Former Race Relations Commissioner Meng Foon’s messy departure from office seems like a classic case of a heat of the moment resignation.  First it was publicly announced that he had resigned, after this information was allegedly leaked from the office of the prime minister.  Then Foon told TVNZ’s Breakfast that he had not yet formally resigned, he had simply told the Associate Minister of Justice Deborah Russell that he intended to. 

He added “I have not formally written to the Associate Minister of Justice yet”.  It then became even more confusing when Foon appeared to backtrack from his statement of intention to resign and challenged the government for throwing him “under the bus”.

As it happens Foon’s resignation has now been formally offered and accepted, but it raises issues as to when an employee will be deemed to have resigned.

The starting point is the employee’s employment agreement which should set out the obligations on both parties when terminating the relationship.  Most agreements will require an employee to give notice of termination in writing and will spell out what period of notice is to be given.  If Foon’s agreement required notice to be given in writing, his verbal statement of intention to resign would not likely be binding, leaving him free to resile from this position should he wish to. 

If there was no such requirement for the resignation to be in writing, he could potentially be held to his statement of intention to resign, especially once that became publicised.  The legal test in this regard is “whether a reasonable employer, with knowledge of the surrounding circumstances, would have reasonably considered the employee to have resigned”.

When an employer receives notice of resignation from an employee, the next question is whether they can require the employee to leave immediately, or at least before the end of the contractual notice period.  Employers do not have a right to require a resigning employee to leave early, and this can only be by agreement.  However, most employment agreements do allow an employer to pay an employee in lieu of working out the notice period, and this typically occurs when an employee is either leaving to go to a competitor or has resigned in acrimonious circumstances. 

When an employer elects to pay an employee in lieu of notice, the employment generally comes to an immediate end.  However, some employment agreements allow for an employer to place an employee on “garden leave”.  In this situation, the employee remains employed and bound by all of their usual duties of confidentiality, good faith and fidelity, but they are not required to attend work or undertake any duties.  They are literally paid to sit at home in the “garden”.

Another interesting question is whether either party to an employment relationship can give more than the required amount of notice.  For example, could Foon have given a years notice and then hung around to be a thorn in the government’s side?  Whilst this will again depend on what the employment agreement says, the general principle is that more notice can be given, but not less.  In other words, the contractual notice period is a minimum.  If the parties want greater certainty, the employment agreement should ideally say that “no more and no less” than the contractual notice period can be given.

All of this is relatively straight forward.   Where things get complicated is when an employee resigns on a whim and then wants to take it back.  A recent Employment Court decision held that if an employee has, on an objective assessment, resigned, there is no obligation on an employer to hold off recognising and accepting that resignation.  This shifts the legal principle that has traditionally applied which required an employer to allow an employee a “cooling off” period prior to accepting a resignation where this was offered in the heat of the moment.

Fortunately, the Foon debacle appears to now be resolved, at least insofar as his resignation has been formalised.  Had he instead sought to resile from this, there would likely have been a very public legal dispute as to whether he did, or did not, resign in the first instance.

The case highlights the need for employees to think carefully before they announce that they intend to resign, because they may well be held to this even if they later change their mind.

This article was originally published in 28 June 2023