Running a small business often means hiring when you need help and adjusting roles as you grow. But, down the line, such practices can trigger disputes that cost far more than your original decision.
This matters even more in the face of the recent proposed amendments to South Africa’s Labour Relations Act 66 of 1995 and Basic Conditions of Employment Act 75 of 1997, which are now open for public comment. These proposals signal tighter enforcement, expanded employee protections, and changes that could affect every existing and future employment contract.
Clientèle Legal unpacks seven areas that often lead to disputes:
- Retrenchment: All retrenchments must follow a fair consultation process and meet minimum obligations, and the proposed amendments suggest higher severance benchmarks, including a potential increase from one to two weeks’ pay per year of service, alongside stronger enforcement powers. If you do not comply, you could face compensation claims of up to 12 months’ salary, along with reinstatement orders.
- Hiring junior staff: The law does not distinguish between levels of seniority, or race, gender, age, or language, when it comes to fairness. If you do not have clear job criteria, consistent interview processes, and documented decisions for all recruitment decisions, you leave yourself exposed to discrimination claims. This is becoming even more relevant in light of recently proposed Fair Pay legislation, which may prohibit employers from asking about salary history and require greater transparency in how remuneration is structured and communicated.
- Employing non-citizens: In terms of the Employment Services Act 4 of 2014 and Immigration Act 13 of 2002, hiring foreign nationals without proper documentation could result in fines or criminal liability. You must always verify valid work permits, check expiry dates, and ensure that the role matches permit conditions.
- Probation periods: During a probation period, you are required to assess performance fairly, provide feedback, and allow time for improvement. The Code of Good Practice 2025 allows for a post-probation assessment of conduct, attitude, and cultural fit. It recognises incompatibility as a form of incapacity, but only if expectations were clear from the start.
- Permanent and contract employment: Permanent employees are entitled to notice, severance, leave, and protection against unfair dismissal. Such employees must be registered with the Unemployment Insurance Fund (UIF), where applicable, and included in your Employment Equity report if you are a designated employer. Fixed-term and contract employees may be hired for a defined project or period but must be afforded permanent benefits if they perform ongoing work. Misclassification can result in claims for benefits, notice pay, and unfair dismissal.In addition, proposed amendments to the Basic Conditions of Employment Act introduce changes to parental leave, moving towards a more flexible, shared system of leave between parents. This may require employers to rethink how they plan for workforce continuity, leave policies, and employee benefits.
- Misconduct versus poor performance: ‘Misconduct’ covers serious breaches of rules, including theft, fraud, gross insubordination, and harassment. The first step in addressing these breaches is a disciplinary hearing that adheres to the requirements of the Code. ‘Poor performance’ involves inadequate work quality or output, or inability to meet job requirements despite training and support. If you blur the line, a dismissal may be ruled unfair even if your frustration is justified.
- Exiting employees: You must follow a three-step process before terminating an employment contract: a fair reason, a fair procedure, and proper documentation. This includes written notice, an opportunity for the employee to respond, and a clear record of how the decision was reached.
In some cases, SMMEs may consider offering slightly more than the minimum severance compensation during retrenchments or mutual terminations as part of a negotiated settlement process, particularly where it may help avoid lengthy and costly disputes at the Council for Conciliation, Mediation and Arbitration (CCMA) or in the Labour Court.
As these proposed labour law changes move through the public comment process, the margin for error is shrinking. Clientèle Legal says the safest approach is to treat every hiring and management decision as a legal, not just operational consideration. Working with a qualified legal professional before, during, and after employing staff can help businesses stay compliant and avoid costly disputes before they escalate.
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