Schedule 8 to the Labour Relations Act 66 of 1995 was substituted in its entirety by GenN 3470 in Government Gazette 53294 of 4 September 2025. Every South African employer that is currently managing an underperformer is therefore running a process governed by a Code that did not exist when most internal disciplinary codes were written. Dismissal for poor work performance is the incapacity ground that generates the highest volume of disputes at the CCMA, and the practical question for employers is narrow. Does the process you are running now still hold up under the substituted Code, and if it does not, what can be corrected before the enquiry sits.
This article deals with poor performance after probation. For a Code-wide overview, see the 2025 Code of Good Practice on Dismissal.
What the 2025 Code of Good Practice Changed About Poor Performance
The substituted Schedule 8 places poor work performance in Part F, headed Incapacity, alongside ill health, injury and other forms of incapacity. Misconduct sits separately in Part D. That structural separation matters, because it signals that incapacity and poor work performance are corrective and remedial in nature rather than punitive.
Item 19 provides that after probation, an employee should not be dismissed for unsatisfactory performance unless the employer has given the employee appropriate evaluation, instruction, training, guidance or counselling, and after a reasonable period of time for improvement the employee continues to perform unsatisfactorily. Item 19(2) adds that before dismissing, the employer should give the employee an opportunity to respond to the allegations of unsatisfactory performance.
Item 20(1) sets out what any person determining fairness should consider. Whether the employee failed to meet a performance standard, and if so, whether the employee was aware or could reasonably be expected to have been aware of the required standard, whether the employee was given a fair opportunity to meet it, whether the standard was reasonably achievable, and whether dismissal was an appropriate sanction for not meeting it.
The most useful way to understand the shift is this. The 2025 Code of Good Practice adopts a more flexible, context-based approach to procedural fairness and moves away from a rigid checklist of prescribed steps, while still requiring a process that is fair and reasonable in the circumstances. The Code largely codifies and modernises principles that already existed in South African labour law. It did not create a new body of law, and it did not remove the obligation to give a genuine opportunity to improve.
Two further points of context deserve a mention. Item 21(6) confirms that incapacity may arise from factors unrelated to ill health or injury, including imprisonment. Item 21(7) confirms that incompatibility, as manifested by an inability to work in harmony with an employer’s business culture or with fellow employees, can constitute a form of incapacity. Neither provision is a route to dismiss an underperformer under a different label. They are separate incapacity heads with their own evidentiary demands.
Classifying the Problem Correctly Before You Act
The first fork in the road is classification, and it is where a substantial number of employer cases fail before the merits are reached. Section 188 of the Labour Relations Act requires the employer to prove a fair reason and a fair procedure. Choosing the wrong reason means running the wrong process.
- Poor work performance concerns an employee who is capable of doing the job but fails to meet the required standard.
- Misconduct involves a wilful breach of a workplace rule. The employee could comply and chose not to.
- Ill-health incapacity arises where a medical condition prevents satisfactory performance.
- Incompatibility relates to an inability to maintain harmonious working relationships rather than an inability to produce output.
- Operational requirements concern the employer’s economic, technological or structural needs, and not the employee’s conduct or capacity at all.
Misclassification often results in the employer following the wrong legal process, which can render the dismissal procedurally unfair and, in some cases, substantively unfair. Getting the classification right is what separates a case in which incapacity and poor work performance are managed correctly from a defensible dismissal that collapses on a procedural footing.
Certain red flags should prompt a pause. Allegations of deliberate or negligent conduct point toward misconduct. Personality conflicts and relationship breakdowns point toward incompatibility. Performance concerns that surface only after a restructuring or redundancy process point toward operational requirements. Concerns linked to a protected characteristic such as disability, pregnancy, age or race raise a potential discrimination issue, which changes the analysis entirely.
If you are unsure whether the issue is misconduct or poor work performance, resolve that question before issuing anything in writing. Where the employee is still serving probation, a different pathway applies. Dismissing a probationary employee for underperformance is governed by Part E of the Code, which under item 18(2) permits reasons that may be less compelling than would be the case after probation.
Uncertain how to classify the problem? Book an employer-side labour consultation before the first formal step is taken. Our labour law services include a process audit at any stage of the matter.
Dismissal for Poor Work Performance: The Fair Procedure Step by Step
The Code does not prescribe a fixed sequence. It does describe what a fair process looks like, and the following steps reflect what the Code requires read together with established practice.
Step 1. Set and communicate the standard. The employee must be aware, or reasonably capable of being aware, of the required performance standard, and that standard must be reasonably achievable. A standard that exists only in a manager’s head does not satisfy item 20(1)(b)(i).
Step 2. Assess performance fairly and identify the shortcoming. Record what the standard is, what the actual performance is, and the gap between them. Vague dissatisfaction is not a shortcoming.
Step 3. Provide evaluation, instruction, training, guidance or counselling. This is the express language of item 19(1)(a). Support is not an optional courtesy. It forms part of the fair reason itself.
Step 4. Allow a reasonable period for improvement. This is commonly structured as a performance improvement plan. The Code does not use that term and does not require one, but a well-constructed performance improvement plan remains the most reliable way to evidence compliance with item 19(1). It should identify the required standards, the areas needing improvement, the support and training to be provided, measurable objectives, review dates, and the consequences of failing to improve.
Step 5. Hold an incapacity enquiry if performance remains unsatisfactory. The employee must be given an opportunity to respond to the allegations. The employer must genuinely consider any explanation offered, and must consider alternatives short of dismissal. An incapacity enquiry is not a disciplinary hearing, and running it as one is a common and avoidable error.
Step 6. Consider and record alternatives. Additional training, coaching or mentoring, extending the improvement period, adjusting expectations where appropriate, transfer to a more suitable available position, or demotion by agreement. Where an alternative is rejected, record why it was not reasonable or viable.
Step 7. Decide. Dismissal should follow only where it is an appropriate sanction in the circumstances, applying item 20(1)(b)(iv).
Senior Employees and Small Businesses: Where Formality Relaxes and Where It Does Not
Item 20(2) provides that depending on the circumstances, an employer may not be required to warn an employee that dismissal may follow if performance does not improve. The Code identifies two categories where this may apply. Managers and senior employees whose knowledge and experience enables them to judge whether their own performance is adequate, and employees with a high degree of professional skill where a departure from that standard would have severe consequences.
Item 3 addresses small businesses. The Code should not be interpreted as requiring small businesses to comply with obligations that are not practical or feasible for their operation. Item 3(3) records that small businesses cannot reasonably be expected to engage in time-consuming investigations while at the same time keeping the business going, and that they do not have human resource departments staffed by people with skills and experience in these matters.
Two cautions apply, and both matter.
First, whether an employee falls within the senior or highly skilled category is a fact-specific enquiry. A senior job title is not the test. The test is whether the employee’s knowledge and experience genuinely enables self-assessment against the standard.
Second, reduced formality is not an exemption from fairness. The employer must still inform the employee of the shortcomings, provide a reasonable opportunity to improve where appropriate, allow the employee to respond, and consider alternatives to dismissal. These core requirements cannot be dispensed with, whatever the size of the business or the seniority of the employee.
What You Must Have on File Before an Incapacity Enquiry
An incapacity enquiry is only as strong as the record behind it. Before proceeding, an employer should hold the following.
- The employee’s job description.
- The KPIs, targets or performance standards applicable to the role, with evidence that they were communicated.
- Performance appraisals and review records.
- Notes of counselling, coaching and feedback sessions.
- Records of training or support provided.
- The performance improvement plan, its measurable objectives and its review outcomes.
- Correspondence relating to the performance concerns.
- Records showing that the employee was given a reasonable opportunity to improve.
This evidence goes to both substantive and procedural fairness. Where it is absent, the employer is usually reconstructing the case after the decision has already been taken, and that is visible to an arbitrator.
Preparing for an incapacity enquiry? Vermeulen Attorneys audits the file, the standard-setting record and the improvement period before the enquiry sits, rather than after the award arrives. Contact us to arrange a review.
Where Employers Lose These Cases at the CCMA
A dismissal for underperformance is tested by the Commission for Conciliation, Mediation and Arbitration against section 188 and the Code. Section 188(2) requires that any relevant code of good practice be taken into account. The recurring employer failures are consistent.
- No clear performance standard. The employee cannot have failed a standard that was never communicated or was not reasonably achievable.
- No genuine support. Item 19(1)(a) is treated as a formality rather than an obligation.
- A performance improvement plan set up to fail. Targets that are unrealistic, support that is insufficient, a timeframe that is unreasonably short, or an outcome that was decided in advance. Where the record shows the employer had already resolved to dismiss, the improvement period is likely to be regarded as a sham.
- Inconsistent application. Comparable underperformers treated differently without explanation.
- An enquiry that looks like a disciplinary hearing. Charges, a prosecutor and a guilt finding signal that the employer was really running a misconduct case.
- Wrong classification. A dismissal for underperformance that was in truth a misconduct or operational requirements matter.
No outcome can be promised. Fairness under the Code depends on the facts, the evidence and the assessment of the commissioner or the court. A defensible process improves the employer’s position. It does not determine the result.
When to Involve Labour Attorneys
Legal advice should be sought as soon as it becomes apparent that dismissal may be a possible outcome, and in complex matters involving senior employees, disputed performance standards or procedural concerns. Employers who wait until a referral has been received have usually lost the opportunity to correct the record.
Even where errors have occurred, early intervention can identify the defects, recommend corrective steps and strengthen the employer’s position before an incapacity enquiry or a CCMA referral. Where the matter has been mischaracterised, restarting under the correct process is often better than defending a process that was flawed from the outset. Employers who also run disciplinary hearings should keep the two processes and their documentation clearly separate.
General guidance on employer obligations is published by the Department of Employment and Labour.
Frequently Asked Questions
How many warnings are required before dismissal for poor work performance?
The Code does not prescribe a number of warnings. Item 19(1) requires appropriate evaluation, instruction, training, guidance or counselling, followed by a reasonable period for improvement. Item 20(2) provides that, depending on the circumstances, an employer may not be required to warn that dismissal may follow. This may apply to managers, senior employees and employees with a high degree of professional skill. The better question is whether the employee knew the standard, was supported, and was given a fair opportunity to meet it.
Is a performance improvement plan legally required?
No. The Code does not use the term and does not require a performance improvement plan as such. What it requires is appropriate support and a reasonable period for improvement. A properly constructed performance improvement plan remains the most practical way to evidence that those requirements were met, which is why it is standard practice rather than a legal obligation.
How long should a performance improvement plan run?
There is no prescribed minimum period. Any statement that a plan must run for 30, 60 or 90 days would be legally incorrect. The period must be reasonable having regard to the nature and complexity of the role, the performance deficiencies, and the time genuinely required to improve.
Can a senior manager face dismissal for poor work performance without a formal improvement plan?
Possibly, depending on the facts. Item 20(2) recognises that a formal warning may not be required where the employee’s knowledge and experience enables self-assessment against the standard. The employer must still identify the shortcoming, inform the employee of it, allow a response and consider alternatives to dismissal. Whether a particular manager falls within item 20(2) is a fact-specific enquiry, and a job title alone does not settle it.
Does a small business have to follow the same process as a large employer?
Item 3 of the Code recognises that small businesses should not be required to comply with obligations that are not practical or feasible for their operation, and that they cannot reasonably be expected to run time-consuming investigations while keeping the business going. This affects the formality of the process, not its fairness. A dismissal for underperformance by a small business must still rest on a known standard, genuine support, an opportunity to improve and an opportunity to respond.
What is the difference between an incapacity enquiry and a disciplinary hearing?
A disciplinary hearing addresses misconduct and asks whether the employee broke a rule. An incapacity enquiry addresses capacity and asks whether the employee can meet the standard, what support was given, and whether any alternative to dismissal exists. The Code does not prescribe a format for an incapacity enquiry. It requires a fair process in which the employee is informed of the concerns, given an opportunity to respond, and alternatives to dismissal are considered.
Can incompatibility be used instead of poor performance?
No. Item 21(7) recognises incompatibility as a distinct form of incapacity, concerning an inability to work in harmony with the business culture or with colleagues. It is not an alternative label for underperformance. Relabelling a performance case as incompatibility invites a finding that the true reason for dismissal was something other than the reason advanced.
Book an employer-side labour consultation. If a performance improvement plan is running, a warning has been issued, or an incapacity enquiry is scheduled, the time to audit your process for a dismissal for poor work performance against the 2025 Code is now, before the decision is taken. Contact Vermeulen Attorneys to arrange a consultation, or to mandate a review of your disciplinary code and performance-management framework against the substituted Schedule 8.
