The Department of Employment and Labour published the Draft Code of Good Practice on Dismissals on 21 January. The Draft Code revises and expands upon Schedule 8 of the Labour Relations Act. It provides a more detailed framework governing dismissals, covering aspects such as procedural and substantive fairness, misconduct, incapacity, participation in unprotected strikes, and operational requirements.
Law firms Bowmans and Werksmans have provided analyses of the Draft Code, identifying its significant changes, implications, and potential consequences.
Recognition of small businesses and procedural flexibility
The Draft Code recognises the constraints faced by small businesses, particularly in handling disciplinary matters.
Bowmans’ Keshni Naicker (partner) and Amandla Makhongwana (senior associate) note that the Draft Code “specifically acknowledges that small businesses cannot reasonably be expected to engage in time‐consuming investigations or pre-dismissal processes”, and such employers lack the human resource capacity available to larger organisations. The Draft Code permits a more flexible approach to disciplinary procedures, which should be considered when determining the fairness of a dismissal.
Similarly, Werksmans’ Andries Kruger (partner) and Amy King (knowledge lawyer) highlight that “rigid processes are often impractical for small employers with limited resources”, emphasising that the Draft Code allows them to address workplace issues informally. This is intended to reduce administrative burdens that could hinder business operations.
Misconduct and procedural fairness
One of the major revisions in the Draft Code is its treatment of misconduct dismissals, particularly the reinforcement of informal disciplinary processes. Both law firms recognise this as a positive shift towards efficiency and practicality.
Bowmans observes that the Draft Code promotes “a genuine dialogue” between employer and employee, ensuring that an accused employee has “an adequate and reasonable opportunity to reflect on, and respond to, the allegation/s of misconduct before any decision is taken”. Employers must also make reasonable efforts to allow the employee to communicate in a language with which they are comfortable.
Werksmans says the Draft Code will have implications for CCMA arbitrations, noting that in unfair dismissal disputes, commissioners must consider additional elements of substantive fairness, specifically:
- the importance of the rule or standard that has been breached; and
- the actual or potential harm caused by the contravention.
According to Werksmans, this new approach places an additional burden on employers, who must now prove not only that the rule existed and was broken but also that the breach was of sufficient importance to warrant dismissal. This requirement may lead to more complexity in proving substantive fairness in dismissal cases.
Although consistency in the application of disciplinary action remains a core principle, the Draft Code clarifies that inconsistency does not automatically render a dismissal unfair, particularly where the misconduct is so severe that continued employment would be intolerable.
Dismissals for incapacity and poor performance
Probation and poor performance management
Bowmans highlights that the Draft Code introduces slight relaxations in probation-related dismissals, making it easier for employers to terminate employment during probation because of misconduct or poor performance. This change provides employers with greater flexibility during the probationary period.
For dismissals based on poor performance after probation, the Draft Code largely retains the current guidelines but with important clarifications. Specifically, it introduces a distinction between ordinary employees and senior/managerial employees, acknowledging that the latter group is inherently expected to understand their performance standards.
Bowmans points out that for such employees, explicit warnings may not be necessary before dismissal, provided they are given an opportunity to respond to allegations of poor performance. Werksmans states that “explicit warnings about possible dismissal may not always be necessary” for senior employees because of their heightened accountability.
Recognition of other forms of incapacity
The Draft Code formally recognises additional categories of incapacity as grounds for dismissal, aligning with evolving case law.
Bowmans highlights the inclusion of incompatibility, where an employee’s inability to work harmoniously within the organisation could justify dismissal. It also notes that factors such as imprisonment may constitute incapacity.
Regarding substance abuse-related incapacity, Werksmans emphasises that the Draft Code encourages exploring non-dismissal interventions such as counselling and rehabilitation. Although this promotes fair treatment of employees, it may also impose significant procedural demands on employers, extending the process before dismissal can be considered.
Dismissals for participation in unprotected strikes
The Draft Code introduces significant changes to dismissals for industrial action, expanding on the considerations for procedural and substantive fairness.
Procedural fairness in collective misconduct
The Draft Code recognises that procedural fairness can, in certain cases, be satisfied through collective representations rather than individual hearings. Bowmans notes that this is particularly useful in cases of mass misconduct, suggesting that employers could expedite matters by allowing employees to submit written representations.
Werksmans views this codification as a positive development, because it aligns with common industrial relations practice. However, it also raises concerns about potential ambiguity in implementation.
Substantive fairness and employer conduct
Bowmans says the Draft Code introduces new factors that employers must consider when determining whether to dismiss employees for participating in unprotected strikes, such as:
- the conduct of the parties involved;
- the legitimacy of the strikers’ demands; and
- the harm caused by the strike.
Werksmans warns that a significant shift in language could have unintended consequences. Under the current framework, a key consideration is whether the strike was in response to “unjustified” conduct by the employer. The Draft Code broadens this to include “unlawful, unfair or unreasonable conduct by the employer”, potentially increasing the likelihood of wildcat strikes by weakening the incentive for workers to adhere to formal strike procedures.
Dismissals for operational requirements (retrenchments)
The most significant structural change in the Draft Code is the inclusion of retrenchments, which were previously regulated under a separate code.
Bowmans notes that the Draft Code incorporates and expands upon provisions from the Code of Good Practice on Dismissal Based on Operational Requirements, providing a new standardised form for the section 189(3) notice. This aims to improve clarity by outlining the required disclosures in a tabular question format.
Werksmans points that although the Draft Code insists that retrenchment should be a last resort, this may signal a departure from existing jurisprudence, which recognises that retrenchments may be pursued for reasons such as enhancing profitability.
Deadline to comment
Members of the public have been invited to submit their written comments on the Draft Code within 60 days from the date of publication in the Government Gazette (that is, by Friday, 21 March).
Click here to download the Draft Code.
Disclaimer: The information in this article does not constitute legal advice.