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Labour Law: Resignations and the parties’ contractual obligations

Many employers often find themselves in a predicament when employees resign without adhering to the notice periods stipulated in the contract of employment. In order to address the recourse available to employers, it is important to first look at what legislation prescribes for notice periods.

1. Notice periods

A reasonable notice period that either party in an employment relationship needs to abide by is derived from common law, however section 37 of the Basic Conditions of Employment Act 75 of 1997 (BCEA) has specifically developed the common law and makes specific provision for notice periods. Depending on the length of service of the employee, notice periods range from one (1) week, two (2) weeks or one (1) month, however it is common for companies to provide for notice periods which differ from the BCEA or any other relevant legislation including collective agreements. This is permitted only if the notice periods are not less than the periods stipulated in the relevant legislation. An employee may not be required to give longer notice than the employer. It is important to note that there are provisions whereby the notice periods are waived and that include matters of a constructive dismissal.

2. Employer’s Remedies

Employees who fail to give notice as per the stipulated notice period are in breach of contract and the employer has specific remedies to compel the employee to adhere to the contractual obligations.
2.1. Order for specific performance
The first recourse is for the employer to refer the matter to the High Court to request an order compelling the employee to comply with the conditions of the employment contract (order for specific performance). In terms of section 77A (e) of the BCEA, the court may use its discretion whether or not to grant or deny an order for specific performance in terms of the reasonableness of the matter.

The court indicated in Nationwide Airlines (Pty) Ltd v Roedinger & another [2006] JOL 17221 (W) that the applicant was entitled to enforce the three (3) month notice period against the respondent, as the respondent only gave one (1) month’s notice. The respondent was deemed a professional employee and entered into the employment relationship on his own accord. The respondent was fully aware of the conditions in the contract of employment and that the agreed notice period had not been forced on him. The court furthermore took into consideration the potential operational risk as flights might have to be cancelled due to the airline not having a replacement for the respondent, who was the only pilot qualified to pilot a particular Boeing, which would have resulted in a substantial financial loss for the business.

In contrast, in Santos Professional Football Club (Pty) Ltd v Igesund & another [2002] JOL 10021 (C), the head coach of the professional football team indicated that he would like to resign due to another competitive offer of employment he received. The team referred the matter to the High Court and sought relief in terms of an order for specific performance. They deemed it unfair for the coach to breach the conditions stipulated in the fixed term contract purely because he received a better offer of employment.

The High Court had to take into consideration whether the order would be viable and appropriate. It was found that the coach would not be as committed as he ought to be, should he be compelled to adhere to his contract. The coach’s dignity as well as the employment relationship between the coach and management were taken into consideration. It was found that the working relationship was irreparably broken, therefore a future working relationship would not be viable. In this case the order for specific performance was denied.

2.2. Claim for damages

The second remedy for the employer is to terminate the employee’s contract and to sue for damages. Claiming for damages is not as easy as employers might envisage it to be due to employers being required to physically prove that there was harm caused as a result of the employee not serving notice. Employers cannot simply rely on the mere fact that the employee was in breach of the employment contract.

In Rand Water v Stoop & another (2013) 34 ILJ 576 (LAC), the court found that where employees have breached their contract of employment by failing to act in good faith, in relations to section 77(3) of the BCEA, the Court may decide whether or not the employer may claim for damages incurred as a result of the breach of contract.

In Aaron’s Whale Rock Trust v Murray and Roberts Ltd and Another [1992] 3 All SA 390 (C), the court held:

“Where damages can be assessed with exact mathematical precision, a plaintiff is expected to adduce sufficient evidence to meet this requirement. Where, as is the case here, this cannot be done, the plaintiff must lead such evidence as is available to it (but of adequate sufficiency) so as to enable the Court to quantify his damages and to make an appropriate award in his favour. The Court must not be faced with an exercise in guesswork; what is required of a plaintiff is that he should put before the Court enough evidence from which it can, albeit with difficulty, compensate him by an award of money as a fair approximation of his mathematically unquantifiable loss.”

2.3. Withholding statutory payment

In practice, employers find it frustrating and costly as the financial implication of referring the matter to court equals more than the physical harm caused by the employee not serving notice. Therefore employers have been advised to include a clause in the employment contract to specifically indicate that should an employee fail to serve their full notice period, the employer is entitled to withhold final remuneration until the employee serves such notice. This will compel employees to return to abide by their contractual obligations.

In the two key judgments of Singh v Adam (2006) 27 ILJ 385 (LC) and 3M SA (Pty) Ltd v SA Commercial Catering & Allied Workers Union & Others (2001) 22 ILJ 1092 (LAC) it was specifically held that the employment contract is a reciprocal contract to which these provisions apply. The employer can therefore refuse to pay out any final payments until the employee has rendered proper performance.

3. Conclusion:

It is evident that employers have various remedies in place regarding employees who are in breach of contract in terms of serving their notice period as per the employment contract. The remedies of applying for an order of performance and claiming for damages will result in costs incurred and may not necessarily be successful. Employers are therefore advised to include a clause in their employment contract whereby the employer may withhold the amount equal to the required notice from the employee’s final statutory payments until the employee serves notice as agreed in the contract of employment.

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