What happens when an employer and an employee discuss the termination of employment of the employee but are unable to reach an agreement? Can that conversation be deemed to show the intention of the employee to resign or can it maybe be deemed a severance conversation?
The Israeli Severance Pay Act distinguishes between severance of employment due to dismissal and severance of employment due to resignation, and in general, with only a few exceptions, an employee is entitlement to severance pay only if dismissed. But what happens when it is not clear who actually led to the termination of employment?
Court rulings set that a clear and unequivocal intention to bring an end to labor relations is required for both dismissal and resignation. As to a statements given in a moment of anger, a statement in circumstances where the dismissal or resignation were not made without aforethought (e.g. in the midst of an argument), it was held that the statement is not binding, if the employee or the employer put the other on notice of the real intention and retract the statement within a reasonable time.
Recently, the National Labor Court discussed a case in which an employee filed a severance pay claim while the employer argued that the employee resigned and is therefore not entitled to severance pay. In that specific case transcript of a conversation that took place between the employee and the employer showed that the parties wanted to reach an agreed as to early retirement while the employee insisted that he will not give notice of resignation and the employer promised to give him an answer whether he is will agree to the arrangement. A few days later the employee received a letter in which the employer accept his resignation. The employee, who did not understand how the conversation between the two was construed as resignation, talked with the employer and clarified that he had no intention to resign while the employer insisted that this was indeed a resignation. The Court held that a discussion on early retirement is a clear and unequivocal act that indicates the employee's termination of labor relationship.
In any case, even if there was any doubt about the intention of the employee, the employee clarified his position by talking with the employer and the employer was not entitled to hold the employee on his words even if originally construed them as resignation.
Thus, it is recommended that both employers and employees will act to terminate labor relations clearly and unequivocally. Neither of the parties can hold the other on statements made in the framework of conflicts and in any case it is important to consult with an attorney specializing in the field before making a decision about termination of employment. It is important to follow the law and case law - particularly when the circumstances are complex.