Understanding South Africa’s New Code of Good Practice: Dismissal. Effective September 4, 2025

After more than two decades of relying on separate dismissal frameworks, South Africa has ushered in a new era of employment law with its recent updates to the existing Code of Good Practice for Dismissals. This landmark reform represents a comprehensive consolidation of dismissal procedures since the Labour Relations Act (LRA) was first introduced, by including various guidelines into one modern framework.

What Has Changed?

The updated Code of Good Practice for Dismissals makes it significantly easier for employers and employees to navigate dismissal procedures. The Code repeals the previous Schedule 8 Code of Good Practice on Dismissal and streamlines compliance and reduces confusion around which guidelines apply in different situations.

Key Changes Every Employer Should Know

1. Retrenchments Now Integrated

One of the most significant changes is the full integration of operational requirements (retrenchments) into the main Code. Sections 22–24 outline consultation, selection, severance, and re-employment obligations, giving employers a single reference point for all dismissal types. The Code also includes a standardised Section 189(3) retrenchment notice template in Annexure A, ensuring consistency across organisations.

2. Small Business Flexibility

Recognising that small and medium enterprises often lack extensive HR infrastructure and resources to outsource, the Code allows for simplified procedures and greater flexibility for small businesses. Arbitrators must consider the realities of small business operations when assessing procedural fairness, acknowledging that a one-size-fits-all approach doesn’t work for businesses of all sizes.

3. Incompatibility as a Valid Dismissal Reason

The Code formally recognises incompatibility as a valid ground for dismissal under incapacity. This addresses situations where personality clashes or working relationship breakdowns make continued employment untenable, even when neither party is technically at fault. Other additions to incapacity grounds include imprisonment and substance abuse (with intervention guidelines).

4. Enhanced Performance Standards for Senior Employees

The Code now introduces higher performance expectations for senior professionals, who may not require warnings before dismissal but must still be given an opportunity to respond and make representations for their performance or lack thereof. This acknowledges that senior roles come with greater responsibility, requirements for performance and accountability, where performance failures can have a more significant organisational impact on the business and operations.

5. Modernised Probation Framework

The Code provides clearer guidance on probationary periods, covering both performance and suitability assessments. It specifies a reasonable duration for probation and requires a less onerous justification for non-confirmation, while also warning that misusing probation to deprive employees of permanent status may constitute unfair dismissal.

6. More Proportional Disciplinary Outcomes

The Code now includes the importance of the rule breached by employees and the actual or potential harm caused when assessing appropriate sanctions. This enables more context-sensitive and proportional disciplinary decisions, moving away from rigid, one-dimensional approaches.

7. Informal Procedures Formally Recognised

Informal procedures are now formally recognised, and employers may depart from rigid procedures if justified. The Code emphasises that the purpose of a fair procedure is to foster dialogue and reflection, signalling a move toward a less criminalised approach to workplace discipline.

What This Means for Your Organisation

The Code confirms that dismissals are fair only if based on conduct, capacity, or operational requirements and effected through a procedurally fair process. However, the emphasis is on contextually appropriate procedures rather than rigid adherence to formalistic steps.

Immediate Action Steps

To ensure compliance with the new Code, employers should:

1. Review and Update Policies: Revise existing policies in place that deal with disciplinary and dismissal procedures to align with the new requirements.
2. Train HR and Management: Ensure decision-makers understand the new framework, particularly provisions around small business flexibility and informal procedures.
3. Adopt New Templates: Implement the standardised Section 189(3) retrenchment notice template from Annexure A.
4. Consider Business Context: Take advantage of flexibility provisions where appropriate, particularly for small businesses.
5. Focus on Dialogue: Emphasise meaningful engagement over procedural formalism in disciplinary processes.

The Bigger Picture

The Code recognises the need for simpler, less formal dismissal procedures based on operational realities, while still maintaining fundamental fairness protections. This balance reflects 23 years of legal evolution, case law developments, and practical workplace challenges experienced by both employers and employees.

The Code acts as a general guideline and allows for departures in appropriate circumstances. This gives employers the flexibility to adapt procedures to their specific situations while maintaining core fairness principles.

Conclusion

The 2025 Code of Good Practice for Dismissals represents a strategic shift in how dismissals are handled across South Africa. By consolidating multiple frameworks, recognising business realities, and modernising outdated provisions, it provides a more practical and accessible guide for both employers and employees.

Organisations that proactively update their policies and train their teams on these changes will be better positioned to handle dismissals fairly, defend their decisions if challenged, and maintain productive working relationships with their employees.

Share: