Heat of the moment resignations don’t require cooling off period.

12 September 2022

The long-held view that an employer should not rely on a ‘heat of the moment’ resignation but allow the employee the opportunity to ‘cool off’ and reconsider their position, has been over-turned by a recent decision of the Chief Judge of the Employment Court.

The employee in question struggled to make sales and found the way the company responded to this demoralising. He was invited to a meeting with management, without prior notice to discuss concerns with his lack of sales.

After some discussion and feedback to the employee regarding how he could go about making sales, he responded that he could not do the job and was resigning.

There were other issues involved and the Authority found the employee had been unjustifiably dismissed.

However, on appeal, despite precedents such as Boobyer v Good Health Wanganui Ltd EmpC Wellington WEC3/94, 24 February 1994 where Chief Judge Goddard held that such “resignations” could not safely be relied upon, Chief Judge Inglis said she preferred to approach the issue on the following basis:

Resignation is a unilateral act. It does not involve the employer’s agreement or disagreement. An employer cannot, for example, decline to accept a resignation and require the employee to continue to work for them. It follows that the key question is not whether advice of resignation was given by the employee in a moment of distress, anger or frustration. Nor is the key question what a fair and reasonable employer would do in response to a resignation given in the heat of the moment. Rather the key question is whether the employee resigned. This is an objective assessment and will likely be informed by the relevant circumstances.

A resignation given in clear and unequivocal terms is more likely to satisfy an objective assessment than words of resignation expressed in an equivocal manner or which are plainly not meant to be taken seriously.

Four related points might usefully be made.

First, the Act does not legislate for how a resignation is to be communicated; it may be verbal, in writing, or in some circumstances, by conduct. A resignation will ideally comply with the contractual provisions regarding notice but may also be given on a “summary resignation” or “resignation without notice” basis, where an employee resigns on the spot and does not return to work. The employer may, in such circumstances, have a claim against the employee for breach of the notice period. The employer does not, however, have a claim that the employment remains on foot and the resignation is of no effect.
Second, while an employer’s decision to dismiss must be justified and meet the standard of what a fair and reasonable employer could do in all the circumstances, an employee does not need to justify their decision to resign; nor does the decision need to be demonstrably sensible or well thought through. And where a resignation has, on an objective assessment, occurred it remains open for the employer to re-engage an employee on the same terms if that is what the parties choose to do after a period of reflection.
Third, the way in which the law has developed around dismissals bears reflection. It is well established that the test is objective - would someone in the employee’s shoes consider that their employment had been terminated? For example, in a heated discussion an employer tells the employee that their employment is terminated. Someone in the employee’s shoes may well consider that a summary dismissal had occurred; but much will depend on the surrounding circumstances. A dismissal may not have occurred where, for example, the employer’s words and/or actions taken in context were equivocal. The point is that the objective assessment of the key issue (has the employee been dismissed) would not be informed by consideration of whether the employee should have given the employer a “cooling off” period to confirm (or otherwise) the position.
Finally, while there are obvious policy concerns which arise in cases involving pressured “resignations”, or those stemming from the employer’s misconduct or breach, those concerns are appropriately addressed via the developed caselaw relating to constructive dismissals.

The Chief Judge was satisfied that the employee had resigned.

Mike's Transport Warehouse Limited & Modern Transport Engineers Limited v Vermeulen [2021] NZEmpC 197 [17 November 2021]