New Zealand: Resignations and Dismissals: Hot heads, walk outs, and cool downs – a warning note for employers

Employment

Picture this: Following a heated argument, an employee tells their boss to 'stuff' their job and leaves in a huff. Or an employee storms out of a disciplinary meeting claiming it is unfair and they quit. Seems pretty straightforward right, the employee has resigned? Not quite...

While a statement or action by an employee may appear to be an unequivocal resignation, an employer who attempts to rely on such a statement or action which has arisen in the 'heat of the moment' may find itself in hot water and exposed to the risk of a personal grievance for unjustified dismissal.

Heat of the moment resignations

The Employment Court has said that in a situation where an employee says or does something that could be construed as a resignation during a heated argument or conversation, a fair and reasonable employer "would allow for a cooling down period and then discuss with the employee what had occurred".

Only if after the parties had an opportunity to 'cool down' did the employee take further steps to end the employment, such as asking for final pay, would the employer reasonably to be able to conclude that the employee wished to resign and accept the resignation. In addition, an employer must satisfy itself that the response is based on the employee's actual intentions, not just inferred from their conduct. For this reason, after the cool down period, best practice is for the employer to request the resignation in writing.

What a "reasonable amount of time" is for the employee to cool down is entirely fact dependent. It should be long enough to allow the employee to calm down and reflect on what has occurred.

Heat of the moment dismissals

In contrast to the situation above, an employee may believe that they have been dismissed by the employer during a heated argument or discussion. In this situation, on becoming aware that the employee believes they have been dismissed, and this is not the case, an employer must immediately seek to rectify the situation.

An employer who fails to do so "must suffer the adverse consequences of passively standing by and letting the employee think that a dismissal has taken place". An employer must therefore act quickly in clarifying the situation, or could find itself exposed to the risk of a personal grievance for unjustified dismissal.

Employers should be familiar with their obligations under section 4(1A)(b) of the Employment Relation Act 2000 to be "active and constructive in maintaining a productive employment relationship in which the parties are... responsive and communicative".

We suggest taking advice if you are unsure of whether you can accept a resignation, or you are unclear about how to deal with an employee who considers they have been dismissed. The Employment Team at Cavell Leitch are happy to help.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.