On 4 September 2025, the Minister of Employment and Labour published the new Code of Good Practice: Dismissal (“the Code”) under the Labour Relations Act 66 of 1995 (“LRA”). The Code consolidates the principles applicable to dismissals for misconduct, incapacity and operational requirements into a single framework and replaces the previous Code of Good Practice on Dismissal as well as the separate 1999 Code of Good Practice on Dismissal Based on Operational Requirements.
While the fundamental requirement that a dismissal must be substantively and procedurally fair remains unchanged, the new Code introduces a more flexible and context-sensitive approach to workplace discipline and dismissal. This is particularly evident in its treatment of small businesses, disciplinary procedures, probation, incapacity and retrenchment.
Fairness remains the starting point
The Code confirms that a dismissal is fair if it is for a fair reason and effected in accordance with a fair procedure. The three recognised grounds remain the conduct or capacity of the employee and the operational requirements of the employer.
Importantly, the Code provides guidelines rather than a rigid procedural checklist. Each case must be considered on its own circumstances and departures from the Code’s norms may be justified in appropriate cases. Fairness remains compulsory, but what is required to achieve fairness will depend on the particular workplace and circumstances.
Greater flexibility for small businesses
A notable feature of the Code is its recognition that disciplinary procedures should take account of the size and nature of the employer’s business. Small businesses are not expected to comply with obligations that are impractical or unfeasible for their operations and may adopt a less formal approach to discipline.
Employees must nevertheless understand the standards of conduct expected of them, and discipline should primarily be corrective. Minor infringements may be dealt with through informal advice or correction, while repeated or serious misconduct may warrant formal disciplinary action.
Medium and larger employers are encouraged to maintain written disciplinary rules and procedures. Ultimately, while the degree of formality may differ, the requirement of fairness applies to all employers.
Fair procedure: substance over formality
The purpose of a fair procedure is to ensure genuine dialogue and provide an employee with an opportunity for reflection before a decision is taken.
An employee facing dismissal for misconduct should ordinarily be notified of the allegations, preferably in writing, and afforded a reasonable opportunity to prepare and make representations regarding the misconduct and appropriate sanction. Employees should also ordinarily be entitled to assistance from a fellow employee or trade union representative.
The focus is therefore on whether the employee had a meaningful opportunity to understand and respond to the allegations, rather than whether the employer replicated the formalities of a court proceeding.
When is dismissal an appropriate sanction?
Dismissal remains the most severe disciplinary sanction and will generally only be appropriate where the continued employment relationship has become intolerable.
Relevant considerations include the seriousness of the misconduct and its effect on the business, the nature of the employee’s position, whether progressive discipline could prevent recurrence, and the employee’s individual circumstances, including length of service and disciplinary record.
Consistency also remains important. Similar misconduct should generally attract consistent treatment, although different sanctions may be justified where there is an appropriate explanation for the difference.
Poor performance and probation
Probation allows an employer to assess an employee’s performance and suitability for continued employment. Less compelling reasons for dismissal may be acceptable during or at the end of probation, although employers must still provide reasonable guidance and afford employees an opportunity to make representations.
After probation, an employee should generally not be dismissed for unsatisfactory performance unless appropriate evaluation, instruction, training, guidance or counselling has been provided and the employee has been given a reasonable opportunity to improve.
A Broader Approach to Incapacity: Dependency, Imprisonment and Incompatibility
The Code deals with incapacity arising from ill health, injury and other circumstances preventing an employee from performing their work.
For temporary incapacity, employers should investigate its extent and likely duration and consider alternatives to dismissal. For permanent incapacity, consideration should be given to alternative employment or reasonably adapting the employee’s duties or working circumstances.
Significantly, the Code also recognises other forms of incapacity. Alcoholism or drug abuse may require consideration of counselling and rehabilitation, while imprisonment may result in temporary or permanent incapacity. An inability to work harmoniously within the employer’s business culture or with fellow employees may similarly constitute incapacity.
Employers should therefore correctly identify the true reason for a contemplated dismissal, as circumstances that initially appear to constitute misconduct may instead require an incapacity process.
What should employers do now?
The new Code does not remove employees’ protection against unfair dismissal. Rather, it adopts a more flexible approach to determining what fairness requires in the particular circumstances.
Employers should review their disciplinary procedures, probation and performance-management practices, incapacity processes and retrenchment documentation to ensure that they align with the new framework.
For small businesses, the recognition that procedures must be practical and feasible is particularly significant. For larger employers, established policies remain important in promoting certainty and consistency. Across businesses of every size, however, flexibility should not be confused with an absence of fairness.
The Code modernises how established principles of fairness are applied in the workplace, allowing employers greater scope to adopt procedures suited to the realities of their businesses while retaining the fundamental requirement of a fair reason and fair process.
Employers should ensure that their workplace policies and procedures are aligned with the new Code before a dispute arises. For assistance in reviewing your existing policies, managing a dismissal process, or understanding how the Code applies to your business, please contact me for further information and advice.
Article by:
Nicole Michaels
Candidate Attorney
This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE).