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Decoding the new era of fair dismissals
The world of work is in constant motion, and the regulatory frameworks that govern it must evolve to keep pace. For over two decades, Schedule 8: Code of Good Practice on Dismissals (“the old Code”) of the Labour Relations Act 66 of 1996 (“the LRA”) has served as the cornerstone for fair dismissals in South Africa. Now, the rulebook has been replaced.
On 4 September 2025, the Minister of Employment and Labour ushered in a significant update to employment law by publishing the New Code of Good Practice: Dismissals (“the new Code”). The new Code, therefore, represents the most significant overhaul in South Africa’s labour law landscape since the LRA’s inception, as it repeals the old Code and the Code of Good Practice on Dismissals Based on Operational Requirements.
This change is not merely legislative housekeeping; it is a strategic shift towards a more unified, flexible, and case law-informed framework. For both employers and employees, understanding how this new Code differs from the old Code is critical to managing modern workplace relations.
KEY SHIFTS FROM THE OLD CODE TO THE NEW CODE
While the core principles of fairness established in the old Code remain, the new Code introduces several important refinements. At its core, it aims to simplify the process, provide greater certainty, and address contemporary workplace challenges.
A Unified Code:
The most fundamental change is one of structure and scope. The old Code focused primarily on dismissals for misconduct and incapacity. Dismissals based on operational requirements (also known as “retrenchments”) were previously governed by a separate Code of Good Practice.
The new Code does away with this fragmentation. The new Code integrates all four major grounds for dismissal, namely, misconduct, poor performance, ill-health, and operational requirements, into a single, streamlined framework. This consolidation provides employers with one reference point for all termination procedures, simplifying interpretation and reducing the historical confusion caused by cross-referencing multiple documents.
The Code aims to create cross-cutting principles of fairness that apply equally, regardless of the reason for separation.
Support for Small to Medium Enterprises (SMEs):
One of the biggest practical frustrations with the old Code was its implied rigidity, which often failed to account for the limited resources of small to medium-sized enterprises (SMEs). The new Code directly addresses this reality.
The new Code acknowledges that disciplinary procedures should vary based on the size and nature of a business. It recognises that resource constraints may limit the ability of small businesses to conduct extensive investigations and pre-dismissal processes, particularly due to potential limitations in HR expertise.
Consequently, when assessing the fairness of a dismissal, arbitrators are now required to take the specific circumstances and capacity of the small business into account. This crucial change moves away from a one-size-fits-all approach, injecting much-needed flexibility into the procedural fairness assessment.
While the new Code promotes simpler procedures and greater flexibility, employers must not mistake this for an abolition of fair process.
The core requirement remains that there must still be some form of internal meeting or dialogue between the employer and the employee. The employee must have a fair opportunity to state their case and respond to the allegations. This is the enduring legal principle of audi alteram partem—to hear the other side. A simplified procedure is acceptable; a non-existent one is not.
An Updated Standard for Misconduct:
The assessment of whether dismissal is the appropriate sanction for misconduct has been refined, demanding a more delicate consideration from employers. It recognises that while disciplinary rules and procedures are essential, not every company policy violation necessitates a formal and potentially adversarial disciplinary hearing. The new Code encourages employers to prioritise informal resolutions whenever possible, such as through discussions, dialogues, and meaningful reflection with the employee. This approach aims to foster a more constructive and less punitive disciplinary environment.
While emphasising informal resolutions, the new Code maintains crucial safeguards. Dismissal may be appropriate if a continued employment relationship would be intolerable. This assessment also considers additional factors such as the nature and seriousness of the misconduct. Furthermore, employees must still receive adequate notice of the alleged transgression and have a fair opportunity to present their perspective, though this may not always require a formal in-person hearing. Written submissions may be considered in appropriate cases.
A Broader Scope on Probation:
Probation is the period during which a newly hired employee’s performance and overall suitability for continued employment are evaluated by the employer. An employer may require an employee to serve this period before confirming their permanent appointment.
The new Code does not set a fixed duration for probation. Instead, it offers a flexible, principle-based approach in that (i) the period must be agreed upon and specified before the employee starts work, and (ii) the length must be reasonable, taking into account the nature of the job and the time genuinely required to assess the employee's suitability.
The purpose of probation has been significantly broadened under the new Code, modernising principles that were previously established only through years of case law.
Whereas the old Code focused primarily on assessing work performance, the new Code has expanded its focus to include an evaluation of overall suitability for employment. This expansion means that employers can now legitimately assess a new hire’s technical skills and work performance, conduct and attitude, and general fit within the organisation’s culture.
During the probationary period, employers must actively provide employees with reasonable guidance to help them achieve satisfactory service. This may include instruction, training, or counselling to address shortcomings to help the employee meet required standards.
The nature and extent of this guidance should be appropriate to the job and proportionate to the size of the employer’s operation. Where an employer decides not to terminate the employment relationship at the conclusion of the probationary period or decides to extend the probationary period, in terms of the new Code, a crucial step must be followed. The employee must first be given an opportunity to make representations (i.e. state their case) and the employer must genuinely consider these representations before deciding whether to dismiss the employee or extend the probationary period. This ensures the foundational principle of audi alteram partem is upheld even during a probation period.
A Broader Scope on Incapacity and Incompatibility:
The grounds for incapacity have been widened. Whereas the old Code traditionally focused on poor performance, ill-health, or injury, the new Code now formally recognises that incapacity may arise from other factors preventing an employee from performing their duties. These explicitly include incompatibility i.e., an employee's persistent inability to work harmoniously with colleagues or within the business culture. However, it is important to note that dismissal based on incompatibility will only be justified if the breakdown in the working relationship is irretrievable and a fair process has been followed.
CONCLUSION
The new Code represents a bold and necessary step forward in South African labour law. It successfully achieves a crucial balance by maintaining essential employee protections while realistically accommodating the operational constraints and business realities faced by employers, particularly SMEs. Furthermore, it codifies twenty three years of legal evolution, precedent, and practical challenges, finally providing clarity on principles previously only found in case law.
All employers are strongly advised to take immediate action by reviewing and updating their internal HR and disciplinary policies, codes of conduct, and standard operating procedures, to align them with the new Code and guarantee legal compliance.
Marc Humphries
Director: Legal
Bronwyn Kodisang
Legal Advisor
