New Code of Good Practice on Dismissals: What employers need to know

Author: Nicky Hardwick

The Department of Employment and Labour has gazetted a new Code of Good Practice on Dismissals (effective the 4th September 2025). This single Code replaces both Schedule 8 of the Labour Relations Act (Dismissal) and the Code of Good Practice on Dismissal based on Operational Requirements.

For the first time, all rules on dismissals, whether for misconduct, poor performance, incapacity, probation, incompatibility, retrenchments, or strikes, are consolidated in one binding framework.

Key changes at a glance

• One code for all dismissals: Employers now have one Code that deals with every type of dismissal.
• Flexibility for small businesses: The new Code recognises the practical constraints faced by small employers, allowing more flexibility in how procedures are applied, provided the principles of fairness are respected.
• Misconduct: Progressive discipline remains the norm, but dismissal for serious misconduct can be fair even where discipline has not always been applied consistently, as long as the employer can show the sanction was justified.
• Probation and performance: It’s now easier to dismiss probationary employees if their performance falls short, provided they have been given feedback and support. For permanent staff, performance standards must be reasonable and suited to the role, with higher expectations for managers and specialists.
• Incapacity: Employers must still consider alternatives before dismissal. The Code now also recognises incompatibility with workplace culture or colleagues as a form of incapacity.
• Industrial action: The rules on unprotected strikes have been expanded, requiring employers to consider the legitimacy of demands, employee conduct, and the strike’s impact before dismissal.
• Operational requirements (retrenchments): Retrenchment rules are clearer, with structured guidance on Section 189(3) notices and disclosure requirements, while retaining the need for fair selection criteria and severance pay.

What this means for employers

The new Code brings some welcome flexibilities, especially for smaller businesses and in managing probation. However, it also raises the bar. Employers must prove both substantive and procedural fairness in every dismissal. Alternatives to dismissal should always be explored and documented. Consistency, transparency, and respect for employees’ rights remain the cornerstones of fair process.

Labour laws are shifting

Hot on the heels of the new Code of Good Practice on Dismissals, comes the proposed amendments to the Labour Relations Act (LRA) and the Basic Conditions of Employment Act (BCEA). If you look at both developments side by side, a theme becomes clear: government is trying to encourage businesses, especially smaller ones, to employ more people without living in constant fear of lengthy CCMA disputes or hefty claims.

So, what’s on the table?

• Dismissals and remedies: High-earning employees would be limited to compensation only (except for automatically unfair dismissals), which reduces the stakes for businesses in these cases.
• Probation and qualifying periods: The LRA may soon include a three-month “qualifying period” (or reasonable period) where new employees have reduced unfair-dismissal protections. This mirrors the Code’s more flexible approach to probation, giving employers time to assess new hires properly.
• Retrenchments: The proposed amendments simplify the retrenchment process, cutting out urgent procedural challenges and allowing cases to move more quickly.
• Start-ups and small employers: Exemptions are proposed for new start-up businesses (under two years old, with fewer than 50 employees) from certain bargaining council agreements. Again, the emphasis is on relief for small employers.
• New categories of workers: The BCEA amendments will bring on-call and gig workers (such as platform-based workers in ride-hailing, delivery, and freelance digital services) into clearer focus, requiring written terms and minimum guarantees. For small businesses, this could be significant. Many rely on casual or freelance workers to stay flexible and manage costs. These changes mean those arrangements will need clearer contracts and possibly minimum commitments, which adds a layer of compliance but also reduces the uncertainty that often causes disputes.

The bigger picture

Taken together, the new Code and the proposed amendments reflect a shift in tone. The message is that compliance with fairness and procedure remains non-negotiable, but government also recognises that overly rigid rules can discourage job creation. By carving out flexibility for small businesses and by making processes more streamlined and predictable, the law is creating a space where employers can hire with more confidence.