The legalities behind resignations and notice periods have been a source of confusion for employers. Often, employers are unsure whether the Basic Conditions of Employment Act 75 of 1997 (BCEA) takes precedence over the explicit terms of a contract of employment. Employers may also be uncertain about the implications of a resignation letter with the term “immediate effect” on the employment relationship.

The BCEA, Section 37, sets out the statutory requirements for each party when terminating the employment contract. These are:

  • One week’s notice if the employee has been employed for six months or less.
  • Two weeks’ notice if the employee has been employed for more than six months but not more than one year.
  • Four weeks’ notice if the employee has been employed for one year or more or is a farm worker or domestic worker who has been employed for more than six months.

So, where does this leave employers with specific terms relating to resignation and notice periods in their contracts of employment? And what about the consequent rights employers may still have against the employee?

The confusion surrounding these questions often revolves around whether the BCEA takes precedence over the explicit terms of the employment contract. In the Labour Appeal Court ruling in Standard Bank of South Africa Limited v Chiloane (JA 85/18) [2020] ZALAC 58; [2021] 4 BLLR 400 (LAC); (2021) 42 ILJ 863 (LAC) (10 December 2020), the Court highlighted that contracts of employment are governed either by the law of contract or statute and, in some cases, both.

The Court explained further that in an instance where the employer and its employee do not explicitly agree on the terms of notice to terminate their relationship in the employment contract, the parties are still required to give such notice as provided for in Section 37 of the BCEA.

In the situation where an employee resigns with immediate effect, it was held that such termination is in breach of a contractual term that requires the giving of notice. Where there are no express terms of termination of employment, the employee is in breach of the BCEA unless the employer accepts the non-compliant notice of termination. The terms of the contract or the BCEA remain valid and binding.

Considering the above, in the event that an employee does not comply with the resignation requirements in the BCEA or the notice period as outlined expressly in a contract of employment, the question then arises: Are employers obligated to pay the employee for the notice period, or can employers deduct the days for which the notice was given from the employee’s salary?

In theory, it would seem that the employer has the right to claim the value of the employee’s salary for any period of notice not served in the civil court as the employee is in breach of a contractual term. However, Section 34 of the BCEA does not allow an employer to deduct monies from an employee’s salary without written consent.

However, it remains unclear whether, even in the event of a written agreement, the employer may withhold or deduct monies owing in lieu of notice. Therefore, to safeguard themselves, employers are encouraged to ensure that they always explicitly set out the terms and requirements for resignation in their contracts so that the necessary protection is available in the event of a dispute.

Article by Deepika Naidoo

Dispute Resolution Official (Collective Bargaining) at Consolidated Employers Organisation (CEO SA)