It happens in government and the private sector, over and over – employees fingered in irregular activities resign before disciplinary proceedings can be instituted against them or before a sitting disciplinary committee can make a recommendation. By so doing, these employees hope to escape accountability for their actions. In the words of Eskom CEO Andre de Ruyter, these are “tactical resignations”.
Many do get away with it, but they should not.
This is the reason the government is now considering establishing a register to keep track of those who flee the scene before having to face the music. The measure was one of those mentioned in President Cyril Ramaphosa’s 77-page plan to address and implement the far-reaching recommendations of the Zondo commission. Ramaphosa submitted the document to Parliament in October 2022, and it was made publicly available shortly thereafter.
Under the sub-heading Tracking disciplinary cases across government spheres and public enterprises, itself falling under section 4 Dealing with the perpetrators of state capture, the document notes, somewhat dolefully, that “The challenge remains with employees who have resigned before disciplinary proceedings commence. There is currently no legal recourse to address this”.
This is a labour issue and one that the Labour Court has grappled with for years, says GoLegal. However, it should not present a challenge, because there is in fact legal precedent to continue with the disciplinary hearing even after resignation – more on this in the next section. But uncertainty around the issue, adds GoLegal, has led to confusion and hesitation on the part of employers.
“There is currently no centralised register of people who have been dismissed from organs of state or those that have resigned to avoid being disciplined,” the Zondo response document further notes. “While the Department of Public Service and Administration (DPSA) tracks disciplinary action across national and provincial departments and the Department of Cooperative Governance maintains a database of disciplinary actions at local government, there is no single register that covers all spheres of government and state-owned entities.”
To address this, Ramaphosa has directed the DPSA, the Department of Cooperative Governance and Traditional Affairs, the Department of Public Enterprises, and the National Treasury to collaborate in the design and implementation of appropriate solutions.
“The developed mechanisms will be rolled out across government in April 2023.”
Resignation should be no barrier to discipline
In Naidoo v Standard Bank SA Ltd (18307/2010) [2017] ZAGPPHC 780), the North Gauteng High Court held that if an employee resigns with immediate effect, the employment relationship ends there and then and the employer has no right to proceed with a disciplinary process.
Its judgment, handed down on 24 November 2017, notes that two employees, implicated in gross misconduct and dishonesty, received notice that disciplinary proceedings were to be brought against them and resigned on the spot, with immediate effect.
The employer did not accept the immediate resignations, telling the employees that they must serve the notice period as stipulated in their contracts. They applied to the Labour Court for an interdict which would prevent their employer from continuing with their disciplinary hearing after their resignation.
“Three issues had to be determined by the Court,” says GoLegal. “Firstly, whether an employee’s resignation with immediate effect brings the employment relationship to an end. Secondly, whether employers have the right to hold employees to the notice periods stipulated in their contracts of employment. Lastly, whether employers can proceed with disciplinary enquiries even if the employees attempted to resign with immediate effect.”
The court found in favour of the applicant in this case – but the Labour Court in September 2020 handed down a very different judgment in Mthimkhulu v Standard Bank of South Africa (J 928/20) [2020] ZALCJHB 201. That employee, found guilty of grossly dishonest and fraudulent behaviour, was in the process of defending his actions before a disciplinary hearing, but suddenly resigned. In this case too he was ordered to serve his notice period. The hearing, meanwhile, determined that the employee should be dismissed. He challenged this decision on the grounds that his employer no longer had jurisdiction to discipline him.
“The court had to determine what the legal effect of a resignation was before the announcement of a sanction of dismissal. The court held that the resignation by the employee was nothing more than a stratagem. The employee knew that the inevitable finding of the disciplinary enquiry would be dismissal and as such he resigned before this could be announced.”
This did not sit well with the court, which stated that: “the Bank was still entitled to tackle the ball since it elected to keep the playing field – the contract of employment – alive or open for play. Therefore, the answer to the important question is that the resignation before the announcement of a sanction of dismissal has no legal effect.”
Furthermore, the decision to cancel the employment agreement lies with the aggrieved party – the employer – and not with the employee.
“Ultimately it was held that resignation with immediate effect, before a sanction of dismissal is announced, has no legal effect in circumstances where the employer rejects the attempted resignation as a repudiation, and holds the employee to the notice provisions in his/her contract,” says GoLegal. “In such circumstances, the employer may proceed with the disciplinary action notwithstanding the attempted resignation with immediate effect.”
The organisation added that employers need not hesitate to proceed with a disciplinary enquiry which may lead to the dismissal of an employee where the employee attempts to resign with immediate effect and where the employer has not accepted such resignation.
This is, of course, an abbreviated summary of these judgments – but there is an abundance of available case law.
Expanded Auditor-General powers
The Auditor-General of South Africa (Agsa), under the Public Audit Amendment Act (PAA), is also empowered to pursue state money lost when material irregularities (MIs) occur and in specific circumstances, when the person responsible for settling the loss has moved to another job. This means that accountability for misconduct will not be avoided just because the person resigns.
MIs are defined in the PAA as: “Any non-compliance with, or contravention of, legislation, fraud, theft or a breach of a fiduciary duty identified during an audit performed under the Public Audit Act that resulted in or is likely to result in a material financial loss the misuse or loss of a material public resource or substantial harm to a public sector institution or the general public.”
When an MI is identified, Agsa may:
- Refer any suspected material irregularity identified during an audit performed under the PAA to a relevant public body for investigation, and the relevant public body must keep the Agsa informed of the progress and the final outcome of the investigation,
- Take any appropriate remedial action, which is binding,
- Issue a certificate of debt, as prescribed, where an accounting officer or accounting authority has failed to comply with remedial action.
The third option will be used only after the first two have proved ineffectual, and will hold the accounting officer or accounting authority of an entity liable in their personal capacity for the debt – however, they may within 20 working days make representations to Agsa against the issue of the certificate.
“The certificate of debt is essentially a surcharge against the accounting officer, calling on them to make good on the losses the state is incurring because of their failure to do their work,” says Auditor-General Tsakani Maluleke.
The certificate of debt will be tabled in the relevant legislature and even if an individual mentioned therein moves to another employer, they will remain liable for the debt because they are named in their personal capacity and not as a representative of the entity.
The new powers, which came into effect on 1 April 2019, allow Agsa to “intervene administratively to encourage, and then compel, accounting officers to address material irregularities revealed by the auditing process”.
