The Minister of Employment and Labour published the final Code of Good Practice: Dismissal on 4 September.
The Code, which took effect from the date of publication, repeals the Schedule 8 Code of Good Practice on Dismissal and the Code of Good Practice Based on Operational Requirements.
The substance of the final Code is identical to the draft version released in January this year.
The Code provides guidance to employers, employees, and trade unions on the legal obligations relating to termination of employment in terms of the Labour Relations Act, including termination for misconduct, incapacity, and because of the employer’s operational requirements (retrenchments).
The Code acknowledges that small employers often lack the human-resource capacity and resources available to larger organisations and cannot reasonably be expected to engage in time-consuming investigations or pre-dismissal processes in the same manner as large employers. Therefore, the Code permits a more flexible and less formal approach to disciplinary and investigatory processes for small employers. This flexibility extends to permitting informal processes where appropriate.
The Code does not provide a specific numerical or legal definition of “small business”. Employers and practitioners must therefore apply the Code’s recognition of small-business constraints on a facts-and-circumstances basis.
Although the Code allows flexibility, the employer’s actions remain subject to assessment against the overall requirement of procedural fairness. That is, small businesses may follow simpler, informal procedures, but they should document the steps taken and demonstrate that their approach was proportionate and reasonable in light of their resource constraints.
Dismissals
The Code sets out the dual requirement that a dismissal must be for a substantive reason that is fair and procedurally fair.
Fair reason
The Code identifies three broad categories of fair reasons for dismissal: misconduct, incapacity (including poor performance), and operational requirements (retrenchments). For each category, the Code describes elements employers should consider when assessing substantive fairness.
Fair procedure
The Code explains procedural requirements that are expected in dismissal processes, with room for contextual variation depending on the employer’s size and resources. Procedural fairness includes providing employees with clear allegations, an opportunity to respond, an opportunity to be represented where appropriate, and requirements for language accommodation where it is reasonable to do so.
The Code permits informal processes where justified by circumstances, but it also emphasises that an employer must make reasonable efforts to enable the employee to understand and respond to allegations.
Standard of proof and evidence
In misconduct and similar disputes, the Code specifies the evidentiary considerations and the factual elements that must be shown when justifying dismissal (see the misconduct section below). For retrenchments, the Code prescribes particular disclosure requirements and a standardised format for notices under section 189(3) of the LRA.
Collective and mass cases
The Code addresses situations involving multiple employees (for example, mass misconduct or collective disciplinary matters) and permits certain procedural adaptations such as collective representations or written submissions in place of separate individual hearings where this is reasonable and where procedural fairness can still be satisfied.
Unfair dismissals
The Code sets out the factors and tests that guide determinations of unfairness in dismissals, describing how substantive and procedural fairness are assessed and the relevant enquiries for adjudicators.
The Code confirms that adjudicators must assess both substantive reason and procedural fairness. If either element is lacking, a dismissal may be found unfair.
Procedural fairness factors
The Code lists core procedural elements (clear allegations, opportunity to respond, language accommodation where reasonably possible, right to representation when appropriate, adequate disclosure of information, and that the process should be proportionate to the employer’s resources). The Code makes clear that the procedural standard may be modulated by the size of the employer and the context (for example, allowing informal procedures for small businesses and collective approaches in mass cases).
Substantive fairness factors
The Code sets out the particular considerations relevant to different dismissal grounds.
- Adjudicators must examine whether a rule existed, whether it was reasonable, whether the employee was aware of it, whether it was breached, the importance of the rule breached, actual or potential harm caused by the breach, and whether dismissal was an appropriate sanction in all the circumstances.
- Incapacity and poor performance. The Code requires assessment of the nature and extent of the incapacity or underperformance and whether alternatives to dismissal were considered or implemented.
- Operational requirements. The Code requires that retrenchment be justifiable, that alternatives were considered, and that consultation and disclosure obligations were met.
The Code recognises that consistency in disciplinary outcomes is a relevant factor in assessing fairness, but it also clarifies that inconsistency does not automatically render a dismissal unfair in every case – particularly if the misconduct or incapacity is so serious that continued employment would be intolerable. Adjudicators must weigh consistency alongside the seriousness of the conduct and other facts of the case.
Misconduct
The Code provides a detailed syllabus of the elements that adjudicators should consider when assessing misconduct dismissals.
Core elements to establish
The Code indicates that, in misconduct cases, the following elements should be considered and, where relevant, established:
- whether a rule or standard existed;
- whether the rule was reasonable and lawful;
- whether the employee knew or should have known the rule;
- whether the rule was breached;
- the importance of the rule to the employment relationship; and
- the actual or potential harm caused by the contravention.
These elements form the basis for assessing substantive fairness in misconduct dismissals.
Dialogue and response opportunity
The Code encourages employers to undertake a “genuine dialogue” with the accused employee, ensuring the employee has adequate opportunity to reflect on allegations and to respond before a dismissal decision is made. It requires employers to make reasonable efforts to enable employees to communicate in a language they understand when responding to allegations. The Code therefore emphasises clarity of allegation and an adequate response opportunity as procedural prerequisites.
Informal disciplinary processes
The Code recognises and permits informal disciplinary processes where appropriate. It sets out that rigid or formal processes are not always practical – particularly for small employers – and that informal procedures may be fair if they still provide a reasonable opportunity to respond and are proportionate to the employer’s resources and the seriousness of the allegation.
Consistency and severity
The Code requires consideration of whether prior disciplinary outcomes in similar circumstances were consistent, but it clarifies that inconsistency may be excused where the particular breach was so grave that continued employment would be intolerable. The Code therefore requires a contextual assessment that balances consistency concerns with the severity and consequences of the misconduct.
Additional procedural requirements in arbitration
The Code indicates that adjudicators (for example, CCMA commissioners) should take into account the importance of the rule and the harm caused when deciding whether dismissal for misconduct was substantively fair. That is, in arbitration an employer must be prepared not only to prove that a rule existed and was broken, but also that the breach was of sufficient importance and caused sufficient harm to justify dismissal.
Probation
The Code addresses probationary employment and the assessment of poor performance during and after probation.
Probationary dismissals
The Code provides for a somewhat lower evidentiary threshold for dismissing employees during probation than applies after completion of probation. It states that probationary periods permit employers somewhat greater latitude to terminate employment on grounds of misconduct or poor performance during the probationary period, subject to the requirement that dismissals not be used to disguise discriminatory or prohibited conduct. Employers must, however, still follow a fair procedure appropriate to the circumstances.
Probation must not mask discrimination
The Code cautions that employers must not use probation to mask the replacement of employees on prohibited grounds; probationary processes and outcomes remain subject to protection against discrimination and other statutory prohibitions.
Post-probation performance management
For poor performance after probation, the Code retains the core principles of fair performance management but clarifies expectations. It distinguishes between ordinary employees and senior or managerial employees, stating that senior/managerial employees are held to higher standards of self-management and accountability.
- For senior staff, the Code states that explicit warnings about possible dismissal may not always be necessary before dismissal, provided such employees have been given an opportunity to respond to allegations of poor performance.
- For ordinary employees, the Code continues to require that employers follow fair performance-management processes that include reasonable warnings and opportunity to improve, except where the circumstances make warnings unnecessary (for example, where a dispute of ability to perform has been made clear and addressed).
Alternatives and support
The Code requires that where poor performance or incapacity is alleged, employers should consider alternative measures, reasonable accommodations, and support interventions where appropriate before resorting to dismissal.
In specified incapacity contexts such as substance abuse, the Code encourages consideration of counselling and rehabilitation as possible alternatives to dismissal, while noting that such measures may prolong the process before dismissal can be considered.
