Draft Code of Good Practice on Dismissal

At a glance

• The Department of Employment and Labour published a Draft Code of Good Practice on Dismissal (Draft Code) on 21 January 2025, for public comment.
• The Draft Code aims to guide termination of employment under the Labour Relations Act 1995, expanding on the existing Code of Good Practice: Dismissal (Existing Code).
• The Draft Code recognises that small businesses may need different dismissal processes due to limited resources, and fairness should consider their specific circumstances.
• In terms of misconduct handling, the Draft Code allows flexibility in disciplinary procedures, emphasising fair and expeditious handling of misconduct without always needing formal procedures.
• The Draft Code eases probationary termination for poor performance, maintains current guidelines, and clarifies principles for managerial and senior employees.
• The Draft Code also clarifies dismissal for incapacity (eg imprisonment, cultural fit) and provides a template for retrenchment processes.

On 21 January 2025, the Department of Employment and Labour published a Draft Code for public comment. The Draft Code aims to provide guidance regarding the legal obligations relating to termination of employment in terms of the Labour Relations Act 1995 (LRA). The Draft Code seeks to expand on the Existing code in Schedule 8 of the LRA. 

A summary of the Draft Code

Small businesses might require different processes and procedures to deal with dismissals because they may not have the same resources as larger businesses. Therefore, when considering the fairness of a dismissal the arbitrator or commissioner should take into account the particular circumstances of the small business.

Dealing with misconduct

• Formal procedures do not have to be implemented in every instance of a contravention of a workplace rule and employers could depart from the rules and procedures in appropriate circumstances where there is a justification for doing so. This is in line with the principles that can be extracted from case law on this issue.
• There are various ways employers can address discipline without the need for criminal-style disciplinary procedures which would enable employers to dispense with misconduct matters fairly and expeditiously.
• To demonstrate that an employer has followed a fair procedure the employer would need to give an employee an adequate and reasonable opportunity to reflect on and respond to the allegation(s) of misconduct before any decision is taken.
• The established principle remains that the sanction of dismissal is only appropriate if a continued employment relationship is intolerable because of the nature and seriousness of the misconduct.
• While discipline must be consistently applied, every case needs to be decided on its own merits.
• While the Existing Code deals with dismissal for participation in an unlawful strike, the Draft Code expands on this by setting out the factors that employers would need to consider in assessing the seriousness of the contravention such as the conduct of the parties, the legitimacy of the strikers’ demands, the duration and timing of the strike, and the harm caused by the strike. The Draft Code expands on the process required to be followed by an employer before an employee is dismissed for any misconduct related to industrial action.

Dealing with poor performance

• The provisions relating to probation have been slightly relaxed so that it is easier to terminate employees for poor performance or misconduct during the probationary period.
• The current guidelines in respect of dismissals for poor performance have been maintained. In this regard, employers are required to consider whether the required performance standard was reasonably achievable.
• The Draft Code clarifies the principles that have developed in terms of the case law around poor performance in respect of managerial and senior employees whose knowledge and experience enables them to judge whether or not their performance is adequate.
• The Draft Code seeks to codify the common law position that, depending on the circumstances, an employer may not always be required to put an employee on terms in cases of poor performance. However, the employer would still be required to give the employee an opportunity to respond to allegations of unsatisfactory performance before a decision is made.

Dealing with incapacity

• The Draft Code clarifies that factors that prevent employees from performing their duties such as imprisonment or an inability to work harmoniously within a company's culture or with fellow employees may be a form of incapacity and these forms of incapacity might justify dismissal.

Dealing with dismissal based on operational requirements

• The Draft Code deals with dismissals based on an employer's operational requirements (ie retrenchments) and provides a template form for the section 189(3) letter to commence the consultation process.

Employers do not need to amend their internal codes or procedures at this stage as the Draft Code is still open for public comment and is therefore subject to change.