On 4 September 2025, South Africa’s new Code of Good Practice: Dismissal took effect, replacing the previous codes on dismissal and operational requirements.
Image source: master1305 from
FreepikThis consolidated framework, guided by the Labour Relations Act 66 of 1995 (LRA), offers employers practical guidance on handling dismissals related to misconduct, incapacity, and retrenchments.
By clarifying legal obligations and introducing nuanced updates, the code balances fairness with flexibility, particularly for small businesses, while codifying key judicial precedents. Here’s what employers need to know about the changes and their implications.
Key updates in the new code
Support for small businesses
The code recognises the unique challenges faced by small businesses, which often lack the resources or expertise for formal HR processes. For instance, a small retailer in Durban may not have the capacity for extensive investigations or structured pre-dismissal procedures.
The code allows that the fairness of a dismissal should consider the employer’s size and circumstances, offering relief to smaller operations while maintaining LRA standards.
Kenneth Coster, Hassan Mahlawe and Megan Wilkinson 31 Jul 2025 Misconduct: Flexible but fair
The code emphasises fair procedures that foster genuine dialogue before dismissal decisions. Investigations don’t need to be formal but should suit the context—allegation severity, employer size, and business nature.
For example, a Cape Town tech startup investigating a data breach can tailor its inquiry to the issue’s complexity. Medium and large employers are encouraged to adopt written disciplinary procedures, though deviations are permissible if justified.
Notably, well-established workplace rules, like prohibitions on theft, don’t always require written documentation or explicit communication.
The code also clarifies that inconsistent dismissal sanctions don’t automatically render a dismissal unfair if the misconduct—such as a factory worker’s repeated safety violations—makes employment untenable.
Industrial action: Structured processes
For dismissals tied to industrial action, the code outlines clear steps, including the option for collective representations in cases of group misconduct, such as an unprotected strike at a Johannesburg mine.
It introduces factors for assessing LRA violations, like the strike’s impact, which guide the fairness of resulting dismissals, ensuring employers follow a structured yet practical approach.
Keshni Naicker and Amandla Makhongwana 30 Jan 2025 Probation: Broader evaluation
Probation rules have been relaxed to better align with workplace realities.
Previously, less compelling reasons for dismissal during probation applied only to poor performance. Now, dismissals for conduct or capacity issues, like a new hire in Pretoria struggling with team dynamics, can also be justified with less stringent reasoning.
The code expands probation’s purpose to include assessing overall suitability, not just performance, giving employers greater flexibility to evaluate new staff.
Incapacity: Expanded scope
The code codifies case law, recognising incapacity beyond poor performance or health issues.
Incompatibility—such as an employee in a Port Elizabeth firm unable to align with company culture—is now formally acknowledged as a form of incapacity.
Additionally, the code clarifies that warnings aren’t always required before dismissal, especially for senior or highly skilled employees, like a manager in Sandton whose underperformance directly impacts revenue. This reflects practical realities while upholding fairness.
Retrenchment: Clear Guidelines
For retrenchments, the code refines existing principles, detailing procedural steps and introducing an annexure outlining the notice of possible retrenchment.
This ensures clarity for employers, such as a Bloemfontein manufacturer, initiating consultations with employees, maintaining transparency and compliance with LRA requirements.
Strategic benefits of AI in dismissal processes
While the code itself doesn’t address technology, AI platforms like Traydstream, used by RMB and other banks, offer parallels for streamlining compliance.
AI can process dismissal-related documents in under an hour, identifying errors with high accuracy, reducing risks, and improving efficiency.
RMB has fully implemented AI for document checking and aims for seamless integration by Q1 2026, envisioning zero manual intervention.
This approach could inspire HR teams to adopt AI for managing disciplinary records, ensuring compliance with the code’s procedural requirements while saving time.
What this means for employers
The new code consolidates and clarifies dismissal practices, offering flexibility for small businesses and codifying judicial precedents without compromising fair labour standards. Employers must align with the code’s guidance to ensure dismissals are both substantively and procedurally fair.
Those with existing disciplinary codes should review them for consistency with the new framework, noting that self-imposed obligations remain binding even if not in the code. For example, a small business in Rustenburg can now tailor its dismissal process to its resources, while a larger firm in Midrand must ensure its written procedures reflect the code’s emphasis on dialogue and fairness.
As South Africa’s labour landscape evolves, the code provides a practical roadmap for compliance, balancing employer needs with employee protections.
