This time, we are writing about something that is not a new concept, and has not been affected by any recent changes in the law. It is, however, an issue that comes up constantly in our practice: when and how is a resignation effective?
Here’s the thing: an employer does not need to ‘accept’ a resignation. But sometimes an employer might need to allow an employee to withdraw a resignation after it has been given. Let’s explain, and consider why this is important.
The basic rule is that a resignation is a unilateral action. The employee gives notice and the employment simply comes to an end when the notice period ends (or earlier if the employee walks out or the employer pays in lieu of notice). The employer not only does not need to ‘accept’ – the employer has no power to stop the employee from resigning. (If the employee does not give notice, or walks out early, then the employer may have a theoretical right to sue, but is another issue entirely and anyway it is hard to do).
Further, the settled rule is that it is not possible to withdraw a notice of termination unilaterally after it has been communicated to the other party. So, an employee who communicates his/her resignation to the employer – whether verbally or in writing – can usually only withdraw that resignation with the employer’s consent.
In applying this rule, the tribunals (in particular Gray J in Birrell v Australian National Airlines Commission (1984) 9 IR 101 at 110) have expressed a view that if unilateral withdrawal of termination was permitted, this could give rise to significant disruption to arrangements made by the parties during the notice period. For example, an employee who resigned but was able to unilaterally withdraw the resignation would potentially place the employer in the position of having to dismiss the employee’s replacement.
Despite the settled rule, the tribunals have recognised ‘exceptional circumstances’ which may make it appropriate to permit a unilateral withdrawal of a resignation or dismissal. These exceptional circumstances include ‘heat of the moment’ situations such as:
- an employee suffering from emotional distress resigns and immediately seeks to withdraw that resignation; or
- an employer gets into a fight with an employee, dismisses the employee and immediately seeks to withdraw the dismissal.
In such circumstances, it may be that the resignation or dismissal didn’t actually represent the relevant party’s considered will. In this context, a delay in trying to withdraw a resignation may count against an argument it should be unilaterally withdrawn.
What happens if an employee tries to withdraw a resignation?
If an employee resigns and then seeks to withdraw the resignation, the employer is faced with a difficult decision: allow the withdrawal? or refuse to acknowledge it and proceed on the basis that the employment will terminate?
The situation will be more complicated still if the employer has treated the resignation as something that must be ‘accepted’, and then delayed in doing so – as the employee then might think that she/he has time and the right to withdraw the resignation at will.
If the employer refuses to acknowledge or allow the employee’s attempt to withdraw the resignation, a common response is for the employee to make an unfair dismissal claim, arguing that (as a result) the termination of employment was at the initiative of the employer. But sometimes, if the employer no longer wants to employ the employee, this risk may be worth taking – although not usually if it is an ‘exceptional case’.
What can you do to avoid risks arising from employee resignations?
To avoid the risks associated with a tribunal finding that the resignation should have been allowed to have been withdrawn, or that the resignation was actually a constructive dismissal, employers should:
- avoid suggesting to an employee that she/he must resign ‘or else’. It is possible to invite an employee to resign, but we recommend that this be done only in carefully considered circumstances and then on a without prejudice basis;
- consider whether acceptance of an employee’s resignation (particularly when it is given in the heat of the moment) is a proportionate response to the issue that caused the employee’s distress;
- consider whether it is appropriate to make enquiries about whether an employee really meant to resign in circumstances where the resignation is given in the heat of the moment;
- make contemporaneous notes of all interactions with employees that involve or indicate verbal resignations; and
- acknowledge all verbal resignations in writing. This is NOT the same as ‘accepting’ the resignation – and has the advantage, in the light of the issues discussed above, that it might prompt a discussion with the employee about whether she/he really intended to resign and, if not, will give the employer an opportunity to consider its response to any request to withdraw the resignation.
We would be interested to hear whether you have had any experiences in this space, and/or your comments on our observations.