Code of Good Practice: Dismissal

The new Code of Good Practice: Dismissal (Code) came into effect on 4 September 2025 and replaces Schedule 8: Code of Good Practice: Dismissal and the Code of Good Practice on Dismissal Based on Operational Requirements. The Code sets out guidelines for carrying out dismissals in South Africa.

The main changes that have been brought about as a result of the Code are as follows:

• There is greater flexibility for small businesses. In this regard, the Code provides that small businesses cannot be expected to engage in time-consuming investigations or pre-dismissal processes and there is recognition that account needs to be taken of the circumstances in which the business operates. Accordingly, simpler, less formal processes may be appropriate for smaller businesses;
• The Code recognizes that employees may be dismissed for incompatibility and this should be dealt with under the category of incapacity for poor performance;
• A number of the principles that have developed from the case law in relation to probation and performance management of senior employees have now been codified in the Code;
• The purpose of probation has been expanded upon so that it is not only to assess performance but also to assess suitability for employment. Much like the previous code, the Code reinforces that an employee on probation must be afforded an opportunity to make representations before the employer dismisses the employee or extends the probationary period. Furthermore the reasons for dismissal during the probationary period may be less compelling than when a dismissal is effected after the probationary period.

The Code provides the following guidelines in relation to the four recognized grounds for dismissal in South Africa, namely misconduct, incapacity for poor performance, incapacity for ill health or injury, and dismissals based on the employer’s operational requirements.

Misconduct

• The Code states that disciplinary policies and procedures may vary depending on the nature and size of the business. Small employers may take a less formal approach;
• Formal procedures do not need to be embarked upon every time a rule is broken or a standard is not met. Informal advice and correction is most effective and accords with the principle of progressive discipline;
• Dismissal may be appropriate if the conduct has rendered continued employment intolerable;
• There must be a fair process followed in terms of which an employee is given a reasonable opportunity to respond to the allegations of misconduct;
• Before a dismissal for misconduct the employee should be notified of the allegations of misconduct and should be given an opportunity to prepare and make representations on the allegations and appropriate sanction;
• There can be a deviation from these guidelines in exceptional circumstances but the employer will need to justify non-compliance if the procedural fairness of the dismissal is challenged; and
• There is no mention in the Code of a formal disciplinary hearing but the CCMA generally views a disciplinary hearing as an important factor when considering procedural fairness. Therefore if there is a risk of the dismissal being challenged the recommended approach is to hold a formal disciplinary hearing.

Incapacity: Poor Performance

• The Code states that an employee whose performance falls below the required standards must be given a reasonable opportunity to improve with appropriate guidance, training or counselling;
• Before dismissing an employee for poor performance the employee must be given an opportunity to respond to allegations of unsatisfactory performance; and
• Depending on the circumstances an employee may not need to be warned that they may face dismissal if their performance does not improve. This is particularly in the case of managers and senior employees whose knowledge and experience enables them to judge for themselves whether their performance is adequate. This may also be the case where employees have a high degree of professional skill where a departure from the high standard would have severe consequences justifying dismissal. These were already principles in terms of the case law but have now been codified in the Code.

Incapacity: Ill health, injury or other forms of incapacity

• The Code states that the employer should investigate the extent of the incapacity or injury and consider alternatives short of dismissal;
• The employee must be afforded an opportunity to state a case in response;
• Incapacity may also arise from other factors preventing the employee from doing the job such as imprisonment; and
• An employee’s incompatibility, as manifested by an inability to work in harmony with an employer’s business culture or with fellow employees, can constitute a form of incapacity which may justify dismissal. This is new to the Code as previously the Code and the Labour Relations Act, 1995 did not formally acknowledge incompatibility as a ground of incapacity.

Dismissal for operational requirements

• The Code states that a dismissal for operational requirements can be based on economic, technological, structural or similar needs of the employer;
• Dismissal should be a measure of last resort and employers are required to embark on a consultation process with employees;
• The consultation process is initiated by issuing a notice that must contain what is prescribed in Annexure A to the Code;
• The Code sets out the prescribed topics for consultation;
• One of the topics for consultation is the proposed selection criteria, which must be fair and objective. The Code provides that selection criteria that are generally accepted as being fair and objective include length of service, retention of skills or qualifications of employees; and
• Employees who are retrenched may be given preference if the employer again hires employees with comparable skills and qualifications.

Employers should consider reviewing their policies to ensure that they align with the Code and that they build in some flexibility.