Draft New Code of Good Practice on Dismissal

Employers, lawyers and HR practitioners will no doubt all have well-thumbed copies of the existing Code of Good Practice: Dismissal that is Schedule 8 to the Labour Relations Act, 66 of 1995 (‘the Dismissal Code’).?It is a succinct statement of the essential principles governing dismissals for misconduct, participation in unprotected industrial action (strikes), poor performance and incapacity for ill-health or injury. It also deals with probation management and dismissals arising out of an unsuccessful probation.

It appears that the intention of the new draft (‘the Draft Code’) is to partly to update the Dismissal Code with judicial interpretations since the last time it was amended in 2002, and partly to rationalise its provisions. The presently separate Code of Good Practice on Dismissal Based on Operational Requirements (‘the Retrenchment Code’) is being incorporated and expanded, so that all categories of dismissal will be dealt with in one Code in future. Finally, the provisions governing dismissal for participating in unprotected strikes have been substantially expanded.

What has not changed?

To set your minds at rest, let me say up front that just about everything that is in the existing Dismissal Code is also in the Draft Code, albeit not always in exactly the same form or place. The essential principles that you are familiar with remain intact.

What is new?

Acknowledgement of the special circumstances in which small businesses operate

The Draft Code incorporates a section entitled ‘Small businesses’ (Draft Code Item 3) which specifies that the Code should not be interpreted as requiring small businesses to comply with obligations that are not practical or feasible for their businesses (Item 3(1)). Any person determining the fairness of a dismissal (ie, disciplinary hearing chairperson, arbitrator or judge) is required to take into account the circumstances in which small businesses operate (Item 3(2)). It says:

‘For example, small businesses cannot reasonably be expected to engage in time-consuming investigations or pre-dismissal processes while at the same time keeping the business going. It should also be borne in mind that small employers do not have human resource departments staffed by people with skills and experience in these matters.’ (Item 3(3))

The Draft Code does not define ‘small business’. Neither does the LRA. So precisely what constitutes a small business is left to common sense and definition by the courts in due course.

Emphasising informality in disciplinary processes

The existing Dismissal Code has always stressed that ‘[f]ormal procedures do not have to be invoked every time a rule is broken or a standard is not met. Informal advice and correction is the best and most effective way for an employer to deal with minor violations …’ (Dismissal Code Item 3(3)). Also, that a disciplinary investigation or enquiry does not have to be formal (Dismissal Code Item 4(1)), giving content to the requirement of 188(1)(b) that a dismissal must be ‘effected in accordance with a fair procedure’. The Draft Code expands on this by stressing that the nature of the enquiry ‘should be appropriate to the circumstances, including the type of allegation and the nature and size of the employer’ (Draft Code Item 11(3)).?

Dismissal for operational reasons (retrenchments, redundancies, restructuring, etc)

The existing Dismissal Code does not deal with retrenchments and the like at all. These are dealt with in the separate code that I have described above as the Retrenchment Code. The provisions of the Retrenchment Code have been expanded and are included in the Draft Code as Part G, Items 22-24. The Draft Code sets out these provisions in a logical, step by step description of both the substantive aspects (what is a fair reason for retrenchment?) (Item 23) and the procedural aspects (what is a fair procedure to effect a retrenchment?) (Item 24). It also touches on the related aspects of severance pay and re-employment (Items 24(15) and (16)), and it includes a suggested format for the notice of possible retrenchment mandated by section 189(3) of the LRA (Item 24(2) and Annexure A).

Dismissal for participating in an unprotected strike

The Draft Code deals with this as a subset of Misconduct (Part D, Item 12) which has its own specific requirements in addition to complying broadly with the requirements for misconduct dismissals, where those may be applicable. The few provisions on this topic in the existing Dismissal Code are retained, but expanded upon by introducing:

(a) specific factors to consider in assessing the seriousness of the contravention (conduct of the parties or others that may have a bearing; legitimacy of the strikers’ demands; duration and timing of the strike; and harm caused by the strike (Item 12(2)). Note the use of the broader term ‘harm’ as opposed to the narrower ‘damage’, which usually relates to a loss quantifiable in precise financial terms;

(b) detailed procedural steps to be taken by the employer before dismissal, including involving a trade union official or other leader or representative, allowing an opportunity for consultation and considering the representations made; issuing a clear ultimatum and allowing sufficient time to reflect (Item 12(3)(a)-(e));

(c) sounding a caution that it may not be fair to dismiss employees who actually comply with the ultimatum and return to work - obviously circumstance-dependant (Item 12(3)(f));

(d) allowing for the employer to satisfy the requirements of procedural fairness by calling for collective rather than individual representations in an enquiry dealing with what amounts to collective misconduct (Item 12(3)(h));

(e) noting that if circumstances are such that the employer cannot reasonably be expected to comply with these requirements, they may be dispensed with (Item 12(3)(i)).

Expanding the ambit of incapacity dismissal

Recognition is given to the long-accepted fact that incapacity does not result only from ill-health or injury, but can arise from any other factor preventing an employee from being able to work. The example of imprisonment is given. Incompatibility, in the sense of being unable to work in harmony with an employer’s business culture or with fellow employees, is also characterised as a form of incapacity (Draft Code Item 21(6)-(7)).

Considering whether dismissal is an appropriate sanction

The factors to be taken into account when considering whether dismissal is an appropriate sanction are expanded to include:

(a) the effect of the misconduct on the business;

(b) whether progressive discipline might prevent a recurrence of the misconduct; and

(c) any acknowledgement of wrongdoing by the employee and willingness to comply with the employer’s rules and standards. (Draft Code Item 9(2)-(4))

Deciding on an appropriate sanction

The guidelines for determining a fair disciplinary sanction (Dismissal Code Item 7) have the following new considerations added:

(a) how important is the rule or standard in the workplace?

(b) what is the actual harm or damage caused by the contravention of the rule or standard? (Draft Code Item 8(2)(c) and (d))

These considerations focus attention on the actual impact of the contravention rather than solely on the formal fact that a rule has been contravened which may in itself be of no real consequence.

Poor work performance

One further consideration has been added to those that must be taken into account when deciding whether a dismissal for poor performance is fair: whether the performance standard required of the employee was reasonably achievable (Draft Code Item 20(1)(b)(iii)). This seems to speak for itself, but see the recent case (Samson v Commission for Conciliation, Mediation and Arbitration and Others?(JR2023/22) [2025] ZALCJHB 13 (14 January 2025)) where the Labour Court had to set aside as an unfair labour practice a final written warning given to an employee, ostensibly for negligence but in reality for failed work performance in circumstances involving unattainable targets, inadequate resources and unreasonable expectations. ?

Comment

The interested public has 60 days within which to comment or make proposals on the draft. No doubt the final version will contain further changes, but the draft that has been tabled is certainly a step forward in addressing some of the concerns that have been expressed over time.

Particularly welcome is the recognition of the particular circumstances in which small businesses operate, and the impact that they have on the employer’s ability to comply with many of the requirements imposed by courts and arbitration processes which have failed to grasp that a disciplinary hearing (in any size of business) is not meant to comply with the procedural requirements expected of a trial before the courts. This is explicitly spelt out in Item 4(1) of the existing Dismissal Code, but for some unfathomable reason, this seems to be consistently ignored. It is one aspect I would have liked to see strengthened even more in the Draft Code than it is, but it may be that the damage that has been done will take more than a new Code to unravel. Hopefully this is a cause that the Labour Court may be better placed to prosper.

?Kevin Mulligan 2025

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