Dismissal code 2025

Practical guidance for employers and employees

On 4 September 2025, the Minister of Employment and Labour brought into effect the new Code of Good Practice: Dismissal under the Labour Relations Act 66 of 1995 (LRA). The Code consolidates and updates South Africa’s dismissal framework, replacing the long-standing Schedule 8: Code of Good Practice: Dismissal and the separate Code on Dismissal Based on Operational Requirements. It represents one of the most significant updates to workplace dismissal rules since the LRA came into force in 1996.

The Code is not legislation, but it carries persuasive authority. The CCMA, bargaining councils and the Labour Court will use it as a benchmark to test whether dismissals are substantively and procedurally fair. Before September 2025, two separate codes guided dismissals:

1. Schedule 8 of the LRA – focusing mainly on misconduct and incapacity
2. Code on Dismissals Based on Operational Requirements – dealing with retrenchments

These procedures were criticised for being fragmented, overly formal, and out of touch with modern workplace realities. Employers, particularly smaller businesses, often found the requirements burdensome. Employees complained that the framework gave too much discretion to employers.

The new Code was drafted after consultations conducted through the National Economic Development and Labour Council (NEDLAC) and aims to streamline, clarify and modernise the law while keeping the constitutional right to fair labour practices at its core (s 23 of the Constitution).

Grounds for dismissal in the new Code

The 2025 Code brings the three recognised grounds for dismissal into a single framework:

• Misconduct – employees acting in breach of workplace rules
• Incapacity – covering poor performance, ill health, injury and now incompatibility (the inability to work harmoniously with colleagues)
• Operational requirements – dismissals based on the employer’s economic, technological or structural needs (retrenchment)

Key innovations of the Code

The definition of probation has been amended so it is no longer only about performance; it now allows assessment of whether an employee is a good “fit” for the role or organisation. There is more flexibility for small employers. The Code recognises that small businesses may not have the resources to run formal processes. Informal hearings may suffice, provided fairness is maintained. There are changes to the treatment of performance management. Especially for senior or professional roles, warnings may not always be required before dismissal for poor performance. There is more flexibility around procedures. The Code allows employers to deviate from standard procedure in exceptional cases, but only with sound justification. Finally, employees must be informed of allegations in a language they can reasonably understand, ensuring genuine opportunity to respond.

What employers should be mindful of

Employers will have to update policies. Disciplinary codes, performance management policies and retrenchment procedures should be revised to align with the new Code. Managers and HR staff will need to be trained. Supervisors will need to understand when simplified processes are permissible and when full formal procedures are still required. Everything must be documented. Although the Code allows greater flexibility, records of warnings, consultations and reasons for decisions remain critical in proving fairness. The new ground for dismissal of “incompatibility” will require caution. Employers must still show they tried to resolve the relationship breakdown before dismissal.

What employees should be mindful of

Fairness is still central. The Code has not diminished an employee’s right to fair dismissal. Employees can still challenge dismissals at the CCMA or Labour Court. Probation periods carry more weight, and employees must take probation reviews seriously, since “fit” is now as important as competence. Workers have the right to be informed of allegations in a language they understand, strengthening procedural fairness. Retrenchments for operational requirements are now explicitly part of the Code. Employees should ensure employers follow consultation procedures and apply fair selection criteria.

Labour law evolves

The new Code of Good Practice: Dismissal (2025) marks a significant evolution in South African labour law. It introduces flexibility for employers, especially small businesses, while maintaining fairness and clarity for employees. For lawyers, HR practitioners and workers alike, the key message is that substantive and procedural fairness remain the cornerstone of dismissal law; but the way those principles are applied has been modernised.

Employers should act quickly to update internal policies and train staff, while employees must familiarise themselves with their rights under the new framework. Ultimately, the Code aims to balance workplace efficiency with constitutional fairness, ensuring dismissals are handled lawfully, fairly and transparently.

SD Law can help

Compliance with South African labour law requires careful attention to legislation, codes and dispute resolution procedures. If you have questions about the new Code or any aspect of labour relations, contact Cape Town attorney Simon on 086 099 5146 or email sdippenaar@sdlaw.co.za for a confidential, personal discussion.

Further reading:

• Unfairly dismissed?
• Employment contracts and labour disputes
• Executive dismissal – a new approach

SD Law – Simon Dippenaar & Associates Inc.

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