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Cooling Off Periods – A new approach?

When an employee resigns in the heat of the moment, it can be difficult for an employer to judge whether there is merit in providing the employee a with “cooling off” period to reconsider their resignation, or to take the statement at face value.
Past case law has suggested that best practice is to actually allow for a period of reconsideration, however recent case law has introduced some new framework for employers to operate within when an employee resigns in these circumstances.  

Below, we outline the change in approach to cooling off periods and explain what this means for employers moving forward when they encounter a heat of the moment resignation.

Previous authority has said that ‘cooling-off periods’ should be provided in situations where an employee uses words of resignation which form part of an emotional reaction or amount to an outburst of frustration, that these words are not meant to be taken literally and either it is obvious that this is so, or it would have become obvious upon inquiry made soberly once “the heat of the moment” had passed.

It was also stated that employers must act fair and reasonable in these circumstances. For example, if an employer knows the employee quite well and can take the situation as them acting in a way they have not seen them act before, then it would be reasonable to allow for a cooling down period and discuss with the employee what has occurred.

However, if we take a look at Mikes Transport Warehouse Ltd v Vermuelen, this demonstrates a different approach to these ‘heat of the moment’ resignations.

Mikes Transport Warehouse Ltd v Vermuelen

This matter started with the ERA finding that the employee was unjustifiably disadvantaged and unjustifiably dismissed. However, after the employer challenged the Authority’s determination, the Employment Court considered the claim of unjustifiable dismissal.

It was accepted by the Court that the employee had in fact resigned from their role and the claim for unjustified dismissal was dismissed.

The employee had attended a meeting where their progress, feedback received about his work, and the company’s expectations of him were discussed. According to the employer, the employee responded by saying he could not do the job and that he was resigning.

It was concluded that it was more likely than not that the employee told the employer he was struggling and therefore resigning.

The fact that the employee announced his resignation was found to not be determinative of the claim of unjustified dismissal.

This decision shifts away from considering whether an employer has provided a significant cooling-off period, and instead focuses simply on whether the employee resigned on an objective basis.

It was determined that while an employer’s decision to dismiss must be justified and what a fair and reasonable employer could do in all the circumstances, an employee does not need to justify their decision to resign; nor does the decision need to be demonstrably sensible or well thought through. The Court noted that resignations are a unilateral decision and do not involve the employer’s acceptance or disagreement. The question then is not what a fair and reasonable employer would do in response to a resignation given in the heat of a moment, in that there is no response.  

 

We can see this decision applied in another recent case, Urban Décor Ltd v Yu, where two employee’s employment ended after a heated argument, during which they stated that they quit and then left the premises. This was taken by the employer as a resignation. The question in consideration was whether the employees resigned or were dismissed. The facts supported a finding that the employees objectively resigned, and that the Authority made an error of fact/law around cooling-off periods – again, being that an employer is not required to provide a cooling off period or to revisit the resignation, but rather objectively evaluating whether the resignation occurred.

Summary

From this most recent case, we can see a shift away from previous precedent that states there is an obligation to provide a cooling off period, stating that this should be provided in situations where an employee uses words of resignation which form part of an emotional reaction or an outburst of frustration.

As we see from the Mikes Transport Warehouse case, the focus has moved towards resignation being considered a unilateral decision of resignation by an employee and that an employer cannot accept nor deny this decision. Also, that an employer does not have an obligation to act fair and reasonable in these circumstances. This decision has been considered and applied in the Urban Décor case.

To translate these recent findings for employers – if an employee resigns in a manner that may be interpreted as “in the heat of the moment” (i.e. after conflict or as an uncharacteristic outburst) there should be consideration as to whether the statement was truly a “resignation” before deciding if a cooling-off period is appropriate.

If the employer considers that there is a risk that:

  • the employer’s actions or inactions caused the employee to resign, and
  • the resignation was foreseeable

then best practice could be to allow for a cooling-off period and check in with the employee to understand the reasons for the “resignation” as well as potentially providing an opportunity for the employee to revoke their resignation.

This is suggested as the section 4 requirements of good faith still operate in the background in these situations, and employees who resign do have remedies such as a personal grievance claiming constructive dismissal available to them if they believe that their actions were not really a voluntary resignation.

Disclaimer

This article, and any information contained on our website is necessarily brief and general in nature, and should not be substituted for professional advice. You should always seek professional advice before taking any action in relation to the matters addressed.

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