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Case study: Can a permanent employee terminate his employment with immediate effect?

by , 17 March 2015
Experts at www.labourandhrclub.co.za recently received this question:

'One of our permanent employees would like to resign with immediate effect, but as per contract he must give a calendar month notice.

What would be the implications of his actions?

What is my responsibility regarding his salary and leave pay outs? He also has a bursary and study loan with the firm. As per these agreements, these amounts are fully re-payable on resignation but his monthly salary is not enough to cover these amounts.

What can I do?'

Here's what our expert told them…
What to do if a permanent employee resigns but wants to leave without fulfilling his notice period  

According to the South African Labour Relations Act, a contract of employment may be terminated for any fair reason, including worker's (mis)conduct, poor work performance, employer's operational requirements and health injury leading to incapacity for work. The employment contract contains a period of notice that both parties have to give in case of contract termination. The notice can be for:
- one week for workers who have been employed for four weeks or less;
- two weeks for workers who have been employed for more than four weeks but not more than one year; and 
- four weeks period for workers who have been employed for one year or more

The Labour Relations Act, Sections 37 - 38. states that for domestic and farm workers with more than four weeks of employment the notice period is four weeks. You can include in the contract a shorter notice period than what is required under the law if this is stipulated in a collective agreement.
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A contract of employment can be terminated on the following grounds:
  • On expiration of the agreed period of employment
  • On completion of the specified task
  • By notice duly given by either party
  • By summary termination in the event of a material breach on the part of either party
  • By repudiation (to reject the value or authority of the employer or employee)
  • By mutual agreement
  • By death of either party
  • By the insolvency of the employer
  • By the supervening impossibility of performance, where either party becomes permanently unable to perform his/her obligations in terms of a contract
Important note! An employment contract may not be terminated in the absence of a justified reason, according to the law.
Therefore, as the law states, your employee has to serve the exact notice specified in the contract, unless you both agree upon terminating the contract earlier.

But what if this employee resigns and still owes you money?

As for paying you back the student loan, if the contract allows you to deduct from money owing to the employee for notice not given, you can include this in your calculations in term of final payment due to the employee. All earnings due for work done and annual leave balance as of date of termination must be paid out (or offset against notice not given if you are allowed).

You should also reach an agreement with the employee in terms admission of debt and money owing to the company. Once the employee leaves, you will have to rely on the employee to pay you back. Failing this, you will be able to sue the employee for the money in her personal capacity and claim the included payment of your legal fees (include this in your agreement) upon termination. Just remember not to ask for interest unless you are permitted by law to do so.

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