The draft Code of Good Practice on dismissals: Key changes and implications for employers

On 21 January 2025, the Department of Employment and Labour published a Draft Code of Good Practice on Dismissal ("Draft Code") for public comment. The Draft Code expands and modernises the existing Code of Good Practice on Dismissal, introducing updated guidelines for employers, employees, and workplace stakeholders.

The Draft Code provides clearer guidance on dismissals related to misconduct, incapacity, and operational requirements, reinforcing procedural fairness and aligning dismissal processes with evolving workplace dynamics. Below, we explore the most significant changes and their potential impact on South African businesses.

A More Structured and Comprehensive Code

The Draft Code consolidates existing dismissal rules into a single, streamlined document, incorporating elements from the Code of Good Practice on Dismissal Based on Operational Requirements (Retrenchment Code). This integration ensures a more consistent and transparent approach to all forms of dismissal.

Procedural Fairness and Progressive Discipline

While procedural fairness has always been a fundamental requirement, the Draft Code introduces clearer expectations for employers, including:

• Ensuring that employees are fully informed of any allegations against them.

• Providing employees with a reasonable opportunity to respond to the allegations, as well as to make representations as to an appropriate sanction, before any decision is made.

• Advising employees of their right to assistance from a fellow employee or trade union representative.

Employers must demonstrate compliance with these requirements, and any deviations therefrom must be justified if challenged. The Draft Code also reinforces the principle of progressive discipline, requiring employers to explore alternative measures such as warnings or counselling before considering dismissal, except in cases of serious misconduct.

A notable clarification is that consistency does not require identical outcomes in every case. If misconduct fundamentally destroys the employment relationship, dismissal may still be justified, even if other employees previously received lesser sanctions for similar offences.

Practical Adjustments for Small Businesses

The Draft Code recognises the unique challenges faced by small businesses, which may not have dedicated HR personnel or the resources to conduct lengthy investigations. While fair procedures must still be followed, the Code acknowledges that small employers cannot be held to the same procedural expectations as larger corporations.

This adjustment ensures greater flexibility for smaller businesses, reducing unnecessary administrative burdens while still upholding fairness.

Industrial Action and Strike-Related Dismissals

The Draft Code expands the framework for dismissals related to strike action, requiring employers to assess the severity of the strike before taking disciplinary action. Considerations now include:

• Whether the strike was in response to unlawful, unfair or unreasonable conduct by the employer.

• The legitimacy of the striking employees’ demands.

• The duration, timing, and impact of the strike.

Additionally, the Draft Code permits collective representations, allowing striking employees to present a joint defence instead of undergoing individual disciplinary hearings.

Relaxed Guidelines for Probationary Employees

The Draft Code simplifies the dismissal process for probationary employees, making it easier for employers to terminate employment for poor performance or misconduct during this period. While fair treatment remains essential, less emphasis is placed on issuing multiple warnings or following various counselling meetings before termination.

For non-probationary employees, the Draft Code introduces a distinction between:

• Employees who must be warned and given opportunities to improve before dismissal for poor performance; 

• Senior or managerial employees whose knowledge and experience enables them to judge whether their performance is adequate, and those employees with a high degree of professional skill where a departure from the required standards would have severe consequences, justifying dismissal.

This approach aligns with recent case law, recognising that higher-level employees may be subject to stricter performance expectations.

Expanded Definition of Incapacity

Traditionally, incapacity dismissals applied mainly to ill health or injury. The Draft Code now formally recognises additional grounds of incapacity, including:

• Imprisonment, where an employee cannot perform their duties due to incarceration.

• Workplace incompatibility, where an employee is unable to work in harmony with an employer’s business culture or with fellow employees.

Operational Requirements and Retrenchments

The Draft Code incorporates retrenchment guidelines into the dismissal framework, ensuring greater transparency in the process. Notably, it introduces a structured form for Section 189(3) retrenchment notices, assisting employers to disclose all relevant information as part of the statutory retrenchment process.

Final Thoughts: What Employers Need to Know

The Draft Code does not introduce drastic changes but refines key areas to clarify fair dismissal practices, emphasising procedural consistency and substantive fairness. It also acknowledges the practical realities faced by different employers, particularly small businesses, while reinforcing the importance of due process.

While there is no immediate requirement for employers to amend their disciplinary policies, reviewing current practices in light of the Draft Code’s provisions is advisable. Staying informed and proactively aligning workplace procedures with evolving legal standards can help prevent disputes and ensure compliance.

Given the increased scrutiny on fair dismissals, businesses should take a proactive approach in reviewing their internal policies and disciplinary procedures. Our firm is well-equipped to assist employers in navigating these changes, ensuring that their employment practices remain both legally compliant and operationally effective.

The public has until 22 March 2025 to submit comments on the Draft Code. If you need guidance on how these changes may affect your business, our team is available to provide tailored advice and strategic support.