A Managing Director has won a claim of unfair dismissal after fellow directors held him to what they considered to be his resignation, despite him clarifying shortly after the event that he was not resigning.
The case of Rae v Wellhead Electrical Supplies is a reminder to employers to be careful regarding resignations, particularly where they are given in the heat of the moment.
The Facts of the Case
The employee was the Managing Director of the company he originally founded. He had been having informal discussions with fellow directors regarding pay increases – those for his son and a member of his sales team had become particularly contentious. It had reached the point where he had threatened to resign if these two members of staff were not given larger pay increases than other employees. During a subsequent board meeting the Managing Director understood that the larger pay increases had been agreed and informed the two members of staff of this. However, this was not later reflected in the pay they actually received, which caused the Managing Director some embarrassment.
He pursued the matter with the Company Finance Director which resulted in him shouting “I told you what was going to happen”, throwing his keys down and storming out saying he won’t be back. A few hours later an emergency board meeting was called and it was decided to accept the Managing Director’s resignation.
The next day the Managing Director contacted the Company, explained he was suffering from stress and was not resigning. He was subsequently signed off work with stress. The Company responded by saying that he had resigned, it had been accepted and they were moving forward with it.
The Managing Director complained to an employment tribunal that he had been unfairly dismissed.
The employment tribunal upheld his claim. Whilst it did appear he had resigned, it was found that the circumstances in which it had happened meant that the employer should have given more thought to the matter before accepting his resignation. It was tended verbally which was not normal practice for someone of that seniority, it was done in anger and he was not allowed a ‘cooling off’ period which had been granted to others in the past. The judge found that the employer was in essence determined to treat the Managing Director as having resigned and were not going to accept any explanation for his behaviour.
If an employee resigns in the heat of the moment or a resignation is ambiguous it’s important to ascertain the employee’s true intentions. Whilst it may be tempting to simply accept the resignation, particularly if the employee has been troublesome, it will not necessarily be safe to do so. In most cases it will be advisable to ask the employee to confirm in writing what their intentions are and to allow them a reasonable period to cool off. It’s important to seek advice on the facts of your case if such a situation arises in your organisation.
If you have an employment law matter you would like assistance with, please do not hesitate to contact Kingfisher Professional Services Ltd as we are happy to help.