Heat of the moment resignations

Once an employee has given notice of resignation, the general rule is that he or she cannot withdraw that notice without the employer’s agreement. There is a limited exception where notice is given in the heat of the moment and is then promptly withdrawn. But there is a limit to how much time the courts will give to either an employee or an employer to reconsider an over-hasty giving of notice.

In Walker Smith v Perry’s Motor Sales Ltd, Mr Walker Smith was a manager of a car dealership when a series of financial irregularities came to light. These were mostly the result of the actions of a financial controller, but he was nevertheless accused of failing to exercise enough oversight of the financial affairs of the dealership and keep senior management appropriately informed. On 4th June 2016 he was told that he was invited to a disciplinary hearing to take place four days later. He immediately submitted his resignation – giving three months’ notice – but the employer insisted that the disciplinary hearing go ahead. As a result, he was told on 13th June that he was being dismissed without notice.

In notifying his employer that he intended to appeal against this decision, Mr Walker Smith said that he was withdrawing his resignation on the basis that it had been given in the heat of the moment when he was feeling stressed and upset. The appeal was unsuccessful, and he claimed unfair dismissal.

The Tribunal upheld his claim, finding that dismissal fell outside the band of reasonable responses. The financial controller responsible for the irregularities did not report to Mr Walker Smith who should not have been held responsible for the problems that had arisen – although he was guilty of culpable conduct in failing to communicate some issues to senior management.

The difficult issue was compensation. The Tribunal decided that he was 50 per cent to blame for his dismissal and reduced his compensation accordingly, but they also held that he had been entitled to withdraw his resignation because it had been given in the heat of the moment. As a result, his loss of earnings could be calculated without the assumption that his employment would have ended three months later in any event. The employer appealed.

The EAT held that while a resignation given in the heat of the moment could be withdrawn by the employee – this had to be done promptly, and Mr Walker Smith had waited too long.

In any event, by the time he told his employer that he wanted to withdraw his resignation it was already too late because he had just been dismissed and his employment was over. It was true that the employer had said that it did not accept his resignation, but it was clear from the context that what they meant by this was that they would not allow his resignation to get in the way of the disciplinary process. To complicate matters the EAT also found that the Tribunal had no evidence to support their conclusion of culpable misconduct justifying a 50 per cent reduction in his compensation.

The result was that Mr Walker Smith was entitled to full compensation for his losses – but his losses did not extent beyond the three-month period at the end of which his resignation would have taken effect in any event.