How to dismiss an employee fairly: an employer's checklist

You run a small business. An employee has been stealing, or cannot do the job despite months of help, or the work has simply dried up. You want to end the employment, and you want to do it in a way that does not land you at the CCMA paying a year's salary for a mistake in the paperwork.

This guide is part of our Labour law for employers: a practical guide for small businesses, which links every guide on the topic.

This checklist is for employers. It covers the three lawful reasons for dismissal, what the Code of Good Practice: Dismissal, 2025 requires for each, how much formality a small business actually needs, the documents to prepare, what you must pay on the way out, and the risk if you get it wrong. It describes the law; it is not advice on your case, and a short consultation with a labour attorney before you act is usually far cheaper than defending a referral afterwards.

The rule: a fair reason and a fair procedure

Section 185 of the Labour Relations Act 66 of 1995 (LRA) gives every employee the right not to be unfairly dismissed. Section 188 makes a dismissal fair only if it is for a fair reason and follows a fair procedure. Once the employee shows they were dismissed, section 192 puts the burden on you to prove both.

There are only three categories of fair reason:

• Conduct, meaning misconduct such as theft, assault, dishonesty, insubordination or repeated absence.
• Capacity, meaning poor work performance, or ill health or injury that prevents the employee from doing the job.
• Operational requirements, meaning the economic, technological, structural or similar needs of the business. This is retrenchment.

Some reasons are never fair. Section 187 makes a dismissal automatically unfair if the reason is, for example, pregnancy, union membership, taking part in a protected strike, or discrimination on a listed ground. Our guide on what counts as a fair reason sets out the categories from the employee's side.

The 2025 Code and small businesses

The Code of Good Practice: Dismissal, 2025 came into force on 4 September 2025. It replaced Schedule 8 to the LRA and the separate Code of Good Practice on Dismissal Based on Operational Requirements, and CCMA commissioners must take it into account. Three features matter for a small employer.

First, the Code recognises that small businesses may not be able to follow formal procedures. Written disciplinary codes may suit medium and large employers but are not essential for a small one. The Code does not define "small", so use common sense.

Second, a misconduct enquiry may be informal. Its form should fit the size of the business and the seriousness of the allegation. A meeting at which you put the allegation to the employee and genuinely listen to the answer can be enough for a straightforward matter.

Third, the Code allows departures from its norms where the circumstances justify them. That is not permission to skip the employee's chance to respond. It means you will not be penalised for lacking an HR department.

What does not change: the employee must be told what the allegation is, in enough detail and in a language they understand where reasonably possible, given adequate time to prepare, allowed to be assisted by a fellow employee or a union representative, and heard before you decide.

Misconduct: the checklist

1. Investigate. Gather the facts before you decide anything: statements, CCTV, till records, messages.
2. Identify the rule. Was there a rule or standard, was it reasonable, and did the employee know about it or should they reasonably have known?
3. Check consistency. Have you treated other employees who did the same thing the same way? Inconsistency is one of the most common reasons employers lose.
4. Put the allegation in writing and give the employee time to prepare. Our guide on running a disciplinary hearing covers notice, the chairperson and the hearing itself.
5. Hear the employee, including on mitigation.
6. Choose a proportionate sanction. The Code reserves dismissal for misconduct serious enough to make continued employment intolerable, and expects warnings for less serious conduct. Consider length of service, disciplinary record, the employee's personal circumstances and whether they acknowledge the wrongdoing. Our guide on written warnings explains progressive discipline.
7. Communicate the decision in writing, with reasons, and tell the employee they may refer a dispute to the CCMA or a bargaining council.

Incapacity and retrenchment: the differences

Poor performance. Set the standard, tell the employee where they fall short, give guidance, training or counselling, allow a reasonable time to improve, and then hear them before deciding. The Code accepts that managers and senior professionals may not need the same warning, because they can judge their own performance.

Ill health or injury. Find out how serious the condition is and how long it will last, consider adapting the job or offering other work, and consult the employee. The duty to accommodate is heavier if the illness is work-related. See incapacity versus misconduct for why using the wrong track loses cases.

Retrenchment. Section 189 of the LRA requires you to consult before deciding, issue a written notice inviting consultation, consider alternatives, agree or apply fair selection criteria, and pay severance of at least one week's remuneration for each completed year of service under section 41 of the BCEA. The 2025 Code includes a model format for the section 189(3) notice. Our retrenchment package calculator estimates the severance, and rights during a retrenchment consultation shows what the employee will expect.

The paperwork to keep

Keep a file for every dismissal. At minimum it should hold:

• the employment contract and any policy the employee breached
• the investigation notes and evidence
• the written notice of the allegations, with proof it was delivered
• notes or minutes of the hearing or meeting, signed if possible
• for performance or ill health: the reviews, improvement plans, medical information and records of consultation
• for retrenchment: the section 189(3) notice, consultation minutes and the selection criteria
• the outcome letter with reasons and the reference to the right to refer a dispute

The Code expects employers to keep records of misconduct, the action taken and the reasons. A commissioner looks at your file first. If something is not written down, assume you will struggle to prove it happened.

Notice, final pay and the leaving documents

Notice. A dismissed employee is entitled to notice under section 37 of the Basic Conditions of Employment Act 75 of 1997 (BCEA): one week up to six months' service, two weeks up to a year, and four weeks after that, or more if the contract says so. Under section 38 you may pay the notice instead of having it worked. You may terminate without notice only for serious misconduct that the law recognises as justifying it, which still requires a fair procedure. Use the notice period calculator.

Final pay. Pay salary to the last day, notice pay where applicable, accrued annual leave under section 40, and severance on retrenchment. Do not deduct anything without a lawful basis under section 34. The leave payout calculator checks the leave figure.

Certificate of service. Section 42 requires a certificate stating the employee's full name, your name and address, any bargaining council or sectoral determination covering your business, the start and end dates, the job title or description, the remuneration at termination and, only if the employee asks, the reason for termination.

UIF. Declare the termination to the Unemployment Insurance Fund and give the employee the UI-19 information they need to claim, with the correct reason for termination. Giving false information to the UIF, for example recording a resignation as a retrenchment to help the employee claim, can be a criminal offence.

The CCMA risk

The employee has 30 days from the dismissal to refer a dispute to the CCMA or a bargaining council. Conciliation comes first; if it fails, arbitration follows. If the commissioner finds the reason unfair, the primary remedy is reinstatement with back pay. Where reinstatement is not appropriate, compensation can reach 12 months' remuneration, or 24 months for an automatically unfair dismissal. Where only the procedure was unfair, awards tend to be lower, but they are still a cost you could have avoided. See how much compensation the CCMA can award for the factors commissioners weigh.

Worked example

This example is illustrative. Johan owns a bakery in Bloemfontein with nine staff. Till records show that a cashier, Precious, who has worked there for four years and earns R8 500 a month, voided R4 200 of sales over three weeks while customers paid cash.

Johan prints the till reports and pulls the CCTV for three of the voids. He gives Precious a short written notice listing the dates and amounts, attaches the reports, and invites her to a meeting two working days later with a colleague if she wishes. At the meeting she says a supervisor told her to void sales for staff meals, but cannot name one. Johan checks with the supervisor, who denies it, and adjourns briefly to consider her length of service and clean record against the dishonesty. He dismisses her summarily, gives her a written outcome with reasons and her right to refer a dispute, pays her salary to the last day and her accrued leave, issues a certificate of service and declares the termination to the UIF.

If Precious refers a dispute, Johan's file shows a fair reason and a fair, proportionate procedure.

Change the facts: if Johan had dismissed her by WhatsApp the same afternoon without hearing her, the dismissal would be procedurally unfair even if she was guilty. Had the voids turned out to be a till fault, the dismissal would be substantively unfair too, and compensation could reach 12 months' remuneration, R102 000.

What to do

1. Pause before acting in anger. Most unfair dismissals are decided in the first hour.
2. Decide which category applies: conduct, capacity or operational requirements.
3. Gather and keep the evidence.
4. Give written notice of the allegation or concern and time to respond.
5. Hear the employee and consider the response, mitigation and alternatives.
6. Decide, and put the decision and reasons in writing.
7. Pay notice, salary, leave and any severance correctly, issue the certificate of service and declare the termination to the UIF.
8. Speak to a labour attorney before dismissing a long-serving employee, before any retrenchment, and as soon as you receive a CCMA referral.