Unpacking the 2025 Code of Good Practice on Dismissal

Effective 4 September 2025, the Minister of Employment and Labour has introduced a revised Code of Good Practice on Dismissal. This new Code replaces both the former Schedule 8 Code and the Code of Good Practice: Operational Requirements. Its purpose is to clarify and modernise dismissal standards across the workplace, including new guidance relating to probation, misconduct, incapacity, and retrenchments.

What is the Code and Why Does it Matter?

The Code provides practical direction on how dismissals should be managed under the Labour Relations Act (LRA), covering:

Misconduct-related dismissals
Dismissals for poor performance or ill health
Operational requirement dismissals (retrenchments)

It aims to balance fair labour practices with the legitimate needs of employers to maintain discipline and productivity.

The Code expressly acknowledges the unique challenges faced by small businesses, offering flexibility to avoid overly rigid procedures that could hamper their viability — although it does not formally define what constitutes a “small business”.

PART A & B - Dismissal

What is a “Dismissal”?

A dismissal occurs where an employer terminates employment, whether with or without notice. It also includes situations such as:

Failure to renew a fixed-term contract where the employee reasonably expected renewal
Not retaining an employee who reasonably expected continued employment
Refusing a new mother’s return from maternity leave
Selective re-employment after a group retrenchment
Constructive dismissal — where working conditions become intolerable
Less favourable employment terms following a business transfer as a going concern

PART C – Unfair Dismissal

When is a Dismissal Considered Fair?

To be lawful, a dismissal must have:

1️⃣ A fair reason, linked to one of the following:

Conduct (eg. breach of rules)
Capacity (eg. performance or medical incapacity)
Operational needs (eg. restructuring, reduced demand)

2️⃣ A fair process, giving the employee an opportunity to respond before a decision is made.

This principle supports the Constitutional right to fair labour practices.

Automatically Unfair Dismissals

Some reasons are never acceptable, including dismissal connected to:

Participation in a protected strike
Pregnancy
Discrimination based on protected grounds (eg. gender, race, religion)

Where automatic unfairness is not alleged, the employer must prove fair reason and fair procedure.

PART D – Misconduct

Must every case be handled through a formal hearing?

No. The Code reinforces the de-criminalisation of discipline:

✔ Procedures may be informal
✔ Scaled to the severity of the misconduct
✔ Adapted to the size and operational nature of the employer

However, the employee must always:

Understand the allegations against them
Have a chance to respond
Be assisted by a colleague or union representative (where applicable)

Is consistency important?

Yes — similar cases should result in similar outcomes.
But if the employment relationship is irreparably harmed, dismissal may still be appropriate even where others received lesser sanctions.

When is dismissal justified?

Only where continued employment is intolerable, considering:

The seriousness and impact of the misconduct
Whether progressive discipline could correct behaviour
Length of service and personal circumstances
Acceptance of wrongdoing and potential for reform

PART E – Probation

Probation allows employers to assess if a newly appointed employee is suited to the role.

Key principles:

The length of probation must be reasonable for the position
Employers must give guidance, support and feedback
Employees must be allowed to make representations before a negative decision is reached
Misuse of probation to avoid confirming permanent employment may amount to unfair dismissal

The new Code adopts a more flexible approach to what “reasonable guidance” entails, particularly for smaller employers.

PART F – Incapacity (Performance or Health)

Employers may dismiss for incapacity where attempts to accommodate the employee have been exhausted.

The employer must consider:

The job requirements and ability to adjust duties
Length and impact of absence
Alternative roles or workplace adaptations
Whether the condition is work-related (which increases the duty to accommodate)

Notably, the Code now groups incompatibility under incapacity — meaning an employee’s inability to maintain harmonious workplace relationships may justify dismissal if the breakdown is beyond repair and a fair process is followed.

PART G – Operational Requirements (Retrenchments)

Operational requirement dismissals remain grounded in economic, technological or structural needs.

Key updates include:

Incorporation of retrenchment guidance into one unified Code
Standardised Section 189(3) notice format, including:

Number and categories of employees affected
Reasons for proposed retrenchment
Alternatives considered and reasons for rejection
Selection criteria
Timing
Proposed severance pay
Potential re-employment prospects
Disclosure of retrenchments in the previous 12 months (for employers with >50 employees)

The Code continues to emphasise meaningful consultation and genuine efforts to avoid job losses.

Thus Finally:

The 2025 Code builds on established labour law principles while:

Streamlining guidance
Enhancing flexibility for different workplace contexts
Strengthening fairness and accountability in dismissal processes

It remains essential that employers apply the Code thoughtfully and case-by-case, ensuring that both substantive and procedural fairness are upheld.

While the new Code strengthens employee protections, it also gives employers — especially smaller businesses — more flexibility in how dismissals are handled. The challenge is knowing how to balance fairness with business practicality.

That’s where HR Consult comes in. Our team translates complex labour law into clear, step-by-step processes that protect both your people and your business.

💡 Let’s make sure your workplace policies are ready for the 2025 Code.

Office: 012 997 0037

E-mail: info@hrconsultsa.co.za

Adapted by HR Consult, specialists in South African labour and employment law compliance.

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