We often get contacted by clients who are seeking advice on whether they should accept the resignation of an Employee that has been made in the ‘heat of the moment’, with this raising the question as to whether such resignations can be interpreted as being genuine.
For many years our advice has always been on the more conservative side due to the uncertainty as to whether the Employee will then seek to raise a Personal Grievance for Constructive Dismissal – that being where the Employee believes that the relationship was now so untenable that they had no option but to resign.
However, a recent Case in the Employment Court has provided a clear interpretation of the law regarding heat of the moment resignations.
Urban Décor Limited v Yu [ NZEmpC 56; 29/03/2022]
Ms Yu and Ms Jin both worked for Urban Décor until ending their employment by way of resignation after a heated argument with Mr Han, the Company’s sole Director and Shareholder. Despite their heat of the moment resignations, Mr Han then proceeded to issue both Yu and Jin with letters of dismissal.
Yu and Jin raised Personal Grievances of Unjustified Dismissal with the matter proceeding to the Employment Relations Authority (ERA). The ERA found that Yu and Jin were Unjustifiably Dismissed, with the determination placing significant weight on Urban Décor’s failure to provide a cooling-off period before sending them a letter confirming their dismissal.
Urban Décor challenged the Determination in the Employment Court arguing that Yu and Jin had in fact quit before they had then been dismissed. The Court, in considering previous case law Mikes Transport Warehouse Ltd v Vermuelen assessed whether Yu and Jin should have been allowed a cooling-off period, due to the fact that the resignations were provided in an emotional tense context, before Urban Décor acted on their resignations.
The Court made four key observations:
- That a resignation is a unilateral act. Once it has been notified in whatever form, it is not open to the Employer to claim that the employment relationship remains on foot and the resignation is not effective.
- That an Employee, unlike an Employer, was not required to justify their decision to resign.
- That an Employee’s decision to resign is not required to be demonstrably well thought out.
- That the key issue was whether, on an objective assessment, the Employee had resigned.
Based on these observations the Court held that there was no legal obligation to provide a cooling-off period or hold off recognising the resignation, and a failure to do so would not amount to a constructive dismissal.
Having been presented with a resignation, there is no ability for an Employer to reject that resignation and declare the relationship ongoing. Equally, which was potentially relevant in the case, there is no ability to dismiss the Employee if they have resigned, even if the Employer purports to do so, as the relationship has already ended.
While the Court’s decision illustrates a shift away from requiring Employers to provide cooling-off periods when faced with hasty resignations, we recommend that there is still a need to handle such situations with care. If an Employee’s resignation is not objectively clear from the context, Employers should make efforts to confirm the decision before acting upon it. Where it is not objectively clear that this was the Employee’s genuine intention, we would still advise that the best process would be to still provide a cooling-off period to help determine whether the Employee has in fact resigned and reduce the risk of a constructive dismissal claim.
If this case raises any questions for you in respect to a situation that you may face, please feel free to contact us for advice before making any final decisions.