John Botha What do labor law reforms mean for companies and workers?

Although it may be easier to fire an incompetent employee, layoffs will become more expensive if the new labor bill is passed by Parliament in its current form.

South Africa's labor law is set to be overhauled, with some moves likely to reduce companies' compliance burdens, while other moves will increase their costs, writes John Botha.

The publication of the Labor Law Amendment Bill in the Government Gazette on 26 February 2026 marks the most comprehensive review of South African employment law in more than a decade.

Following more than two years of negotiations at the National Economic Development and Labor Council (Nedlac), the Bill proposes amendments to the Labor Relations Act, the Basic Conditions of Employment Act, the Employment Equity Act and the National Minimum Wage Act. It is now open for public comment before going to Parliament.

While a number of institutional reforms were agreed upon during the negotiations, many of the proposed changes have direct cost, compliance and operational implications for businesses – while also providing protections to certain categories of workers.

What was agreed upon in Nedlac

The talks reached agreement on several key areas between organized business, labor and the government.

The agreed amendments include the introduction of a new earnings limit of R1.8 million per year, which limits reinstatement as a remedy in non-automatic unfair dismissal disputes involving higher paid employees. Compensation limits linked to inflation adjustment were also included.

The statutory test for procedural fairness has been simplified, requiring employees to be given a fair and reasonable opportunity to respond – a move that more closely aligns the law with existing case law.

Start-up businesses with fewer than 50 employees will get a two-year exemption from extended bargaining council collective agreements. The amendment to Section 189A aims to streamline mass retrenchment processes, while a validity limit of 24 months has been introduced for Section 77 socio-economic protest certificates.

Overall, these reforms represent an effort to realign parts of the existing dispute-resolution and bargaining framework.

Cost and compliance implications

Many of the proposed amendments will have practical financial and compliance consequences.

• Statutory severance pay is set to increase from one week to two weeks for each completed year of service. For organizations that periodically restructure, this change may require revised workforce cost modeling and budget projections.
• The proposed expansion of the definition of “employee” – through a new Schedule 11 to the Labor Relations Act – seeks to extend organizational and collective bargaining rights to certain non-standard and platform-based workers. If implemented, it could significantly impact businesses operating in the gig and platform economy.
• The operational implications of a large-scale reclassification remain uncertain and may depend on how the provisions are interpreted and implemented.
• New protections for “on call” workers under the Basic Conditions of Employment Act introduce minimum wage guarantees and advance notice requirements. Sectors that rely on flexible staffing arrangements may need to reevaluate scheduling and employment practices.
• Following the Labor Appeal Court's decision in the Quantum Foods case, an amendment to the National Minimum Wage Act clarifies how contractual bonuses are considered in minimum wage calculations.
• Proposed amendments to the Employment Equity Act addressing arbitrary pay discrimination also indicate an increased regulatory focus on pay equity compliance.

public comment window

The bill is now in its public comment stage – a formal step in the legislative process before being introduced to Parliament.

Submissions made during this period may influence whether certain provisions are refined, amended or reconsidered. The extent and substance of stakeholder involvement may shape the final form of the law.

South Africa's labor law framework is therefore entering an important period of review. The outcome of the current consultation process will determine how these reforms ultimately reshape employment relations.

John Botha is Joint CEO of Global Business Solutions, a South African workplace and labor advisory firm specializing in employment law and workforce administration.

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