What happens when an employee resigns from their employment and they then advise you they wish to rescind their resignation and continue with their employment. Now, if the employee is an asset to your company you may be feeling quite relieved. However, on the other hand, if the employee really hasn’t been a suitable fit for the organisation or is a poor performer then you may be reluctant to accept their continued employment. In this update we consider whether notice provided in this manner is valid and whether an employer has any obligation to accept an employee’s change of mind after providing their resignation.
REQUIREMENTS FOR A VALID NOTICE OF RESIGNATION
The basic rule is that a resignation is a unilateral action. In order for an employee to properly terminate the employment contract they must do so willingly, not under duress and by providing the appropriate notice of termination.
The period of notice given to terminate an employment contract must be as prescribed by the contract of employment, relevant Modern Award or industrial agreement or agreed or, if there is no prescription or agreement, it must be reasonable. The assessment of how much notice is reasonable is dependent on the facts and circumstances of each case. These may include factors such as the employee’s length of service, the employee’s age, qualification, seniority and industry custom and practice.
A notice of termination will be held to be invalid if it is not given in accordance with the requirement of the relevant industrial instrument or contract, or because it specifies too short a period, and it will therefore not operate to end the contract of employment. However, the unilateral act of the employee, which clearly indicates that the employee no longer wishes to be bound by the contract will then amount to a repudiation of the contract.
In the absence of a term in a written agreement or industrial instrument to the contrary, there is no general requirement that notice of termination be in writing. Importantly, an employee’s resignation must be communicated to an employer in such a way that a reasonable employer would have little doubt in regards to the employee’s intention not to be bound by the contract of employment and the continuation of the employment relationship. Until the resignation is properly communicated to the employer, it is not effective to terminate the employment and is capable of withdrawal. For instance, if an employee provides written notice of termination to the secretary to be conveyed to the boss, and prior to the boss receiving the notice, the employee withdraws it, it will not have any effect.
EFFECT OF NOTICE
A valid notice of termination will operate according to its terms and will bring the contract of employment to an end when the notice period expires. In certain circumstances, an employer may bring the contract to an end immediately by paying the employee in lieu of notice. Notably, termination of the contract does not mean that the contract ceases to have all legal effect. For example, in relation to restraint clauses and confidentiality obligations.
WITHDRAWAL OF NOTICE
Providing proper notice of resignation is a unilateral act, requiring no acceptance by the other party for it to have effect. If an employee has provided a notice of resignation in clear and unambiguous terms then the notice cannot be withdrawn unless the employer consents to the withdrawal. When deciding whether to allow the rescission of a notice of resignation, employers should consider the circumstances leading up to the resignation including the reason why the employee resigned.
In order to prevent claims for unfair dismissal or constructive termination, employers should ensure that resignations are not motivated by a “heat of the moment” decision as a result of an altercation or work related stress. Where a resignation occurs in the heat of the moment or out of frustration or without proper consideration, the employer must be satisfied that the resignation is a truly voluntary one. This would include the classic scenario of an employee walking out of the business yelling “I am not coming back!”. In these circumstances, if there is a real possibility the resignation was motivated by emotional upset and the employee within a reasonable period of time, thereafter indicates he wishes to withdraw the resignation, should be given an opportunity to do so, The decision of Birrell v Australian National Airlines Commission held that the ability to withdraw a resignation in these circumstances was tightly confined, stating that the notice must be given in the heat of the moment, and withdrawn as soon as the person realises she or he has acted in anger. However, if such a notice is not withdrawn as soon as emotions have subsided, but allowed to stand, the invalidating circumstance would be removed and the notice ratified.
RELEVANT RECENT DECISIONS
In the decision of Taylor v AGAS National [2016] FWC 3435, the Applicant commenced unfair dismissal proceedings against his employer, AGAS National. The Applicant was a truck driver and was approached by his Operations Manager to discuss a vehicle accident that had occurred while undertaking his delivery duties the prior day. Mr Taylor became abusive and argumentative regarding the issues raised in the discussion and as such, told the Operations Manager to “shove your job I won’t be back” and walked out. The employer made numerous calls to Mr Taylor after he had left with no response. The following morning, Mr Taylor sent a text message to his Manager stating that he would not be attending work. The employer again attempted to contact Mr Taylor and sent him a text message stating “Mate will you be in on Monday” to which no answer was received. On the following Monday morning Mr Taylor presented for his shift at the usual time, however, was advised that his resignation had been accepted and his services were no longer required.
The Fair Work Commission (“FWC”) found that if the employer had been the initiating party to the termination, there would have been no need whatsoever for the repeated attempts to contact the driver to see what he was intending. Furthermore, the FWC also considered the fact Mr Taylor had sent a text on the Friday morning advising he would not be coming to work. The FWC found the driver was the architect of his own demise and had been given a chance to smooth things over, but flatly refused to communicate. The FWC held Mr Taylor’s conduct as a whole manifested an intention to no longer be bound by his contract of employment and no longer render dutiful service to his employer. As such, the FWC held there was no dismissal at the initiative of the employer and the application was dismissed.
In contrast, in the decision of CV v Darlea Pty Ltd T/A Sawtell Coaches [2015] FWC 1267 it was found unreasonable for an employer to act on the resignation of a bus mechanic who felt his complaints about workplace bullying and unsafe vehicles were being ignored. In this matter the Applicant had submitted a letter of resignation, providing two weeks’ notice. The letter also doubled as a formal complaint where the employee cited unacceptable working conditions (bullying, harassment and intimidation) and dangerous behaviours (deliberate sabotage and damage to the buses). The resignation was accepted in writing by the employer. However, the same day the employee thought better of his decision to resign and requested to withdraw his resignation. The employer asked the employee to make the request in writing. The employee did not do so. Around the same time, the employer was subject to a surprise inspection of the roadworthiness of its buses by Roads & Maritime Services (“RMS”). As a result, a large portion of the fleet received defect notices, which caused a crisis for the company. Relevantly, the employee continued to work, including past the expiration of the original notice period. The employer suspected the employee as being responsible for the audit by RMS, and as a result presented the Applicant with a letter of termination, advising him that he had failed to rescind his earlier resignation in writing and that his employment had come to an end. He was directed to leave the premises immediately.
The FWC held that the Applicant had been left with no option but to resign due to intolerable workplace bullying which was ignored by the employer. VP Lawler noted that a resignation, once accepted, cannot be unilaterally withdrawn but found in this case that in fact the employer had accepted the withdrawal of the resignation by continuing the employment past the notice period. He stated that it should had been obvious to the employer that the Applicant’s resignation was a product of frustration and the Applicant acted quickly in seeking to withdraw the resignation. It was found to be unreasonable for the employer to request the withdrawal be in writing, and the conduct of the employer in allowing the Applicant to continue working past the date his resignation was due to take effect was conduct indicating the acceptance of the Applicant’s withdrawal of his resignation. VP Lawler concluded that the termination was a result of the employer suspecting the Applicant for “dobbing in” the employer to RMS and the dismissal had been harsh, unjust or unreasonable. The employer was ordered to pay the Applicant $20,000 in compensation.
WHAT EMPLOYERS CAN DO TO AVOID RISKS FROM EMPLOYEE RESIGNATIONS
In light of the above authorities, it is prudent for employers to be cautious in regards to resignations given in the heat of the moment or due to an employee’s perceived failure by management to deal with legitimate complaints. To avoid risks associated with a finding that the resignation of an employee should have been permitted to be withdrawn or that the resignation was in fact forced, employers should:
- Avoid suggesting to an employee that she/he must resign ‘or else’.
- Consider whether it is appropriate to make enquiries about whether an employee really meant to resign in circumstances where the resignation is given during or directly after an altercation or other work related episode, and may be in the “heat of the moment” or while under extreme pressure.
- Ask an employee who has resigned verbally, to confirm the resignation in writing.
- If the resignation has been provided in writing and is not impacted by the emotional distress of the employee, accept the resignation in writing;
- If an employee’s resignation is due to a perceived failure of management to deal with a legitimate complaint, try attempting to open further discussions and address the employee’s concerns.
- Keep adequate records of all interactions with employees that involve or indicate verbal resignations as well as any notes of discussions relating to unsatisfactory work performance or unacceptable conduct/behaviour.
- When possible, conduct an exit interview.
If you wish to discuss any aspect of this article or require specialist advice or assistance in relation to an employment law issue, please do not hesitate to contact us.
This alert is not intended to constitute, and should not be treated as, legal advice.