12/03/2026
The Real Risk in Dismissals: Why South African Employers Must Pay Attention to the Updated Code of Good Practice
Many employers only start looking at dismissal procedures after a dispute has been referred to the Commission for Conciliation, Mediation and Arbitration (CCMA).
By that stage, it is often too late.
Dismissals remain one of the most common causes of labour disputes in South Africa, and the financial, reputational and operational consequences can be significant if the correct procedures are not followed.
Recent developments linked to the Labour Relations Act 66 of 1995 and the proposed updates to the Code of Good Practice on Dismissal are a reminder that employers must continually review how they manage discipline, performance, and retrenchments.
The updated framework provides clearer guidance for employers — but it also raises the expectation that organisations will apply fair and consistent dismissal practices.
Here are some of the most important developments businesses should be aware of.
Fairness Still Remains the Foundation
The principle at the heart of South African labour law has not changed.
For a dismissal to be lawful, it must be both:
• Substantively fair (there must be a valid reason) • Procedurally fair (the correct process must be followed)
The Code continues to emphasise that the employment relationship must be based on mutual respect, fairness, and transparency.
For employers, this means that even when misconduct is obvious, the process followed will always matter.
Recognition That Small Businesses Cannot Operate Like Corporates
A welcome addition in the updated framework is the explicit recognition of small and growing businesses.
Historically, many smaller employers struggled because disciplinary procedures were often interpreted through the lens of large corporate HR departments.
The updated Code acknowledges that while fairness is essential, procedures may be applied more flexibly depending on the size and resources of the business.
This provides important relief for entrepreneurs and SMEs who may not have large HR teams managing workplace disputes.
Stronger Guidance on When Dismissal Is Appropriate
The Code has also expanded on the factors employers should consider before imposing dismissal as a sanction.
Beyond the seriousness of the misconduct, employers are encouraged to consider:
• The impact of the misconduct on the organisation • Whether the employee acknowledged wrongdoing • The employee’s willingness to correct their behaviour
This reinforces the importance of progressive discipline, ensuring dismissal is used proportionately and not as a first response unless the misconduct is severe.
Probation Is About More Than Just Performance
The updated guidance recognises that probation periods allow employers to evaluate not only performance, but also overall suitability for the role.
This includes factors such as:
• Professional conduct • Cultural alignment • Ability to function effectively within the organisation
This change reflects the realities of modern workplaces, where technical ability alone is not always enough for long-term success.
A More Practical Approach to Poor Performance
Poor work performance continues to be one of the most misunderstood areas of dismissal.
The updated Code emphasises that employers must consider whether:
• The performance standard was reasonable and achievable • The employee received guidance, training, or support • The employee’s seniority or professional expertise meant they should reasonably have known the required standard. Importantly, senior professionals and highly skilled employees may be held to a higher level of accountability than junior staff.
A Broader Understanding of Incapacity
Traditionally, incapacity referred mainly to ill health or injury. The updated framework recognises that incapacity may also arise from other circumstances, such as:
• Situations where employees are unable to perform their duties due to external constraints • Persistent incompatibility within the workplace
While dismissals on these grounds still require careful handling, the expanded guidance gives employers clearer direction when managing complex employment situations.
Closer Alignment With Retrenchment Processes
The updated Code also introduces guidance on dismissals based on operational requirements, aligning the framework more closely with the requirements already contained in the Labour Relations Act 66 of 1995.
For employers navigating restructuring or retrenchments, this reinforces the importance of:
• Proper consultation • Transparent communication • Fair selection criteria
Failing to follow these principles remains one of the fastest ways to end up in litigation.
The Reality Employers Must Face
In South Africa, procedural mistakes in dismissals are one of the biggest risks facing employers.
Even where misconduct or poor performance is clear, failing to follow a fair process can result in:
• Reinstatement orders • Compensation awards • Lengthy CCMA or Labour Court disputes
Updating internal policies and ensuring managers understand the correct process is no longer optional — it is essential risk management.
Final Thought
Employment law is not static, and organisations that fail to evolve their internal practices often pay the price later.
The updated guidance under the Code of Good Practice on Dismissal provides employers with a clearer roadmap for managing discipline, performance, and operational restructuring.
The question for employers is simple:
Are your internal policies aligned with where South African labour law is going — or where it was ten years ago?
