Heat of the moment resignations

The unfair dismissal jurisdiction of the Fair Work Commission and the remaining  State industrial tribunals are dependent upon there having been a dismissal, that is to say a termination of employment of an employee at the initiative of the employer.  Self-evidently, that will not be the case where the employee resigns. But what constitutes a legally effective resignation?  Does a resignation need to be accepted by an employer to be effective? Can a resignation be withdrawn?

Here is an extract from a recent decision of the Fair Work Commission which analyzes these issues. 

“Legal principles

In Minato v Palmer Corporation Ltd 13 Murphy JR said, in relation to whether a resignation stands:

The legal position is set out in the case of Sovereign House Security Services Ltd v Savage [1989] IRLR 115 where at 116 May LJ said:

‘‘In my opinion, generally speaking, where unambiguous words of resignation are used by an employee to the employer direct or by an intermediary, and are so understood by the employer, the proper conclusion of fact is that the employee has in truth resigned. In my view tribunals should not be astute to find otherwise…

However, in some cases there may be something in the context of the exchange between the employer and the employee or, in the circumstances of the employee him or herself, to entitle the tribunal of fact to conclude that notwithstanding the appearances there was no real resignation despite what it might appear to be at first sight.’’

Those comments were considered in another case: Kwik-Fit (GB) Ltd v Lineham [1992] ICR 183 where at 188 Wood J said that he saw no difference in principle between words or actions of resignation. At 191 he set out the position as follows:

‘‘If words of resignation are unambiguous then prima facie an employer is entitled to treat them as such, but in the field of employment personalities constitute an important consideration. Words may be spoken or actions expressed in temper or in the heat of the moment or under extreme pressure (‘being jostled into a decision’) and indeed the intellectual make-up of an employee may be relevant: see Barclay v City of Glasgow District Council [1983] IRLR 313. These we refer to as ‘special circumstances’. Where ‘special circumstances’ arise it may be unreasonable for an employer to assume a resignation and to accept it forthwith. A reasonable period of time should be allowed to lapse and if circumstances arise during that period which put the employer on notice that further inquiry is desirable to see whether the resignation was really intended and can properly be assumed, then such inquiry is ignored at the employer’s risk. He runs the risk that ultimately evidence may be forthcoming which indicates that in the ‘special circumstances’ the intention to resign was not the correct interpretation when the facts are judged objectively.’’

In CF Capital PLC v Catherine Willoughby 14 the English Court of Appeal said:

  1. The ‘rule’ is that a notice of resignation or dismissal (whether given orally or in writing) has effect according to the ordinary interpretation of its terms. Moreover, once such a notice is given it cannot be withdrawn except by consent. The ‘special circumstances’ exception as explained and illustrated in the authorities is, I consider, not strictly a true exception to the rule. It is rather in the nature of a cautionary reminder to the recipient of the notice that, before accepting or otherwise acting upon it, the circumstances in which it is given may require him first to satisfy himself that the giver of the notice did in fact really intend what he had apparently said by it. In other words, he must be satisfied that the giver really did intend to give a notice of resignation or dismissal, as the case may be. The need for such a so-called exception to the rule is well summarised by Wood J in paragraph 31 of Kwik-Fit’s case and, as the cases show, such need will almost invariably arise in cases in which the purported notice has been given orally in the heat of the moment by words that may quickly be regretted.
  2. The essence of the ‘special circumstances’ exception is therefore that, in appropriate cases, the recipient of the notice will be well advised to allow the giver what is in effect a ‘cooling off’ period before acting upon it. Kilner Brown J, in paragraph [15] of his judgment in Martin’s case understandably referred to such a period as an opportunity for the giver of the notice to recant, or to withdraw his words; and this is in practice what is likely to happen. I would, however, be reluctant to characterise the exception as an opportunity for a unilateral retraction or withdrawal of a notice of resignation or dismissal since that would be to allow the exception to operate inconsistently with the principle that such a notice cannot be unilaterally retracted or withdrawn. In my judgment, the true nature of the exception is rather that it is one in which the giver of the notice is afforded the opportunity to satisfy the recipient that he never intended to give it in the first place – that, in effect, his mind was not in tune with his words.

The “special circumstances” exception was considered by the UK Employment Appeals Tribunal (EAT) in Barclay v City Of Glasgow District Council 15 where Lord McDonald explained the approach as follows:

  1. On the other hand we do not consider that in the circumstances of this case the matter rests there. It is true that if unequivocal words of resignation are used by an employee in the normal case the employer is entitled immediately to accept the resignation and act accordingly. This has been authoritatively decided by the Court of Appeal in Sothern v. Franks Charlesly & Co [1981] IRLR 278 to which we were referred. It is clear however from observations made in that case that there may be exceptions. These include cases of an immature employee, or of a decision taken in the heat of the moment, or of an employee being jostled into a decision by employers (Fox LJ at paragraph 21); they also apply to cases where idle words are used under emotional stress which employers knew or ought to have known were not meant to be taken seriously (Dame Elizabeth Lane, paragraph 25). There is therefore a duty on employers, in our view, in an appropriate case to take into account the special circumstances of the case…

Whilst these two decisions are from English Courts the approach taken is generally consistent with Australian Courts and Tribunals such that guidance can be taken from them.

In Birrell v Australian National Airlines Commission 16 Gray J found that:

The giving of notice of termination of a contract, in accordance with the terms of that contract, is a unilateral right. Its exercise does not depend in any way on the acceptance or rejection of the notice by the other party to the contract. The giving of such a notice operates to determine the contract by effluxion of the period of notice. It is clear that such a notice could be withdrawn by the consent of both parties to the contract; it seems unnecessary to determine whether, in the case of withdrawal of a notice by consent, the existing contract continues or a new contract comes into being. A question does arise, however, whether unilateral withdrawal of a notice is possible. 17

In considering whether unilateral withdrawal of the notice is possible (such that the resignation no longer stands) his Honour found, after a consideration of a number of authorities, including some of the United Kingdom, that:

These authorities all support the view that unilateral withdrawal of a notice of termination of a contract of employment is not possible. In principle, this conclusion must be correct. The purpose of providing in a contract for a period of notice of termination is to enable the party receiving the notice to make other arrangements. An employee given notice by his or her employer has a period of time in which to seek another job; an employer who receives notice has time to arrange for a substitute employee. It would be harsh if arrangements so made during the running of the notice could be disrupted, and parties could be held to their contracts by unilateral withdrawal of the notice at the last minute. 18

The following can be taken from these decisions:

  • If clear and unambiguous words are used to convey a resignation and these are understood by the employer, then the proper conclusion to draw is that the employee has resigned;

 

  • A notice of resignation has effect according to an ordinary interpretation of the words used to convey the resignation. Caution might be exercised in accepting certain types of resignations, where it may be prudent for the recipient of the notice to investigate the meaning with the giver of the notice. Such circumstances that may require investigation might be where an employee is coerced into the decision, if the employee is immature, the resignation is given in the heat of the moment or if given during emotional distress.

 

  • The existence of such circumstances should not be accepted as providing a unilateral right to withdrawal of the notice.

 

  • There is no right to unilateral withdrawal of a resignation during the period of notice as to do so would defeat the purpose of notice.

 

I have applied these principles to the matter before me.

 

Did Mr Fato resign?

Mr Fato’s text message of 10 March 2017 said, in part:

I’ll speak to you when you come in but let me know how much notice you want because I’m not staying anymore…I’ve had enough.

I am satisfied that the words of Mr Fato’s text message of 10 March 2017 are clear and unambiguous. An objective view of the communication amounts to a resignation. The words are clear – “let me know how much notice you want” and “I’m not staying anymore” and “I’ve had enough” cannot, on any construction, convey anything else. Mr Chilelli understood the words as Mr Fato’s notice of his resignation. The only matter to be resolved was the question of notice.

Even if the resignation is given in the heat of the moment the employer is entitled to notice as specified in the FW Act, relevant industrial instrument or contract of employment. Employees resign with notice as a matter of course. It is not unusual for an employee who is resigning to have some discussion with their employer about how much notice is required or preferred to see if an arrangement may be reached. That Mr Fato did not specify a period of notice in the text message does not alter the characterisation of the communication.

The evidence of Mr Fato and Mr Chilelli as to the conversation they had on the evening of 10 March 2017 does not vary in any material aspects. The difference is seen only in the context within which the conversation occurred. If Mr Fato had resigned then the conversation was about how much notice Mr Fato would give. If Mr Fato had, in fact, not resigned then the conversation was about how long Mr Fato would remain at Sagra before he did resign.

Mr Chilelli’s evidence is that he accepted the resignation conveyed in the text message and moved on to discuss the notice period he preferred with Mr Fato. He was, in my view, entitled to do so. He did not waiver from this position. On balance I prefer Mr Chilelli’s evidence compared to the evidence of Mr Fato as to what occurred at the meeting of 10 March 2017, particularly due to the clear words of the text message.

While there had been two recent incidents involving Ms Hargreaves prior to the lap top incident, which appear to have sparked the 10 March 2017 text message, I am not convinced Mr Fato resigned in the heat of the moment. He was not ‘jostled’ or coerced into resigning and he understood what he was doing. Even if it might be seen that Mr Fato did send the text message in the heat of the moment he had ample opportunity to seek to withdraw it – when Mr Chilelli rang him and later that evening in his conversation with Mr Chilelli – but he did not do so. As Mr Fato said, in sending the text message it was his intention to resign.

It does create some confusion that the notice period to be given by Mr Fato was never reduced to writing and, that for the two weeks following the conversation between Mr Fato and Mr Chilelli on 10 March 2017, the matter was not discussed again. However, I am satisfied that Mr Chilelli asked Mr Fato to stay until he, Mr Chilelli, returned from leave. Mr Fato said he would discuss it with his wife but never had a further discussion with Mr Chilelli as to an alternative. To this extent, whilst Mr Chilelli should have done more the finalise the matter (which he accepts 19), I am satisfied that he took from Mr Fato’s inaction that he would work out an extended notice period until Mr Chilelli returned around the end of April.

The uncertainty now to be resolved by the Commission falls squarely with Mr Chilelli’s failure to document any aspect of the end of Mr Fato’s employment. Mr Chilelli gave evidence of his extensive experience in the hospitality industry and that he had employed many people in that period and dealt with resignations and dismissals. Given such experience, my expectation is that he would be aware of the need to document matters associated with the end of employment including any notice period to be worked. Despite this, it does not change the text message.

Whilst it might be unusual for an employee to work out such an extensive notice period, I am satisfied that Mr Fato did not withdraw his resignation and that, on request of Mr Chilelli and by his own actions, he agreed to work the extended notice period. When Mr Chilelli returned, Mr Fato’s notice period was formalised with an offer of a further notice period to enable Mr Fato to find alternative employment, it being apparent he had not yet found another job.

These circumstances having been established, Mr Fato had no unilateral right to retract his resignation during the period of notice he was serving.

Mr Fato submits that his failure to look for work during the six week period should be accepted as evidence that he did not resign, however the text message trumps any such submission. Having resigned and agreed to a notice period, it was no longer Mr Fato’s right to unilaterally retract his resignation. His actions, or lack of action, after the resignation text cannot change the text message.

For these reasons I am satisfied that Mr Fato resigned. Whilst he may argue this was never his intent, on an objective basis his text message of 10 March 2017 cannot have conveyed anything else.”

 

Fato v La Sagra Pty Ltd (2017) FWC 4458 delivered 1 September 2017 per Bissett C