Outdated employment contracts put SMMEs at legal risk

IN THE ever-evolving landscape of South Africa's small and mid-sized enterprises (SMMEs), outdated employment contracts are transforming from an overlooked concern to a significant legal risk.

- ASHLEY LECHMAN

With compliance norms shifting dramatically, particularly in the sphere of labour law, SMMEs are finding themselves on precarious legal ground.

This predicament was underscored by the Commission for Conciliation, Mediation and Arbitration (CCMA)'s 2019 report, which revealed that a staggering 80% of its cases originated from small businesses.

Now, with impending changes to labour law coming into effect, the risk is poised to surge further.

The new Code of Practice on Dismissal, to be implemented in September 2025, heralds a new era of regulations that will replace previous guidelines.

Employment contracts that fail to reflect these changes may be rendered unenforceable. “As of September 2025, we will see a heightened risk for SMMEs if their contracts are not updated,” Karabo Kopeka, Managing Director at Clientéle Legal said. Recent data underscored the urgency of this issue, with Kopeka's firm having worked on an alarming 2,533 unfair dismissal claims by the close of September this year alone.

While the new Code aims to better accommodate the unique challenges faced by SMMEs permitting simpler, less formal processes for managing dismissals, it introduces complexities that require immediate attention.