Sep 8, 2020

#Employmentlaw: The Effect of Giving Inadequate Notice of Voluntary Resignation or Retirement -- Kayode Omosehin, Esq.

There is some confusion amongst human resources professionals and in-house counsel about the validity and effect of an employee's notice of resignation that is short of the period agreed in the employment contract. Corollary to the foregoing is the issue regarding whether an employer can reject an employee’s resignation letter for any reason, including ongoing investigations or disciplinary proceedings against the employee or inadequacy of the length of notice or other reasons of the employee’s non-compliance with the employment contracts. In practice, many employers include the power to reject an employee’s resignation letter in their #HR policies or Employee Handbook without seeking legal advice on the propriety of such power.

In law, every employee has absolute right to resign at any time before termination of, or dismissal from an employment. An employer has no discretion on whether to accept or reject a resignation letter. Also, it is immaterial that the employer did not issue a formal reply or acceptance of the resignation letter. The Courts have held that all the employee needs to show is that the employer received the resignation letter and that a rejection letter or email from an employer is an evidence that the employer received the resignation letter. Whether the length of notice of resignation is adequate or inadequate, once an employee indicates an intention to leave an employment, any attempt by an employer to reject that move or hold the employee down would amount to forced labour and would be contrary to all known labour standards. In fact, the Court in Taduggoronno v. Gotom [2002] 4 NWLR (Pt. 757) 453 CA specifically held that no employer can prevent an employee from resigning from its employment to seek greener pastures elsewhere.

The only point that needs to made separately, in addition to the above, for emphatic purpose, is that an employer cannot dismiss or terminate the employment of an employee who has given a notice of resignation, notwithstanding the fact that he remains with the employer during the notice period. This is because a notice of resignation takes effect from the date it is received by the employer, not on the last working day as erroneously believed by some employers who still engage in post-resignation termination or dismissal.

What then is the effect of inadequate notice of resignation? The courts have held in Adetoro v. Access Bank Plc and many other similar cases that where the length of notice of resignation given by an #employee is less than the period agreed in the employment contract, then, the notice is deemed to be with immediate effect. So, where, for instance, the contract provides for termination or resignation by one (1) month's notice or salary in lieu, any notice that is short of the agreed period will amount to RESIGNATION WITH IMMEDIATE EFFECT.

In law, the implication of "Resignation with immediate effect" vary, depending on whether the reason for exiting a company is #resignation or #retirement. Resignation with immediate effect gives the employee the right to leave the employment immediately and automatically, without any benefit and subject to the employee paying his outstanding indebtedness (if any) to the employer. Please note that the fact there is an outstanding indebtedness owed to the employer does not entitle the employer to insist that the employee must continue to work for the employer. It merely gives the employer the right to enforce its contractual right to recover the amount owed. Retirement, however, does not appear to confer on a retiring worker such a right to leave service immediately and automatically. In OSHC v. Shittu [1994] 1 NWLR (Pt. 321) 476 CA, the Court of Appeal (Benin Division) opined that a notice of voluntary retirement does not entitle the employee to leave the employment immediately or automatically, and that he or she would still remain in the employer’s service (especially where the notice is rejected by the employer and the employee returns to work). 

In that case, the employee submitted his resignation with immediate effect and paid one month's salary in lieu of notice. The #employer rejected his resignation and directed him to return to work immediately, to which the respondent responded by another letter, wherein he maintained his stand of resigning. The Court found that the employee never returned to work. The one (1) month's salary in lieu of notice paid by the employee was never returned to him to show that his resignation was not accepted. The only inference from all these facts, according to the Court of Appeal, was that the employee never returned to his duty post and it could not be said that he was back in the employment of the appellants.

But I need to point out the extent of the effects of law's prohibition of an employer's rejection of a resignation letter. The rejection of the notice of retirement is an unlawful act, which the employer cannot rely on to make any claim against the employee because doing so would amount to approbating and reprobating, thus, making the employer a beneficiary of its own unlawful act. Indeed, the Court of Appeal in the OSHC v. Shittu case held that”

“If the cross-appellant (employee) had returned to his work with appellants, then the appellants would be estopped from saying that he was no longer in their employment and would have been held liable for any consequences arising from their illegal conduct towards him with regard to his employment.”

The above statement was an obiter dictum (a remark made in passing), which does not command the respect or status of a binding judicial pronouncement. The National Industrial Court refused to apply the above reasoning in Adetoro v. Access Bank Plc (which was decided in 2016 by Hon. Justice B. B. Kanyip of the National Industrial Court), where the employee’s resignation was rejected by the employer twice for being inadequate and on ground that there was an ongoing investigation about ATM imbalance against the employee. The argument of the claimant is that the defendant was wrong to have deducted from his gratuity and that because his two letters of resignation were rejected by the defendant he remained an employee of the defendant until 20th March 2012 when his gratuity was paid to him. The National Industrial Court upheld the argument on the unlawfulness of the deductions but rejected the argument on the claimant being an employee after submitting his voluntary resignation, notwithstanding the fact that the resignation letters were rejected by the employer. The Court held that the employee could not sue for salaries and other benefits after the date of resignation because he had ceased to be in the defendant’s employment. The Court relied on Adefemi v. Abegunde [2004] 15 NWLR (Pt. 895) 1 CA and Yesufu v. Gov. Edo State [2001] 13 NWLR (Pt. 731) 517 SC, in holding that a notice of resignation of an appointment becomes effective and valid the moment it is received by the person or authority to whom it is addressed.

From the above, the lesson for employers is very crucial and, so, can be summarized as follows:

-      the right of an employee to resign without hindrance is still a good labour law and best practice;

-      No employer has discretion to reject resignation on account of any ongoing investigation against the employee or his outstanding indebtedness or inadequacy of the notice period given in the resignation letter;

-      Also, any defect in a resignation letter cannot invalidate or impugn the right of an employee the employment though it may deprive him or her some benefits which would have been available if he or she resigns properly.

-      It goes without saying, therefore, that the power to reject an employee’s resignation letter in any staff #handbook, employee manual or #HR policy will be unlawful and unenforceable to the extent of its inconsistency with international best practice and labour standards in employment and labour relations. The argument that an employee who signs an employment contract giving the employer such oppressive power cannot later complain is beside the point. Under Nigerian law, as stated in many cases, including the Supreme Court's decision in Menakaya v. Menakaya, public policy forbids two parties from contracting out of a mandatory law.

Kayode Omosehin is a Principal Associate and Notary Public at KORIAT & CO. in Lagos.