Breaking Down South Africa's New Code of Good Practice on Dismissal: What Employers and Employees Need to Know

In a significant update to South Africa's labour landscape, the Department of Employment and Labour has released a revised Code of Good Practice: Dismissal under the Labour Relations Act, 1995. Gazetted on 4 September 2025, this new code repeals the previous Schedule 8 version from 1999, aiming to provide clearer, more practical guidance on fair dismissals amid evolving workplace dynamics. Signed by Minister Nomakhosazana Meth on 22 August 2025, it emphasizes fairness, efficiency, and justice in handling misconduct, incapacity, and operational requirements.

This code serves as a benchmark for courts, arbitrators, and the CCMA (Commission for Conciliation, Mediation and Arbitration) when assessing dismissal fairness. Whether you're an employer striving for compliance or an employee safeguarding your rights, understanding this update is crucial in today's fast-paced business environment. Let's break it down section by section.

Part A: Introduction – Setting the Foundation

The code kicks off by outlining its purpose: to guide employers, employees, trade unions, and personnel on applying the Labour Relations Act fairly when dealing with misconduct, incapacity, or operational needs. It stresses that interpretations should be intentional and general, justified in proper circumstances, but warrant different approaches for unique cases – especially in small businesses.

A key principle is mutual respect between employers and employees, promoting efficient operations while protecting against unfair actions. The code explicitly states it doesn't alter rights under collective agreements and uses terms like "retrenchment" instead of "dismissal for operational requirements" for clarity. For small businesses, it advises flexible compliance, recognizing that formal processes might not always be feasible. For instance, it notes that small firms may lack resources for time-consuming investigations, urging a balance between fairness and practicality.

This introduction signals a shift toward pragmatism, particularly for SMEs, which make up a large portion of South Africa's economy. It encourages treating employees with dignity, even in tough situations, to foster better workplace relations.

Part B: Dismissal – Defining the Basics

Here, the code clarifies what constitutes a dismissal, noting it's most common when an employer terminates employment (with or without notice). It references Section 186(1) of the Act, excluding certain scenarios like non-renewal of fixed-term contracts unless expectations were created.

Part C: Fair Dismissal – The Core of Fairness

Fairness is the heartbeat of this code. A dismissal is fair only if it's for a valid reason and follows a fair procedure. The three main grounds are:

• Misconduct: Employee behaviour that breaches rules.

• Incapacity: Poor performance, ill health, or injury.

• Operational Requirements: Business needs like restructuring or economic pressures.

The code protects against automatic unfair dismissals, such as those based on pregnancy, whistleblowing, or union activities. It underscores that dismissals infringing on employee rights (e.g., under Section 187) are intolerable.

Employers must now prove both substantive (valid reason) and procedural fairness. This reinforces the Act's goal of preventing arbitrary terminations, with a nod to consistency in application.

Part D: Misconduct – Progressive Discipline Emphasized

This section dives into disciplinary measures for rule-breaking, promoting correction over punishment. Key points include:

• Disciplinary Rules and Procedures: Should be clear, accessible, and scaled to business size. Formal procedures aren't always needed for minor issues – informal advice often suffices.

• Fair Reason for Dismissal: Only for serious or repeated misconduct. Factors like rule validity, employee awareness, consistency, and harm caused are evaluated.

• Sanctions: Graduated measures (counselling, warnings, suspension) before dismissal. Dismissal is a last resort for intolerable acts.

• Fair Procedure: Involves investigation (not always formal), notification of allegations, opportunity to respond, and assistance from a representative. No bias in decision-makers.

The code pushes for restorative approaches, like counselling for first offenses, and warns against inconsistent application. It also addresses strikes, deeming dismissals fair only if misconduct during unprotected strikes is severe, with procedures including ultimatums and consultations.

Part E: Probation – Evaluating New Hires

Probation periods allow employers to assess suitability before confirming permanent roles. The length should be reasonable, based on job complexity. Poor performance during probation warrants dismissal only after guidance, training, and a chance to improve – not as a shortcut to termination.

This protects new employees from unfair snap judgments while giving employers flexibility. Extensions must be justified, and dismissals require procedural steps like hearings.

Part F: Incapacity – Handling Poor Performance and Ill Health

Split into poor work performance and ill health/injury:

• Poor Performance: Dismissal only after probation if issues persist despite support. Investigate causes, provide training/counselling, and allow time for improvement.

• Ill Health/Injury: Explore alternatives like temporary replacements before dismissal. Factors include injury nature, recovery prospects, and accommodation feasibility. Permanent incapacity may justify termination if no viable options exist.

The code humanizes incapacity, urging empathy for health-related issues (e.g., alcoholism as a treatable condition). It aligns with disability laws, emphasizing rehabilitation over dismissal.

Part G: Operational Requirements – Retrenchments Made Fairer

Dismissals for business needs (e.g., restructuring) must be a last resort. The code categorizes them as "no fault" and requires:

• Fair Reason: Based on economic, technological, or structural needs – not employee fault.

• Fair Procedure: Consultation with affected parties, exploring alternatives like retraining, and providing notice/severance. Small employers can use simpler processes.

This section highlights transparency in consultations, urging employers to disclose information and consider employee proposals. It aims to minimize job losses amid economic challenges, with a focus on consensus.

What's New and Why It Matters Compared to the 1999 version, this 2025 code is more streamlined and practical, with clearer language for small businesses and emphasis on progressive discipline. It integrates modern realities like remote work implications (though not explicitly) and reinforces CCMA-friendly processes to reduce disputes. In a post-COVID economy, its focus on alternatives to dismissal – like training for incapacity or consultations for retrenchments – promotes job retention and fairness.

However, challenges remain: Employers must document everything meticulously to avoid unfair dismissal claims, which could burden SMEs. Employees gain stronger protections, but awareness is key to enforcing rights.

This update reflects South Africa's commitment to balanced labour relations, drawing from NEDLAC (National Economic Development and Labour Council) consultations. It's a tool for building trust, reducing litigation, and fostering productive workplaces.

Final Thoughts: Is Your Business Prepared?

Navigating dismissals compliantly can save time, money, and reputation. But here's a question for you: Does your business have a robust code of conduct in place to align with this new guidance? If not, or if you're unsure about implementing fair procedures, reach out, we at VST Attorneys can assist with tailored HR solutions, from drafting policies to training your team. Let's ensure your operations are fair, efficient, and future proof.