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How Employers Should Handle a Resignation

Published 01 Nov 2013

Employment agreements can end when an Employee offers their resignation. This may sound a simple end to the employment relationship for the Employer but there are a number of traps for the unwary.

There must, of course, be a genuine resignation. An Employer must ensure that the Employee genuinely intends to resign and has not acted under the heat of the moment. If an Employee has been forced to resign because they are pressured to do so by the Employer, the Employee could be said to be constructively dismissed which is an unjustified dismissal.

In order to illustrate the difficulties of resignations, Milburn v Waikato District Health Board ERA Auckland is a useful case. Dr Milburn clearly and unequivocally, both orally and in writing, gave notice of her resignation from her job. Dr Milburn resigned when she found herself in disagreement with Ms Flannery over a matter of medical practice. Dr Milburn lost her temper and said she was resigning. She later wrote and signed a resignation letter. Ms Flannery then told Dr Milburn to sleep on it. However after Dr Milburn continued to insist that she wished to resign, Ms Flannery removed the resignation letter from Dr Milburn’s desk.

Dr Milburn within 24 hours stated equally as clearly that she wished not to proceed with her resignation.

The Employment Relations Authority determined that it would be unfair and unreasonable for the Employer to insist that Dr Milburn had resigned. The Authority emphasised that the Employment Relations Act 2000 stated that it was duty bound to support successful employment relationships and it seemed to the Authority that a fair Employer may well be required to allow an Employee to change his or her mind after they have given notice of a resignation.

Often an Employer will be treated as being wrong to assume that an Employee has resigned because an Employee needs time to cool off. The Employer needs, in such circumstances, to make reasonable enquires.

An Employer should always obtain the resignation in writing. Employers are also well advised to follow up a resignation letter explaining that the Employer accepts the resignation, the Employee freely made the decision to resign and whether the Employee is to work out their notice period or if there is to be any payment in lieu.

An Employer should never sit on a resignation letter (or a comment from the Employee that they are resigning) - they should always respond to it.