What is a Small Business?
In South Africa, a small business is generally defined in the National Small Enterprise Act 102 of 1996 as one with:
- 10 to 50 employees (depending on the sector),
- Turnover and asset values below sector-specific thresholds (e.g., R13m for agriculture/manufacturing, R25m for retail, R80m for wholesale).
In labour law, especially under the new Code of Good Practice: Dismissal, “small business” is used more flexibly. It refers to businesses without the HR capacity or resources of larger organisations, and arbitrators must consider these realities when assessing fairness in dismissals.
Recognition of Small Business Realities
The new Code recognises that small businesses operate under different constraints than medium or large employers. They often lack dedicated HR capacity and cannot reasonably be expected to follow complex or lengthy procedures when dealing with disciplinary or dismissal matters. This recognition is important, as it allows for greater flexibility in assessing fairness in small business dismissals.
Procedural Flexibility
Arbitrators are now expressly required to take into account the practical realities of small businesses when evaluating dismissals. This means that a small business will not automatically be penalised for failing to follow the same detailed, formal procedures that larger employers can reasonably be expected to implement. For example, small businesses may not need to conduct elaborate investigations or hold multiple hearings, provided that the basic requirements of fairness – such as giving the employee an opportunity to be heard – are met.
Balancing Efficiency and Fairness
The Code does not exempt small businesses from complying with the principles of substantive and procedural fairness. Rather, it recognises that “fair procedure” may look different in a small business environment. The key requirement remains that the employee is informed of the allegations against them and given an opportunity to respond before a decision is made.
Risk Management for Employers
While the concession offers relief, small businesses must still exercise caution. The Code provides flexibility, but it does not legitimise arbitrary or unfair dismissals. Employers who fail to demonstrate that they acted fairly, even in a simplified process, still risk findings of unfair dismissal at the CCMA.
Implications in Practice
For small business owners, the new Code provides breathing space and acknowledges their operational pressures. It also reduces the risk of being judged by an unrealistic “one-size-fits-all” standard when cases reach arbitration. However, it also places greater emphasis on the employer being able to show that, even in a less formal procedure, the employee’s rights to be heard and to fair treatment were respected.
