South African Labour Law Reforms

In our previous article, we examined the broader evolving landscape of labour law in South Africa and the pressures driving legislative change. This second instalment focuses specifically on the key reforms proposed under the 2025/2026 legislative cycle that were not addressed in detail previously. These amendments, currently working their way through the parliamentary process and open for public comment, represent the most significant overhaul of South Africa’s labour market framework in recent years.

With South Africa continuing to grapple with one of the highest unemployment rates in the world, the government has signalled a clear intent to modernise labour legislation that has long been criticised as overly rigid and as a deterrent to job creation. The reforms attempt to strike a new balance – maintaining meaningful worker protection while introducing greater flexibility for employers, particularly smaller businesses and those operating in emerging sectors of the economy.

1. The New Probationary “Run-In” Period

One of the more significant and debated proposals is the introduction of a structured three-month “run-in” probationary period during which an employer may dismiss a newly appointed employee without being required to follow the full procedural fairness requirements that ordinarily apply to unfair dismissal claims under the Labour Relations Act.

The rationale is straightforward: employers, particularly small and medium-sized enterprises, have cited the risk and administrative burden of formal dismissal processes as a deterrent to taking on new staff. By providing a legally recognised window within which a new appointment can be assessed and, if necessary, ended without a formal hearing, the legislature aims to lower the barrier to hiring.

Importantly, this does not mean employees in their first three months are without any protection. The dismissal must still not be automatically unfair (for example, it cannot be linked to union membership, pregnancy, or discrimination), and the employee retains the right to refer a dispute. However, full substantive and procedural fairness obligations are relaxed during this window, giving employers greater practical confidence when taking on new appointments.

2. Extended Protections for Gig and Platform Workers

Perhaps the most forward-looking aspect of the 2026 reforms is the proposed extension of formal labour protections to gig workers — a category that has historically fallen outside the scope of employment legislation entirely. Freelancers, independent contractors, and workers engaged through digital platforms such as ride-hailing and delivery services have, until now, operated without access to minimum wage guarantees, unfair dismissal protection, or the dispute resolution mechanisms of the CCMA.

The proposed changes seek to bring these workers within the ambit of the law, extending to them rights that traditional employees take for granted. This reflects a global trend in labour regulation acknowledging that the gig economy, while providing flexibility, has in many instances been used to circumvent basic worker protections under the guise of contractor status.

For businesses relying heavily on platform-based or freelance labour models, this reform warrants careful attention. Compliance obligations, including minimum wage adherence and access to fair dismissal processes, may soon apply to relationships that were previously unregulated.

3. Dismissal and Retrenchment: Doubled Severance Pay

The amendments propose a significant increase in the statutory severance pay entitlement applicable in retrenchment situations. Under the current framework, retrenched employees are entitled to one week’s remuneration for every completed year of service. The proposed reform doubles this to two weeks’ remuneration per completed year of service.

This change has material financial implications for employers planning any restructuring or large-scale retrenchment exercises. Businesses should begin modelling the cost implications of this amendment now, as it will substantially increase the financial exposure associated with workforce reductions once enacted.

The reforms also aim to clarify the procedural fairness requirements applicable to dismissals more broadly, with a view to reducing technical disputes at the CCMA about process compliance and focusing adjudication more squarely on the substantive fairness of the decision to dismiss.

4. High-Earner Limitations on Compensation and Reinstatement

A notable and arguably overdue reform relates to the treatment of high-earning employees in unfair dismissal disputes. Employees earning above a prescribed threshold — currently proposed at approximately R1.8 million per annum – will face capped compensation awards if found to have been unfairly dismissed, and their access to reinstatement as a remedy will be limited.

This reform recognises the practical and commercial reality that senior executives and high earners are generally better placed to secure alternative employment and negotiate their own terms, and that the existing framework – which applies equally to all employees regardless of earnings – has produced outcomes at the top end of the income scale that were never intended by the legislature.

For employers, this change provides some comfort when managing the exit of senior employees, reducing the open-ended compensation exposure that has historically complicated such processes.

5. CCMA Jurisdiction and Enforcement Expanded

The reforms propose a meaningful expansion of the CCMA’s jurisdiction and enforcement powers, with a dual focus: extending access to lower-paid and vulnerable workers, and strengthening the Commission’s ability to enforce its awards.

Currently, non-compliance with CCMA awards is a persistent practical problem, particularly in sectors where workers have limited means to pursue enforcement through the Labour Court. The proposed changes would give the CCMA wider powers to assist workers with compliance and enforcement, reducing the dependency on costly and time-consuming court proceedings to give effect to arbitration awards.

The reforms also aim to streamline the dispute resolution process itself, reducing backlogs and improving turnaround times at the Commission – a long-standing concern for both employers and employees who have had to contend with lengthy delays between referral and resolution

6. Small Business Relief and Bargaining Council Exemptions

Recognising that small and emerging businesses often struggle to meet the same compliance obligations as large, established employers, the proposed reforms include temporary exemptions for qualifying small businesses from certain bargaining council agreements.

Bargaining council agreements, which set minimum wages, working conditions, and other terms across entire sectors, can place a disproportionate burden on smaller enterprises that lack the capacity to absorb sector-wide cost increases. The proposed exemptions are intended to provide new and small businesses with breathing room to become established before being brought into full compliance with sectoral determinations.

This is a carefully targeted measure: it does not remove bargaining council obligations altogether but provides a structured and time-limited relief mechanism that, if well-implemented, could meaningfully reduce the regulatory burden on small business formation.

Summary of Key Reform Changes

• Probation: 3-month run-in period with relaxed dismissal obligations to encourage hiring.
• Gig Workers: Minimum wage and fair dismissal rights extended to freelancers and platform workers.
• Severance Pay: Doubled from one to two weeks’ pay per completed year of service.
• High Earners: Capped compensation and limited reinstatement for employees earning above ~R1.8 million p.a.
• CCMA: Wider enforcement powers and improved access for low-paid workers.
• Small Business: Temporary exemptions from certain bargaining council obligations.

What Should Employers Do Now?

The reforms are not yet law. They remain in the parliamentary process and are subject to public comment and potential amendment before enactment. However, the direction of travel is clear, and employers would be well-advised to begin preparing now rather than waiting for the legislation to be finalised.

In particular, businesses should review their onboarding and probation policies in light of the proposed run-in period, assess the cost implications of the doubled severance pay obligation for any planned restructuring, and audit their use of freelance and platform workers to understand potential new compliance obligations.

For small businesses, the proposed bargaining council exemptions may offer meaningful relief, and it would be worthwhile monitoring the parliamentary process closely to understand how those exemptions will be structured and applied in practice.

As always, employers navigating these changes are encouraged to seek specialist labour law advice to ensure their policies, contracts, and disciplinary processes remain compliant as the legislative landscape continues to evolve.