Dismissing an employee is one of the most serious and legally risky decisions any employer can make – and if not handled correctly, it can result in costly CCMA disputes, compensation awards of up to 12 months’ salary, or even reinstatement orders that force you to take back an employee you’ve already dismissed.
Section 188 of the Labour Relations Act requires that every dismissal must be both substantively fair (based on a valid reason) and procedurally fair (following a proper process), and the burden of proof rests entirely on the employer to demonstrate both elements. Whether you’re dismissing for misconduct, incapacity due to poor performance or ill health, or operational requirements such as retrenchment, understanding the legal framework, following the Code of Good Practice on Dismissal, and documenting every step of the process is essential for both employers wanting to stay compliant and employees seeking to protect their rights.
This guide explains what qualifies as a fair dismissal, the procedural steps employers must follow, and what rights employees have when dismissed.
This article provides general information only and should not be considered legal advice.
Key takeaways
- A dismissal is when an employer ends the employee’s contract—legally, it must follow both a fair reason (substantive fairness) and a fair process (procedural fairness) under Section 188 of the LRA.
- The three valid grounds for dismissal are misconduct, incapacity (poor performance or ill health/injury), and operational requirements (retrenchment).
- All dismissals must follow fair procedures set out in the Code of Good Practice on Dismissal, or they can be challenged at the CCMA within 30 days.
- Employers must document the process clearly, investigate thoroughly, give the employee a chance to respond with representation, and avoid automatically unfair reasons like discrimination or pregnancy.
- Unfair or unlawful dismissals can lead to CCMA orders for reinstatement or compensation of up to 12 months’ salary (or 24 months for automatically unfair dismissals).
What is a dismissal
A dismissal occurs when an employer terminates an employee’s contract of employment, with or without notice. Section 186(1) of the Labour Relations Act defines dismissal broadly to include direct termination by the employer, constructive dismissal (where an employee resigns because the employer made continued employment intolerable), refusal to renew a fixed-term contract without good reason, and selectively re-employing employees after a strike whilst refusing to re-employ others.
Section 188(1) of the LRA provides that a dismissal is unfair if the employer fails to prove that the reason for dismissal is a fair reason related to the employee’s conduct or capacity, or based on the employer’s operational requirements, and that the dismissal was effected in accordance with a fair procedure.
This places the burden of proof squarely on the employer. If you dismiss an employee and they challenge it at the CCMA, you must prove both substantive fairness (a valid reason) and procedural fairness (a proper process). If you fail to prove either, the dismissal will be found unfair.
Substantive vs procedural fairness
Substantive fairness asks: was there a valid, legitimate reason for the dismissal? The reason must fall within one of the three recognised grounds: conduct, capacity, or operational requirements. Even if you followed perfect procedures, if the reason for dismissal was not fair—for example, dismissing someone for wearing the wrong colour shirt when there’s no rule about shirt colours—the dismissal is substantively unfair.
Procedural fairness asks: did you follow a fair process before dismissing? Even if the employee committed serious misconduct like theft, if you dismissed them without a hearing, without giving them a chance to respond, or without following your own disciplinary code, the dismissal is procedurally unfair.
The Labour Appeal Court in Unitrans Zululand v Cebekhulu clarified that both elements are required. A dismissal can be procedurally fair but substantively unfair (wrong reason, right process), or substantively fair but procedurally unfair (right reason, wrong process). Either way, it’s unfair and can be challenged.
Valid reasons for dismissal
Misconduct
Misconduct includes behaviour such as theft, dishonesty, insubordination, absenteeism, poor timekeeping, violation of company rules, assault, or sexual harassment. Not all misconduct justifies dismissal—the severity matters.
The Code of Good Practice on Dismissal states that generally, it is not appropriate to dismiss an employee for a first offence except where the misconduct is serious and of such gravity that it makes a continued employment relationship intolerable. Examples of serious misconduct include gross dishonesty, wilful damage to property, wilfully endangering the safety of others, physical assault, and gross insubordination.
Even for serious misconduct, you must conduct a proper investigation, inform the employee of the allegations in writing, hold a disciplinary hearing where they can state their case with representation, and consider mitigating factors like length of service, previous disciplinary record, and personal circumstances before deciding on dismissal.
Incapacity
Incapacity covers poor work performance and inability to work due to ill health or injury. For poor performance, the Code requires that you assess whether the employee failed to meet a performance standard, whether they were aware or could reasonably be expected to be aware of the required standard, whether they were given a fair opportunity to meet it (through training, support, or reasonable time), and whether dismissal is an appropriate sanction.
Progressive discipline typically involves performance counselling, setting clear targets and timeframes, providing training or support, issuing warnings if performance doesn’t improve, and only then considering dismissal if performance remains unsatisfactory despite these interventions.
For incapacity due to ill health or injury, you must investigate the extent and likely duration of the incapacity, consider medical evidence, explore alternatives such as temporary replacement, adaptation of duties, or reasonable accommodation, and consult with the employee before making a decision. Dismissal is only fair if continued employment is not reasonably possible.
Operational requirements
Dismissals based on operational requirements—commonly called retrenchments—occur when the employer’s economic, technological, structural, or similar needs make certain positions redundant. Section 189 of the LRA sets out detailed consultation requirements, including issuing written notice to affected employees, consulting on reasons for contemplated retrenchments, alternatives to dismissals, selection criteria, timing, severance pay, and assistance to employees.
The employer must genuinely consult, not just go through the motions. After meaningful consultation, if agreement is not reached, the employer may proceed but must still pay severance of at least one week’s remuneration per completed year of service and follow fair selection criteria such as LIFO (last-in, first-out) with skills retention.
Automatically unfair dismissals
Section 187 of the LRA lists reasons for dismissal that are automatically unfair, attracting heavier penalties including compensation of up to 24 months’ salary. These include dismissals based on pregnancy or intended pregnancy, trade union membership or participation in lawful union activities, participation in a lawful strike, discrimination on prohibited grounds (race, gender, sex, ethnic or social origin, colour, sexual orientation, age, disability, religion, conscience, belief, political opinion, culture, language, marital status, or family responsibility), and protected disclosures (whistleblowing).
If an employee proves the dismissal falls under Section 187, the burden shifts to the employer to prove the reason was not the prohibited one. If the employer cannot, the dismissal is automatically unfair and the employee can claim directly to the Labour Court rather than the CCMA.
Procedural steps for a fair dismissal
For misconduct
Conduct a proper investigation to determine whether there are grounds for dismissal. This doesn’t need to be a formal inquiry, but you must gather facts, interview witnesses, and collect evidence before proceeding.
Inform the employee of the allegations using a form and language they can reasonably understand. The charge sheet must be specific—”poor performance” is too vague; “failed to meet sales target of 20 units per month for three consecutive months despite coaching” is specific.
Hold a disciplinary hearing where the employee can state their case in response to the allegations. This is the core of procedural fairness. The employee has the right to be represented by a trade union representative or fellow employee, to call witnesses, to cross-examine the employer’s witnesses, and to present mitigating factors.
After the hearing, communicate the decision taken and provide written notification of the outcome. If the employee is found guilty and dismissed, inform them of the reasons for dismissal and their right to refer the matter to the CCMA within 30 days.
Allow an internal appeal where your policy or collective agreement provides for it. Denying an appeal that the employee is entitled to constitutes procedural unfairness.
For incapacity
Assess the issue thoroughly through performance reviews, medical assessments, or capability evaluations. Meet with the employee and consider their input on what support they need or what obstacles are preventing them from meeting standards.
Explore alternatives such as additional training, role adjustment, reasonable accommodation for disability, or temporary replacement whilst the employee recovers from illness. Document each step and the reasons why alternatives are or are not viable.
If dismissal becomes necessary, ensure the employee understands why continued employment is not reasonably possible and provide written reasons for the decision.
For operational requirements
Follow the Section 189 retrenchment procedure precisely. Issue written notice to affected employees and their representatives (unions or elected workplace representatives) disclosing reasons, numbers affected, proposed selection criteria, timing, severance, and re-employment possibilities.
Consult meaningfully—this means engaging with proposals, considering alternatives, and genuinely attempting to avoid or minimise dismissals. Keep minutes of all consultation meetings.
Apply fair selection criteria consistently. LIFO is common but not mandatory; skills retention, operational requirements, or other objective criteria may be used if transparently applied.
Pay statutory severance and provide certificates of service and UIF forms so employees can claim unemployment benefits.
Employer duties and employee rights
Employers must keep detailed records of performance appraisals, warnings, disciplinary hearings, investigation notes, and decisions for at least three years. These records are your evidence at the CCMA if a dismissal is challenged.
You must apply discipline consistently. If you dismissed one employee for theft but only gave another a final warning for theft in similar circumstances, the dismissed employee has strong grounds for an unfair dismissal claim based on inconsistency.
Termination must be explained clearly in writing, including the reason for dismissal, the date of termination, any notice or payment in lieu, final payment details (accrued leave, pro-rata bonus), and the employee’s right to refer the matter to the CCMA within 30 days.
Employees have the right to a fair hearing, representation by a trade union representative or fellow employee, to call and cross-examine witnesses, to present mitigating factors, and to receive written reasons for the dismissal.
If dismissed, employees may refer an unfair dismissal dispute to the CCMA for conciliation within 30 days of the dismissal date or, if an internal appeal was followed, within 30 days of the final decision. If conciliation fails, the matter proceeds to arbitration where the CCMA commissioner hears evidence and makes a binding award.
Who should be cautious
For employers
Avoid knee-jerk terminations made in anger or frustration without evidence, investigation, or a hearing. Even if you’re convinced the employee is guilty, rushing the process creates procedural unfairness that will make the dismissal unfair regardless of the merits.
Follow your internal disciplinary code and HR policies closely. If your policy promises a three-stage warning system before dismissal for minor offences, you must honour that. Deviating from your own rules undermines fairness.
Ensure no discriminatory motives influence the decision. If performance issues only became a problem after the employee announced her pregnancy, or if disciplinary action escalated after someone joined a union, you face an automatically unfair dismissal claim.
For employees
Request clear reasons for dismissal in writing. If your employer refuses to explain or gives vague reasons, this strengthens your case for procedural unfairness at the CCMA.
Seek advice before signing any settlement agreement, waiver, or release. Employers sometimes offer small settlements in exchange for employees waiving their right to challenge the dismissal. Once signed, these are binding and difficult to overturn.
Lodge a dispute at the CCMA promptly if you believe the dismissal was unfair. The 30-day deadline is strict. Missing it can bar your claim entirely unless you apply for condonation with compelling reasons for the delay.
FAQ: Handling dismissals in South Africa
What is an unfair dismissal?
An unfair dismissal occurs when there is no valid reason for dismissal (substantive unfairness) or the proper process wasn’t followed (procedural unfairness). Automatically unfair dismissals under Section 187—such as dismissals for pregnancy, union membership, or discrimination—carry heavier penalties and can be referred directly to the Labour Court.
How long does an employee have to challenge a dismissal?
Employees must refer an unfair dismissal dispute to the CCMA within 30 days of the dismissal date or, if an internal appeal was followed, within 30 days of the final decision to uphold the dismissal. Late referrals require condonation applications.
Can an employer dismiss someone on the spot without a hearing?
No. Even for gross misconduct like theft or assault, the employee must be given a hearing before dismissal. Summary dismissal without a hearing is almost always procedurally unfair, regardless of how serious the misconduct was. The only limited exception is immediate suspension pending a hearing.
What is a constructive dismissal?
Constructive dismissal under Section 186(1)(e) happens when an employee resigns because the employer made the working environment intolerable. It’s treated as a dismissal by law. The employee must prove the resignation was caused by the employer’s conduct, that conditions were objectively intolerable, and that resignation was a last resort.
Are probationary employees protected from unfair dismissal?
Yes. Whilst employers have more flexibility during probation to assess suitability, dismissals must still be procedurally fair under Section 188. Probationary employees must receive regular feedback, guidance, opportunities to improve, and the right to be heard before termination, including representation.
Sources
- Labour Relations Act 66 of 1995: Sections on dismissal, including Sections 186, 187, 188, and 189 (Department of Employment and Labour)
- Code of Good Practice on Dismissal: Schedule 8 of the Labour Relations Act (CCMA)
- CCMA: Unfair dismissal disputes information sheet
- South African Labour Guide: Dismissals overview and guidance
- Department of Employment and Labour: Termination of employment guidelines
