Recent decisions of the Employment Court signal a different approach to heat of the moment resignations.

The traditional view has been that an employer should allow an employee a cooling off period before accepting a resignation in these situations.  The Employment NZ website recommends that employers allow at least 24 hours for the employee to calm down before checking with them whether they really do want to resign.  It further states “the employer must not just assume that the employee intended to resign”, and warns that this could result in claims of constructive dismissal.

This approach can lead to awkward consequences where an employer, eager to accept an employee’s resignation, either has to hold off for a day or so and hope that the employee does not change their mind, or confirm acceptance of the resignation and hope that the employee does not later seek to resile from it.

It has also led to a number of cases in which employees have successfully established an unjustified dismissal claim by proving that their resignation was unsafe because it was given in the heat of the moment and their employer was wrong to rely on it.

The Employment Court has issued two recent judgments which turn this approach on its head. In the first case, Mikes Transport Warehouse Ltd and Vermuelen, Chief Judge Inglis made four observations in relation to “unsafe resignations”.

First, she said, resignation is a unilateral act.  Once it has been notified it is not open to the employer to claim the employment relationship is still on foot.

Second, an employee (unlike an employer) is not required to justify their decision to resign.  Nor is it required to be well thought through.

Third, if an employee has, on an objective assessment, resigned, there is no obligation to hold off recognising that resignation, and failure to do so can not turn the resignation into a dismissal.

Fourth, any concerns about whether the employer’s actions led to the resignation can be addressed through the law relating to constructive dismissal.

These principles were applied in a case involving Urban Décor Limited and Yu and Jin.

Mingxia Yu and Yan Jin had worked for Urban Décor since 2016 as curtain makers.  The Court described their relationship with the company’s owner, Lei Han, as “fractious”.  The relationship ended after an incident in which Han claimed he saw Jin playing on WeChat, a Chinese social media service, and an argument followed, first about phone use, then escalating to other matters. 

Yu joined in to defend Jin, and the argument took place in two phases.  The first extended for around 10 minutes before the morning tea break, and the second continued for around 5 minutes after the break and culminated in Jin leaving the factory with her bag.  Yu left a short time later after a further argument which Han appears to have started.

There was a dispute about what exactly was said during the argument, but it was found that both Yu and Jin told Han that they “quit”.

Jin messaged Han later that afternoon objecting to his behaviour and saying “because of your unreasonable action again and again you shouted and scolded, I couldn’t carry on working as per usual”.

Yu also messaged Han expressing hurt at his harsh words and saying that she still could not calm down.

Han responded at 4.34am the next morning by sending letters of dismissal to both employees stating that their “employment is terminated effective immediately”.

The Court applied the test of “whether a reasonable employer, with knowledge of the surrounding circumstances, would have reasonably considered the employee to have resigned”.

Whilst noting that the use of the word “quit” does not necessarily mean a resignation, in this case using that word, together with the other actions taken by the employees supported a finding they intended to resign.  Those actions included leaving the workplace abruptly and not returning for the rest of the entire day.  They also failed to make contact with the employer until after hours and then did not signal any intent to return.

The outcome of the case was that Yu and Jin were found to have resigned and there was no unjustified dismissal.  Han’s dismissal letters did not turn those resignations into dismissals because the resignations had already taken effect by the time the letters were sent.

This case should serve as a warning to employees that they may be held to heat of the moment resignations.  If an employee does walk off the job in a fit of pique, they should communicate with their employer as soon as possible and make it clear that they did not intend to resign.  Even then, the employer may not have to accept the employee’s about turn.