Legal Articles

There is a well-known saying that goes like “cutting your losses,” which is usually used where a person has all but accepted that there is no gain that will be realised in a situation, all that is left to do is to at least minimise the loss. Being in such a situation is not ideal for anyone, as the daily endeavor of many people each day is to make gains and leave one at an advantage.

What then becomes, when ‘cutting the loss’ comes a little bit too late? This seems to be what happened in the case of Standard Bank of South Africa Limited v Chiloane.

The relationship between an employer and an employee is a contractual one, governed by the employment contract, applicable labour legislation as well as any collective agreements that are binding on the parties. Labour relations in South Africa are largely regulated by the Labour Relations Act 66 of 1995 (LRA), the Basic Conditions of Employment Act 75 of 1997 (BCEA) as well as the Employment Equity Act 55 of 1998 (EEA). Labour legislation finds effect and force from the Constitution of the Republic of South Africa Act 108 of 1996, which provides in Section 23 that;

Labour relations

23.          (1) Everyone has the right to fair labour practices.

(2) Every worker has the right—

(a) to form and join a trade union;

(b) to participate in the activities and programmes of a trade union; and

(c) to strike.

The parties to an employment agreement are at liberty to agree on the terms and conditions of their engagement as long as those terms are not in conflict with labour legislation as well as the law of contract e.g unlawful provisions are not enforceable. Where parties agree on certain conformities between themselves under their contract, such conformities are indeed applicable and enforceable between themselves to the extent that they are not unlawful. This principle was held by the Court in the case of Xtraprops 66 (Pty) Ltd v Phiopater Supplies (Pty) Ltd (20228/14) [2014] ZAWCHC 177 (25 November 2014).

In the case of Standard Bank of South Africa Limited v Nombulelo Cynthia Chiloane (Case No. JA85/18) [2020] ZALAC (5 November 2020) the parties had entered into a contract of employment which provided that the employee must give one month’s notice in case of resignation. It transpired at a later stage that the employee was given notice for a disciplinary hearing emanating from misconduct, where it was alleged that she cashed in a cheque without following proper laid down procedures. However, in anticipation of her attendance at the disciplinary hearing the employee tendered her resignation, advising that her resignation was with immediate effect.

The employer, unfazed, proceeded with the hearing and found the employee guilty of misconduct, whereafter she was dismissed. The employee took the matter to the Labour Court which upheld that the employment relationship had been terminated as soon as the employee tendered her resignation letter, and so the dismissal was null and void.

The employer appealed to the Labour Appeal Court which overturned the decision of the Labour Court. The Labour Appeal Court upheld that the provisions of the employment contract regulated the relationship between the parties and where it provided that the employee must serve a notice period, such must be adhered to. Therefore, the employer was correct to proceed with the hearing (which found the employee guilty and dismissed her).  

In the Chiloane case it does seem the employee was trying to ‘cut her losses” by resigning, so that she can walk away with some measure of dignity. Some employees do so in order not to have a dented employment record in case a recommendation is requested elsewhere in future, or to retain some benefits. However, as the Labour Appeal Court decided, which decision we believe is correct, it may be too late to resign with immediate effect when one is faced with a disciplinary hearing and where the contract requires the service of a notice period. In situations where the contract does not stipulate a notice period, Section 38 of the Basic Conditions of Employment Act 75 of 1997 will apply.

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