South Africa’s world of work is entering a new era. On 4 September, Employment and Labour Minister Nomakhosazana Meth signed into law a new Code of Practice for the Dismissal of Employees, replacing the long-standing Schedule 8 Code of Good Practice on Dismissal.
The updated code sets out guidelines for employers, employees, and trade unions on how to handle misconduct, incapacity, and retrenchments under the Labour Relations Act. Legal experts Nadeem Mahomed and Sashin Naidoo from Cliffe Dekker Hofmeyr say the changes bring clarity but also room for flexibility, especially for small businesses.
What’s Changing in Dismissals?
- Fairness first: Dismissals must follow a fair process and should only take place when keeping someone employed has become impossible.
- Small business flexibility: Smaller employers are given more leeway in how they manage disciplinary steps and consultation.
- Probation clarity: Employers must set reasonable probation periods and cannot use them as a way to avoid giving staff permanent jobs.
- Consistency matters: Employees who commit similar misconduct in similar circumstances should normally face similar consequences. If the trust between employer and employee has been destroyed, dismissal can still be fair even if the sanction is not consistent with earlier cases.
- Broader coverage: The code also deals with incapacity, including ill-health, poor performance, and incompatibility, as well as unprotected strikes. Employers are expected to issue clear ultimatums and give workers enough time to comply.
- Retrenchments tightened: Employers must provide written notice, consult in good faith about alternatives, apply fair selection criteria, pay statutory severance, and consider affected employees first when rehiring.
The new code closely follows the draft version that was released for public comment in January 2025. It also places greater emphasis on dialogue and reflection rather than treating procedural mistakes as automatically fatal. This reflects a broader move towards a more balanced and less punitive approach to workplace fairness.
The Second Major Change: Employment Equity Reporting
At the same time, South Africa has entered its Employment Equity (EE) Reporting season, which opened on 1 September. This is the first reporting round since the Employment Equity Amendment Act took effect in January 2025.
Here is what employers need to know:
- Who it applies to: Companies with 50 or more employees.
- Demographic targets: The Department of Employment and Labour has set out equity targets across 18 industries to ensure that workplaces reflect the country’s population profile.
- Designated employees: Employers are required to prioritise the inclusion of black (African, Coloured, and Indian), female, and disabled workers.
- High stakes: Non-compliance can cost employers up to R1.5 million or 2% of annual turnover. It can also result in the loss of Employment Equity Compliance Certificates, which are essential for securing state contracts.
- Planning horizon: Employers must prepare and implement an EE plan that runs from 1 September 2025 until 31 August 2030.
Taken together, the new dismissal code and the employment equity requirements represent a major shift in South African labour law. The changes are designed to protect fairness and dignity in the workplace while pushing businesses to reflect the country’s diversity more accurately at every level of employment.
