Dismissal codes expanded: What employers need to know

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The Draft Code expands on the Current Code and now addresses all aspects leading to the termination of employment, including dismissals based on the employer’s operational requirements.

The most significant changes are highlighted below.

Application to small businesses

As with the Current Code, the Draft Code recognises that the form and content of disciplinary rules will vary depending on the size and nature of the employer’s business. The Draft Code, however, specifically acknowledges that small businesses cannot reasonably be expected to engage in time-consuming investigations or pre-dismissal processes and that they do not have human resource departments staffed by people with skills and experience in these matters. Accordingly, any person determining the fairness of a dismissal should take into account the circumstances in which small businesses operate.

It remains a preference that medium and larger employers adopt written disciplinary rules and procedures to establish the standard of conduct expected from their employees, and to create certainty and consistency in the application of discipline.

Misconduct

The Draft Code’s approach to misconduct is one that aligns with the objective of the LRA of expedient dispute resolution. In this regard, the Draft Code emphasises the legitimacy of informal disciplinary processes, recognising that formal procedures do not have to be followed every time a rule is broken. It also recognises that employers may depart from the relevant rules and procedures in instances where there is justification for doing so, but points out that the employer may be obliged to justify its departure should the employee refer an unfair dismissal dispute questioning the fairness of the process followed.

While this is not an entirely new development, it serves to reinforce the various ways employers can address discipline in the workplace in a manner that still follows the prescripts of a fair procedure, without invoking adversarial, criminal-style disciplinary mechanisms. In this regard, employers would be able to dispense with misconduct matters fairly and expeditiously.

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On what constitutes a ‘fair procedure’, the Draft Code places an emphasis on the need for employers to ensure a genuine dialogue, whereby an employee is provided with an adequate and reasonable opportunity to reflect on, and respond to, the allegation/s of misconduct before any decision is taken. Where reasonably possible, the employee should have the opportunity to converse in a language the employee is comfortable with.

The Draft Code maintains the general principle that the sanction of dismissal would only be appropriate if a continued employment relationship is intolerable, as informed by, among other factors, the nature and seriousness of the misconduct.

It is trite that the sanction of dismissal should be consistently applied. Nevertheless, the Draft Code notes that inconsistency would not necessarily mean that the dismissal is unfair where the misconduct renders the continuation of the employment relationship intolerable, and therefore, employers would need to judge each case on its own merits.

Dismissal and industrial action

The Current Code deals with dismissal for participation in strike action that does not comply with the provisions of the LRA. The Draft Code seeks to expand on this by introducing factors that employers need to consider in assessing the seriousness of the contravention, including the conduct of the parties, the legitimacy of the strikers’ demands, the duration and timing of the strike, and the harm caused by the strike.

Further, the Draft Code expands on the process that should be followed by an employer before an employee is dismissed for any misconduct related to industrial action.

In line with the realities faced by employers in dealing with collective misconduct, the Draft Code recognises that, depending on the circumstances, an employer may satisfy the requirements of procedural fairness by calling for collective representations. To dispense with the matter expeditiously, it is our view that these representations could be made in writing.

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Probation

One of the more significant changes in the Draft Code is that the provisions relating to probation have been relaxed slightly, making it easier for employers to terminate employment during this period, both for poor work performance, and misconduct.

Poor work performance after probation

The Draft Code has retained the current guidelines (albeit slightly relaxed) in cases of dismissal for poor work performance, and further requires, as one of the factors in determining whether the dismissal was fair, consideration of whether the required performance standard was reasonably achievable.

A significant development in this respect is the clarification of poor performance management for managerial and senior employees whose knowledge and experience enables them to judge whether their performance is adequate, and those employees with a high degree of professional skill where a departure from the required standards would have severe consequences.

In this respect, the Draft Code reflects the position that has developed through case law that, depending on the circumstances, an employer may not be required to warn such employees that they might be dismissed if their performance does not improve before considering dismissal. The employer would, however, still be required to afford the employee an opportunity to respond to allegations of unsatisfactory performance before a decision is made.

Other forms of incapacity

Over the years, our courts have accepted that dismissals for incapacity may arise due to other factors preventing employees from performing their duties, including, for example, imprisonment. An employee’s incompatibility (ie. the inability to work in harmony with the employer’s business culture or fellow employees) can also constitute a form of incapacity. These species of incapacity are now formally recognised in the Draft Code as grounds which may justify dismissal.

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Operational requirements

Significantly, the Draft Code now also covers retrenchments. In this regard, it includes certain provisions and issues currently contained in the Code of Good Practice on Dismissal Based on Operational Requirements (Retrenchment Code), with some elaboration and amendment.

One of the notable differences as compared with the current Retrenchment Code is that the Draft Code provides a form for the section 189(3) notice, that addresses the information required to be disclosed by the employer in tabular question-form.

Conclusion

The Draft Code seeks to deal with all forms of dismissal under one Code, in a manner that is clearly discernible and easy to follow. The Draft Code does not make extensive amendments to the Current Code but has certain noticeable relaxations and expanded requirements to ensure that dismissals are for a fair reason and follow a fair procedure, considering the nature and size of the employer.

There is no obligation on employers to amend their internal codes or procedures at this point. Nevertheless, we would encourage employers to familiarise themselves with the Draft Code and keep abreast of any further changes that may arise.

Employers would be well-advised to adhere to the prescripts of procedural and substantive fairness in the conduct of any process leading to an employee’s dismissal, to avoid disputes.

Members of the public are encouraged to submit written comments on the Draft Code within 60 days from the date of publication (ie. by 22 March 2025).