This article provides a practical overview of the Code of Good Practice: Dismissal, 2025 (“the Code”), published under the Labour Relations Act 66 of 1995 (“LRA”). It explains what the Code is, what has changed for employers, and the steps businesses should take now to ensure that dismissals for misconduct, incapacity and operational requirements withstand scrutiny at the CCMA, bargaining councils and the Labour Court.
Background: Why a New Code?
For almost three decades, dismissals in South Africa were guided by two separate instruments: Schedule 8 to the LRA (the Code of Good Practice: Dismissal) and the Code of Good Practice on Dismissal Based on Operational Requirements. Over that period, the courts developed a substantial body of case law that refined, and in places departed from, the wording of those codes.
On 4 September 2025 the Minister of Employment and Labour published the new Code (General Notice 3470 of 2025). It took effect on publication and repeals both earlier codes. For the first time, dismissals for misconduct, incapacity (poor performance and ill health) and operational requirements are dealt with in a single, consolidated framework.
The Code is best understood as an evolution rather than a revolution. It largely codifies principles that the courts have applied for years, while introducing a number of practical clarifications that are, on balance, helpful to employers.
The Legal Status of the Code
The Code is a guideline. It does not create new rights or obligations, and it remains subject to the LRA itself, the case law and any applicable collective agreements.
That does not make it optional in practice. Section 188(2) of the LRA requires any person considering whether the reason for a dismissal is fair, or whether a dismissal was effected in accordance with a fair procedure, to take into account any relevant code of good practice. Commissioners and judges will therefore measure an employer’s conduct against the Code, and an employer that departs from it should be able to justify that departure.
Key Changes for Employers
The most significant developments for employers include the following:
- Flexibility for small businesses. The Code expressly recognises that small employers cannot be expected to conduct lengthy investigations or elaborate pre-dismissal processes. Simpler and less formal procedures may be appropriate, provided the employee is still given a fair opportunity to respond.
- Probation assesses suitability, not only performance. The purpose of probation now expressly includes assessing whether the employee is suitable for the role. An employee must still be given an opportunity to make representations before being dismissed or before probation is extended, but the reasons for dismissal during probation may be less compelling than after it.
- Incompatibility is recognised. Dismissal for incompatibility, where an employee’s conduct or relationships make a harmonious working relationship impossible, is now recognised and dealt with under incapacity for poor performance.
- Senior employees. Principles developed by the courts regarding the performance management of senior and managerial employees, who may reasonably be held to a known standard with less formal counselling, have been codified.
- One framework for retrenchments. Guidance on dismissals for operational requirements now sits alongside the other grounds, although the statutory consultation requirements in sections 189 and 189A of the LRA are unchanged.
Dismissal for Misconduct
The core test remains familiar. When considering whether a dismissal for misconduct is fair, the question is whether the employee contravened a rule or standard regulating conduct in the workplace and, if so, whether:
- the rule was valid or reasonable;
- the employee was aware, or could reasonably be expected to have been aware, of the rule;
- the rule has been consistently applied by the employer; and
- dismissal is an appropriate sanction for the contravention.
Progressive discipline remains the default approach. Dismissal is generally reserved for serious misconduct or repeated offences, typically where the misconduct makes a continued employment relationship intolerable. Factors such as the employee’s length of service, disciplinary record and personal circumstances, and the nature of the job, remain relevant to the sanction.
Procedurally, the employee must be informed of the allegations in a form and language they can reasonably understand, be given reasonable time to prepare, be allowed to respond (with the assistance of a trade union representative or fellow employee), and be informed of the outcome. A formal, court-like hearing is not required, and the Code reinforces that the process should be proportionate to the size and circumstances of the employer.
Poor Performance, Incompatibility and Ill Health
Before dismissing an employee for poor performance, an employer should ordinarily establish the required standard, assess the employee’s performance against it, give the employee appropriate evaluation, guidance, training or counselling, and allow a reasonable period to improve. The extent of this process will depend on the seniority of the employee and the circumstances of the business.
Incompatibility cases require particular care. Employers should identify the conduct giving rise to the incompatibility, inform the employee of it, and give the employee a genuine opportunity to address it before dismissal is considered.
Where incapacity arises from ill health or injury, the employer must investigate the nature, extent and likely duration of the incapacity, and consider alternatives to dismissal such as adapted duties or reasonable accommodation, particularly where the incapacity is work-related or the employee has a disability.
Practical Steps for Employers
Although the Code largely reflects existing law, it is an appropriate moment for employers to review their employment framework. In particular, employers should:
- update disciplinary codes and procedures to align with the Code and remove references to Schedule 8;
- review employment contracts and probation clauses to reflect the expanded purpose of probation;
- adopt a documented performance management process, including for senior employees;
- train managers and HR personnel on the revised guidance, especially on consistency and record-keeping; and
- ensure that any departure from the Code is deliberate, justified and properly recorded.
Conclusion
The 2025 Code confirms that the twin requirements of substantive and procedural fairness remain the foundation of South African dismissal law. What has changed is the clarity with which those principles are expressed, and the recognition that fairness must be applied realistically, particularly for smaller businesses.
Employers who take the opportunity to align their policies, contracts and management practices with the Code will be better placed to manage employment relationships confidently and to defend their decisions if challenged.
How O’Reilly Law Can Assist
Dismissal disputes are among the most common and most costly risks faced by South African businesses. A dismissal that is substantively justified can still be found unfair because of a procedural misstep, exposing the employer to compensation of up to 12 months’ remuneration or, in the case of an automatically unfair dismissal, up to 24 months’ remuneration, as well as reinstatement.
O’Reilly Law advises employers on the full lifecycle of discipline, performance management and termination. We review and update disciplinary codes and employment contracts, advise on specific dismissal decisions before they are taken, chair or prepare for disciplinary enquiries, and represent employers at the CCMA, bargaining councils and the Labour Court.
Speak to an Employment Law Specialist
If you are an employer considering a dismissal, or you would like your policies reviewed against the new Code, it is essential to obtain advice early.
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Our team provides practical, commercially minded advice to employers on dismissals, disciplinary processes and workplace disputes.