The Department of Employment and Labour has issued a new Code of Good Practice: Dismissal, which came into effect on 4 September 2025. This Code replaces the previous Schedule 8 Code of Good Practice on Dismissal and the Code based on Operational Requirements from 1999.
The purpose of the Code is to provide clear, practical guidance on fair dismissal procedures relating to misconduct, incapacity, and operational requirements (retrenchments). It emphasises fairness, respect, and the importance of following due process while acknowledging the unique circumstances of different workplaces, especially small businesses.
Smaller employers may adopt a less formal approach to discipline as they cannot reasonably be expected to engage in time consuming investigations and the like. It is trite that a dismissal is fair if it is for a fair reason and in accordance with a fair procedure. The Act lists 3 grounds in which dismissal may be fair:
a. The conduct of the employee;
b. The capacity of the employee; and
c. The employer’s operational requirements.
Summary of Key Aspects and Fairness Requirements
1. Misconduct
a) Substantive Fairness: The reason for dismissal must be due to misconduct serious enough to make the working relationship intolerable.
b) Procedural Fairness: The procedure must be fair and the code now explicitly provides that not every issue requires a formal hearing. Informal advice and correction is often sufficient for minor issues. The procedure can therefore be adapted to the size and nature of the employer, provided that any departure from the relevant rules and procedures can be justified should the employee refer an unfair dismissal dispute questioning the fairness of the procedure followed.
c) On what constitutes a fair procedure, the Code places an emphasis on the need for employers to ensure a genuine dialogue – one where the employee is provided with an adequate and reasonable opportunity to reflect on, and respond to, the allegations of misconduct before any decision is taken.
It is trite that the sanction of dismissal should be consistently applied. However, inconsistency does not necessarily mean that the dismissal is unfair where the misconduct renders the continuation of the employment relationship intolerable. Each case must be judged on its own merits.
2. Probation
This is a significant ease for employers. The code confirms that the standard for dismissing a probationary employee for poor performance is lower than for permanent staff. Employers are given more leeway to assess whether a new employee meets the required standard.
3. Incapacity (Poor Performance)
a) Substantive Fairness: The employee must genuinely be failing to meet a known and achievable performance standard.
b) Procedural Fairness: The employer must have given the employee appropriate guidance, training, and a reasonable opportunity to improve. However, the code now notes that for senior or highly skilled staff, a formal warning may not be necessary before dismissal, as they should be aware of the required standards. The employer would, however, be required to afford the employee an opportunity to respond to the allegations of unsatisfactory performance before a decision is taken.
4. Incapacity (Ill Health/Injury)
- The obligation is to investigate alternatives to dismissal. The procedure is now less rigid, focusing on a practical assessment of the situation rather than a strict procedure.
- Incapacity on the grounds of physical or mental ill health/injury may be temporary or permanent. In the case of the former, the employer should investigate the extent of the incapacity/injury and if the employee is likely to be absent for a time that is unreasonably long in the circumstances.
- In case of permanent incapacity, the employer should ascertain the possibility of securing alternative employment or adapting the duties or work circumstances so as to accommodate the employee’s disability.
- The Code also recognises forms of incapacity unrelated to ill health/injury and may arise due to other factors preventing the employee from performing their job, including imprisonment.
An employee’s incapability (i.e. the inability to work in harmony with the employer’s business culture or fellow employees) can also constitute a form of incapacity, which may justify dismissal.
5. Retrenchment (Operational Requirements)
a) The Code clarifies that operational requirements are based on the “economic, technological, structural or similar needs of the employer.” This includes reasons related to the employer’s financial state (economic), the introduction of new technology that affects work relationships (technological), or the redundancy of posts due to a restructuring of the business (structural).
b) Substantive Fairness: To be fair, the reason for the operational requirement and the reason to select an employee for the operational requirement must relate to the employer’s operational requirements.
c) Procedural Fairness: Consultation is still required, but the code introduces welcome flexibility. For small-scale retrenchments by a small employer, the process “can be done relatively quickly.” The number of meetings and duration of consultation is flexible and based on the complexity of the situation.
The procedure is initiated by the employer issuing a written notice of possible retrenchments, which must contain all relevant information available. The standard requirements for this notice are detailed in Annexure A of the Code, which includes, among other things, the reasons for the proposed retrenchments, the alternatives considered, and the proposed selection criteria.
The Code encourages employers and employees to engage in good faith and aims to support both workplace fairness and business efficiency.
By Mr Lehlogonolo Mokgathi, Candiate legal practitioner
Under the supervision of Ms M Maganbhai-Mooloo, Head of Litigation, Pretoria