NEW CODE OF GOOD PRACTICE DISMISSAL

The South African labour landscape has undergone a significant transformation with the gazetting and implementation of the new Code of Good Practice on Dismissals on 4 September 2025. This comprehensive Code represents a fundamental shift in how employers must approach dismissals, bringing together previously separate frameworks into a unified, practical guide that balances employer needs with employee protection.

What Has Changed?

The new Code consolidates and replaces two critical pieces of labour legislation:

• Schedule 8 of the Labour Relations Act (Code of Good Practice: Dismissal)

• The Code of Good Practice on Dismissals for Operational Requirements

This consolidation creates a single, comprehensive framework that employers can reference for all dismissal-related matters, eliminating the confusion that previously arose from navigating multiple documents.

The Philosophy Behind the New Code

The new Code represents more than just legislative housekeeping. It embodies a philosophical shift towards a more rehabilitative, dialogue-focused approach to workplace discipline whilst maintaining the fundamental requirement for fair dismissals. The Minister of Employment and Labour in consultation with business and labour recognised that modern workplaces require flexibility, particularly for small businesses, while ensuring that employee rights remain protected.

Core Principles: The Foundation of Fair Dismissals

The Three Pillars of Fair Dismissal

The Code reinforces that dismissals can only be substantively fair when based on one of three grounds:

1. Misconduct encompasses various forms of employee wrongdoing, from minor infractions to serious breaches of trust. The Code emphasises that not all misconduct warrants dismissal, requiring employers to consider the severity and context of the behaviour.

2. Incapacity covers situations where employees cannot perform their duties adequately, whether due to incompetence, incompatibility, or ill-health. This ground requires careful assessment and often involves providing support or reasonable accommodations before considering dismissal.

3. Operational requirements address business necessities such as restructuring, economic pressures, or technological changes that may necessitate job losses. These situations require extensive consultation and consideration of alternatives.

Progressive Discipline: A Corrective Journey

One of the most significant aspects of the new Code is its emphasis on progressive, corrective discipline. The Code requires employers to implement increasingly serious disciplinary measures, viewing dismissal as the final option when the employment relationship has become untenable. This approach recognises that most workplace issues can be resolved through proper guidance, training, and support, benefiting both employer and employee.

Procedural Fairness: The Heart of the Matter

A Move Towards Informality

The Code signals a significant departure from the adversarial, court-like disciplinary hearings that have characterised many workplaces. Instead, it advocates for informal, dialogue-based processes that promote understanding and reflection.

This shift reflects judicial preference for disciplinary proceedings that facilitate meaningful engagement rather than confrontational exchanges. Employers are encouraged to create environments where employees can understand their mistakes, reflect on their behaviour, and potentially rehabilitate themselves within the workplace.

Flexibility for Small Businesses

Recognising that small businesses often lack the resources and infrastructure of larger corporations, the Code provides flexibility in procedural requirements. Smaller employers can depart from standard procedures where reasonable, allowing them to address disciplinary issues proportionately to their size and capacity.

This pragmatic approach ensures that small businesses are not burdened with overly complex procedures while still maintaining fairness for employees.

Consistency and Context: Balancing Fairness

The General Rule of Consistency

The Code maintains the principle that employees who commit similar misconduct under similar circumstances should generally receive comparable sanctions. This ensures fairness and prevents arbitrary decision-making that could lead to discrimination claims.

The Exception: Irreparable Damage

However, the Code recognises that some situations require departure from strict consistency. Where misconduct irreparably damages the employment relationship, dismissal may be justified even if previous similar cases resulted in lesser sanctions. This provision acknowledges that context matters and that the unique circumstances of each case must be considered.

Specific Areas of Guidance

Probationary Periods: Getting It Right

The Code provides crucial guidance on probationary employment, addressing common areas of confusion and potential abuse. It establishes that probationary periods should be of reasonable duration and that the requirements for non-confirmation should be less onerous than those for dismissing permanent employees.

Importantly, the Code explicitly prohibits the misuse of probationary periods as mechanisms to deny employees permanent status indefinitely. Such practices may constitute unfair dismissal, providing important protection for vulnerable workers.

Incapacity: A Comprehensive Approach

The Code's treatment of incapacity dismissals is comprehensive, covering three distinct categories:

1. Incompatibility addresses situations where personality clashes or working style differences make continued employment problematic. These cases require careful assessment to distinguish between legitimate incompatibility and potential discrimination.

2. Ill-health incapacity provides guidance on handling employees whose medical conditions affect their ability to work. The Code emphasises the need for medical evidence, reasonable accommodation, and consideration of alternative positions.

3. Poor work performance requires employers to provide adequate training, support, and reasonable time for improvement before considering dismissal. The focus is on identifying and addressing the root causes of poor performance.

Unprotected Industrial Action

The Code provides practical guidance on handling employees who participate in unprotected strikes. It outlines proper ultimatum procedures and emphasises the need to provide sufficient time for compliance, ensuring that employers can protect their operations while treating employees fairly.

Retrenchment: A Structured Approach

Comprehensive Consultation Requirements

The integration of retrenchment guidance into the main Code creates a streamlined approach to operational requirement dismissals. Employers must provide written notice and engage in good faith consultation about alternatives to dismissal.

The consultation process is not merely procedural box-ticking; it requires genuine consideration of options such as reducing working hours, temporary layoffs, or voluntary severance packages.

Fair Selection and Beyond

The Code mandates fair and objective selection criteria for retrenchments, preventing arbitrary decisions that could mask discrimination. Additionally, it requires employers to provide statutory severance payments and offer preferential re-employment opportunities when positions become available.

Practical Implementation for Members

Immediate Steps

Members should begin by conducting a comprehensive review of their existing disciplinary policies and procedures. Many businesses will need to update their approaches to align with the Code's emphasis on progressive discipline and informal processes.

The EOHCB will provide guidance through our monthly Members Exclusive CPD sessions on the new requirements, particularly regarding the shift towards dialogue-based disciplinary processes and the specific provisions for small businesses.

Ongoing Compliance

The Code requires employers to document disciplinary actions appropriately while maintaining the informal nature of proceedings. This balance requires careful consideration of what constitutes adequate documentation without creating overly legalistic processes.

Regular review of disciplinary practices ensures consistency while allowing for the contextual considerations that the Code recognises as important.

Looking Forward

The new Code of Good Practice on Dismissals represents a maturation of South African labour law, recognising that effective workplace discipline requires more than just following procedures. It demands genuine engagement between employers and employees, with the ultimate goal of maintaining productive employment relationships wherever possible.

As South African workplaces adapt to these changes, the new Code has the potential to reduce labour disputes, improve workplace relationships, and create a more balanced approach to employment issues. The key lies in understanding not just what the Code requires, but why it requires it, and implementing its provisions in the spirit of fairness and mutual respect that underpins our labour relations framework.

Members are advised to seek professional legal guidance from the EOHCB for specific circumstances and to ensure full compliance with all applicable labour legislation. This notice provides general information and should not be considered as legal advice for particular situations. Each matter pertaining to dismissal should be dealt with on its own merits, with procedural and substantive fairness. A copy of the Code is provided below.

Code of Good Practice Dismissal Sept 2025.pdf

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