24 January 2025

The recent publication of the Draft Code of Good Practice on Dismissal by the Department of Employment and Labour introduces several significant updates to South African labour practices. Employers, employees, and trade unions are encouraged to review and submit comments by 22 March 2025. Key changes include:
1. Incompatibility as Grounds for Dismissal
The draft code explicitly acknowledges incompatibility—defined as an employee's inability to work harmoniously within the workplace—as a valid reason for dismissal under incapacity.
Historically, South African courts have grappled with this concept. Notably, in Erasmus v BB Ltd (1987) 8 ILJ 537, the Court recognized incompatibility as a legitimate ground for dismissal. However, employers must ensure that any such dismissal is preceded by a thorough investigation and adherence to fair procedures. This includes providing the employee with an opportunity to rectify the behaviour and considering alternative solutions before resorting to termination of employment.
2. Procedural Flexibility for Small Businesses
Recognising the unique challenges faced by small enterprises, the draft code allows for more informal disciplinary procedures. While this flexibility acknowledges resource constraints, it does not diminish the imperative of fairness. Employers must still ensure that employees are treated justly and consistently, providing clear communication and opportunities for representation during disciplinary actions. This approach aligns with the understanding that small businesses may lack dedicated HR departments but are still obligated to uphold fair labour practices.
3. Emphasis on Substantive Fairness over Procedural Formalities
The draft code suggests that while consistency in disciplinary actions is important, deviations will not automatically render a dismissal unfair. This perspective shifts the focus towards the substantive fairness of the dismissal, considering whether the employee's conduct has led to an irreparable breakdown in the employment relationship. Employers are advised to document all steps taken during the disciplinary process meticulously, ensuring that decisions are based on objective evidence and that employees are given fair opportunities to respond to allegations.
4. Clarified Procedures for Dismissals based on Operational Requirements
The draft code provides detailed guidelines for dismissals based on operational requirements, emphasising the necessity of a genuine consultation process. Employers are required to engage in meaningful dialogue with affected employees or their representatives, exploring alternatives to dismissal and selecting criteria for retrenchment that are fair and objective. This approach aims to balance the employer's need to adapt to economic pressures with the employees' right to fair treatment.
Implications for Employers:
These proposed changes present both opportunities and challenges for employers:
• Pros:
1. Enhanced clarity on grounds for dismissal, particularly concerning incompatibility, allows for more confident decision-making.
2. Procedural flexibility for small businesses can reduce the administrative burden, making it easier to manage disciplinary issues effectively.
• Cons:
1. The need for thorough documentation and adherence to fair procedures remains critical, requiring employers to invest time and resources in training and policy development.
2. Potential for increased disputes if employees perceive the relaxed procedural requirements as undermining their rights, necessitating careful communication and consistent application of policies.
Employers are encouraged to review the draft code in detail and consider submitting feedback to ensure that the final version aligns with practical business realities while upholding fair labour standards. Engaging with the Invictus Group can provide valuable insights into adapting current practices to meet these forthcoming changes.