New Code of Good Practice on Dismissals Impacts Employer Obligations
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On 4 September 2025 the Department of Employment and Labour has published the new Code of Good Practice on Dismissals, replacing Schedule 8 of the Labour Relations Act and scrapping the separate code for retrenchments. It has come into effect immediately, and if you’re an employer, it’s time to update your playbook.
Below we summarise what has changed and how it may impact businesses.
What’s changed? Key employer obligations
Unified rules for dismissals
All three recognised grounds for dismissals, misconduct, incapacity (including poor performance, ill health, incompatibility) and operational requirements, are now governed under a single, consolidated Code. This simplifies policy documents, internal procedures, and training (but also means that any oversight is more likely to be noticed).
Flexibility for small businesses
The Code explicitly recognises that small or micro‑employers may not have HR departments or legal teams, and allows for less formal, simpler procedures in certain dismissal and consultation processes where appropriate. However, “less formal” does not mean “no fairness”, the core duties still apply.
Probation redefined
Probation is no longer just about performance. Employers may now use probation also to assess suitability, including whether an employee fits the role, works well with others, or aligns with cultural expectations. For some senior or highly skilled employees, prior warning of possible dismissal may not always be required if they are, or should be, aware of performance expectations.
Wider scope for incapacity
Incapacity now covers more than ill health or injury. It includes incompatibility (e.g. inability to work harmoniously within teams or adapt to workplace culture), and other constraints such as imprisonment or other external impediments. Employers will need to explore alternatives, accommodations or adjustments before dismissal.
More nuance in misconduct case
When dismissing for misconduct, employers must now account for additional factors such as:
the seriousness of the workplace rule breached
the actual or potential harm caused
whether the employee acknowledged wrongdoing or shown a willingness to comply in future.
Formal investigations or full disciplinary hearings are not always mandatory—especially in smaller businesses or for less serious misconduct—but procedural fairness remains non‐negotiable.
Stricter retrenchment / operational‑requirement processes
The Code clarifies employers’ obligations when operational needs force dismissals (restructuring, economic necessity etc.): you must consult in good faith, provide written notice (according to the prescribed format), use fair and objective selection criteria, and explore alternatives. Severance, re‑employment preferences and transparency in process are emphasised.
What employers must do now
Policies, codes & contracts need updating immediately. Internal disciplinary codes, performance evaluation policies, probation terms, retrenchment/operational requirement procedures must all align with the new Code.
Managers, HR, line‑supervisors must understand what “fairness” means under the new rules; in particular the expanded definitions (incapacity, misconduct), what is expected under probation, and how to conduct dismissals for small businesses.
Record keeping becomes more important. Documenting warnings, performance reviews, consultation processes, alternative measures considered and rejected, etc., will be critical for defending dismissals should they be challenged at the CCMA or in court.
Some cases will become more resource intensive, for example those involving incapacity or incompatibility, or where small businesses must still comply but with less formality.
Legal risk of dismissals done under the old assumptions or approaches may now be unfair under the new Code, even if they would previously have passed muster.
