South Africa’s new Code of Good Practice: Dismissal took effect, replacing the previous codes on dismissal and operational requirements. The new dismissal code, guided by the Labour Relations Act 66 of 1995 (LRA), offers employers practical guidance on handling dismissals related to misconduct, incapacity and retrenchments.
The new dismissal code clarifies legal obligations and introduces nuanced updates. It balances fairness with flexibility, particularly for small businesses, while codifying key judicial precedents. Here’s what employers need to know about the changes and their implications.
Support for small businesses
The new dismissal code recognises the unique challenges faced by small businesses. Many smaller employers lack the resources or expertise for formal HR processes.
For instance, a small retailer in Durban may not have the capacity for extensive investigations or structured pre-dismissal procedures. The code allows the fairness of a dismissal to be considered the employer’s size and circumstances. This approach offers relief to smaller operations while maintaining LRA standards.
Misconduct – flexible but fair
The new dismissal code emphasises fair procedures that promote genuine dialogue before any dismissal decision. Investigations do not need to be formal but should fit the context. Factors such as the severity of allegations, employer size and business nature determine the process.
For example, a Cape Town tech startup investigating a data breach can tailor its inquiry to the issue’s complexity. Medium and large employers are encouraged to adopt written disciplinary procedures. However, deviations are acceptable if justified.
Well-established workplace rules, such as prohibitions on theft, do not always require written documentation or explicit communication. The code also clarifies that inconsistent dismissal sanctions do not automatically make a dismissal unfair. When misconduct, such as a factory worker’s repeated safety violations, makes continued employment untenable, dismissal may be fair.
Industrial action – structured processes
For dismissals linked to industrial action, the new dismissal code outlines clear steps. It allows collective representations in cases of group misconduct, such as an unprotected strike at a Johannesburg mine.
The code introduces factors for assessing LRA violations, including the strike’s impact. These factors guide the fairness of resulting dismissals. This ensures employers follow a structured yet practical approach that upholds procedural justice.
Probation – broader evaluation
Probation rules have been relaxed to reflect workplace realities. Previously, less compelling reasons for dismissal during probation applied only to poor performance. Now, dismissals for conduct or capacity issues can also be justified with less stringent reasoning.
For example, a new hire in Pretoria struggling with team dynamics may be dismissed if unsuitable for the role. The code expands probation’s purpose to include overall suitability, not just performance. This gives employers more flexibility when assessing new staff.
Incapacity – expanded scope
The new dismissal code codifies case law, recognising incapacity beyond poor performance or health issues. It now includes incompatibility, such as when an employee in a Port Elizabeth firm cannot align with the company culture.
The code clarifies that warnings are not always required before dismissal, particularly for senior or highly skilled employees. For instance, a manager in Sandton whose underperformance directly affects revenue may be dismissed without prior warning. This reflects practical realities while maintaining fairness.
Retrenchment – clear guidelines
For retrenchments, the code refines existing principles and details procedural steps. It introduces an annexure outlining the notice of possible retrenchment. This ensures clarity for employers, such as a Bloemfontein manufacturer, when initiating consultations with employees.
The process maintains transparency and compliance with LRA requirements, reinforcing procedural fairness.
Strategic benefits of AI in dismissal processes
While the new dismissal code does not directly address technology, AI platforms such as Traydstream, used by RMB and other banks, offer useful parallels. These systems streamline compliance by processing dismissal-related documents in under an hour. They identify errors with high accuracy, reduce risks and improve efficiency.
RMB has already implemented AI for document checking and plans full integration by Q1 2026. This model, aiming for zero manual intervention, could inspire HR teams to use AI in managing disciplinary records. It ensures compliance with the code’s procedural requirements while saving time.
What this means for employers
The new dismissal code consolidates and clarifies dismissal practices. It provides flexibility for small businesses and codifies judicial precedents without compromising fair labour standards.
Employers must align with the code’s guidance to ensure dismissals are substantively and procedurally fair. Those with existing disciplinary codes should review them for consistency with the new framework. Self-imposed obligations remain binding, even if they are not included in the code.
For example, a small business in Rustenburg can now tailor its dismissal process to its resources. A larger firm in Midrand must ensure its written procedures reflect the code’s emphasis on dialogue and fairness.
As South Africa’s labour landscape evolves, the new dismissal code offers a practical roadmap for compliance. It balances employer needs with employee protections while reinforcing fair, transparent and legally sound practices.
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| Anastasia Vatalidis | Director | mail me | | Anna Tchalov | Associate | mail me | |
| | Werksmans Attorneys | | |
