Coetzee v Zeitz Mocaa Foundation Trust and Another (C517/2018) [2018] ZALCCT 20; (2018) 39 ILJ 2529 (LC) (14 June 2018)

Principle:

An employee's contract of employment comes to an end by way of resignation, at the end of the notice period. An employee is entitled to resign with immediate effect only in the case of a material breach of contract by the employer. If an employee wrongfully purports to resign without notice, the employer remains entitled to exercise its contractual rights during the notice period, including prosecuting disciplinary proceedings.

Facts:

The employee in this case was employed as Executive Director and Head Curator of the Zeitz Museum of Contemporary Art Africa. The Trust, his employer, served notice on him on 15 May 2018 to make written representations by 29 May in response to allegations of serious misconduct. The employee then resigned with immediate effect on 16 May, and disputed the employer's right to continue with the disciplinary process against him.

Based on the approach adopted in Kalipa Mtati v KPMG Services (Pty) Ltd J2277/16; 18 October 2016 that found that when an employee resigns 'with immediate effect' despite a notice requirement in the employment contract, the employer loses the right to discipline that employee also with immediate effect, the employee launched an urgent Labour Court application to declare the employer's disciplinary process to be unlawful, invalid and of no force and effect. The employee attempted to interdict the Trust from continuing and finalising the disciplinary process against him.

The LC noted that it was not legally obliged to follow the Kalipa Mtati judgment, given that the judgment has since been overturned on appeal, albeit for other reasons. But the Court went further for the sake of "clarity of the legal position", to outline why it would not follow the approach adopted in Kalipa Mtati. In providing a correct reflection of the law, the LC referred to an extract (clause 19) from the judgment in Vodacom (Pty) Ltd v Motsa and Another 2016(3) SA 116 (LC) that stated that when an employee gives notice, the contract terminates at the end of the notice period. When an employee leaves employment without giving the required notice, the employee breaches the contract. The employer may hold the employee to the contract and seek an order of specific performance requiring the employee to serve the period of notice. Alternatively, the employer may elect to accept the employee's repudiation, cancel the contract and claim damages. The judgment recognised that it is always open to the parties to terminate an employment contract on agreed terms and for either of them to waive whatever rights they might otherwise have enjoyed.

Much of the dispute in this case revolved around whether the employer had agreed that the employee's resignation would have immediate effect, thereby waiving the employer's right to notice. The LC found there was no evidence to this effect, and that the employer was entitled to hold the employee to the notice period.

The judgment clarifies the confusion created by Kalipa Mtati and provides a clear statement of the law, namely that an employee's contract of employment only comes to an end by way of resignation, at the end of the notice period. An employee is entitled to resign with immediate effect only in the case of a material breach of contract by the employer. If an employee wrongfully purports to resign without notice, the employer remains entitled to exercise its contractual rights during the notice period if it wishes to, including conducting disciplinary proceedings during this period.

Extract from the judgment:

(Rabkin-Naicker J)

Applicable legal principles

[3]   The submissions in regard to the legal principles applicable to the dispute are set out on behalf of the respondents are as follows:

3.1.   An employee is entitled to resign with immediate effect only in the case of a preceding material breach of contract by the employer, which is not pleaded, much less proven, here;

3.2.   Statutorily and contractually, the Applicant is bound to give at least four weeks' notice of his resignation, which period the parties have agreed expires on 22 June 2018, in the event that this application fails;

3.3.   If an employee wrongfully purports to resign on no notice, the employer remains entitled to exercise its contractual rights during a notice period;

3.4.   During an employee's notice period, there is no legal impediment to the prosecution of disciplinary proceedings and, if warranted, the subsequent dismissal of an employee for misconduct.

[4]   In Vodacom (Pty) Ltd v Motsa and Another the Court per Van Niekerk J stated the following:

"[19]   The principles that regulate a resignation are well established. Resignation is a unilateral act (see Sihlali v SA Broadcasting Corporation Ltd (2010) 31 ILJ 1477 (LC) (LC J799/08; 14 January 2009)). When an employee gives the required notice, the contract terminates at the end of the notice period. When an employee leaves his or her employment without giving the required period of notice, the employee breaches the contract. Ordinary contractual rules dictate that the employer may hold the employee to the contract and seek an order of specific performance requiring the employee to serve the period of notice. Alternatively, the employer may elect to accept the employee's repudiation, cancel the contract and claim damages. Of course, it is always open to the parties to terminate an employment contract on agreed terms and for either of them to waive whatever rights they might otherwise have enjoyed."

[5]   The above statement is a correct reflection of the law. Reference was made to the case of Mtati v KPMG Services (Pty) Ltd in submission before me. This judgment has recently been overturned on appeal on the basis, (as far as can be gleaned from the LAC ex tempore order) that the dispute before the Labour Court was moot. In as far as that judgment was in conflict with the summary of the law above, it is no longer persuasive. There is no need for the Court to deal with the facts and law applied in that case. However, for clarity of the legal position, that an employee's contract of employment comes to an end only once his resignation takes effect at the end of his notice period, the following obiter dictum of Zondo J (as he then was) in his dissenting judgment in Toyota SA Motors (Pty) Ltd v Commission for Conciliation, Mediation & Arbitration & others is set out:

"[144] Since an employee has no right of withdrawing a valid and lawful resignation once it has been communicated to the employer except with the consent of the employer, this means that as at the date of his dismissal, Mr Makhotla was bound to leave Toyota's employ on 31 March 2011. As already indicated, Mr Makhotla was dismissed a few days before his resignation would take effect. One can, therefore, say that the dismissal interrupted the resignation. That is why we cannot say that Mr Makhotla's employment with Toyota came to an end as a result of his resignation. We say that it came to an end as a result of his dismissal on 24 March 2011."