Employment Law Case Update: Resignations and Cooling Off Periods

When an employee hands in their notice, do you allow them to have a cooling off period?  This topic was up for discussion in the recent case of Robert S Rae v Wellhead Electrical Supplies Limited.

In early 2019, Robert Rae, founder and former Managing Director of Wellhead Electrical Supplies, proposed a 5% general pay increase for company employees and a higher pay increase for his son and a member of his team.

When these proposals were discussed in a board meeting on 7 March 2019, Mr Rae believed they’d been accepted and informed his son and the member of his team of their salary increase. Awkwardly, other directors, Mr Ogg and Mr Rastall, submitted that only the 5% general increase was agreed.

At a meeting on 21 March, Mr Rae threw his keys on Mr Ogg’s desk and shouted, ‘I told you what was going to happen’. On his way out he said “I won’t be back.” To Mr Rastall he commented: “I believe I’ve just resigned.” Two hours later, at an emergency board meeting, the directors unanimously agreed to accept this.

On the next morning, Mr Rae called to undo his resignation, saying that his actions were the result of stress. His doctor then signed him off work until 5 April 2019 due to “stress at work”. He then sent another message to Mr Rastall saying that he would not be resigning but would be off work due to stress. Mr Ogg was on holiday and unreachable.

On 22 March, Mr Rastall wrote to Mr Rae, stating “the company has accepted your resignation and does not accept that you have simply chosen to take time off.” Mr Rae responded that his actions were in the “heat of the moment” without any real intention of resigning. In a letter sent on 25 March, Mr Rastall told Mr Rae he no longer worked for the company and should not communicate with any staff regarding the business. A P45 followed.

The Employment Tribunal (ET) did not find that Mr Rae had used the exact words “I resign” at the meeting on 21 March, but that his words and actions, without considering the surrounding context, did amount to unambiguous resignation.

However, the ET found several “special circumstances” that could justify the finding that there was no resignation, for example Mr Rae had been very angry and acted in the “heat of the moment”; he was suffering from stress; and someone in a senior position would be expected to resign in writing.

The ET believed it would have been clear how upset Mr Rae was at the meeting. It found the other directors held “considerable ill feeling towards [Mr Rae].” Their quick acceptance of his resignation was motivated by their “desire to rid themselves” of him. In 2011, the ET noted, a previous director was given a cooling off period after submitting a resignation.

In light of these special circumstances, the ET concluded it was unreasonable for the directors to assume Mr Rae really intended to resign and accept his resignation so quickly. Mr Rastall’s further communications, telling Mr Rae he no longer worked for the company, amounted to a dismissal. Since no fair reason was given for the dismissal, the ET found Mr Rae was dismissed unfairly.

This case shows that employers should be cautious about accepting resignations too quickly, especially when an employee is clearly acting in the heat of the moment. A hastily accepted resignation may in fact be a dismissal and, if no procedure is followed, could result in unfair dismissal. 

If you have any questions regarding this article, or you would like guidance on how to manage resignations and dismissals, you can call our Employment team today on 023 8071 7717 or email employment@warnergoodman.co.uk.

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ENDS

This is for information purposes only and is no substitute for, and should not be interpreted as, legal advice.  All content was correct at the time of publishing and we cannot be held responsible for any changes that may invalidate this article.