Labour lawyer Patrick Deale joins The Midday Report on Radio 702 with Xolani Gwala, preceded by Professor Edward Kieswetter of Transnet. Patrick Deale shares his expert labour and employment law perspective on Siyabonga Gama fighting against his firing as the Transnet CEO.
Interview Source: https://www.702.co.za/podcasts/180/the-best-of-the-xolani-gwala-show/121893/transnet-ceo-fights-firing
Transcription
Xolani Gwala (Radio 702):
Alright, let’s find out then what is going on at Transnet. Remember that the CEO Siyabonga Gama was fired on Sunday. But it seems as if his lawyers are suggesting that he is going to court.
But of immediate concern is whether or not he is at work today. Remember that the board had said that yesterday was his last day at work. We are on the line now to Professor Edward Kieswetter, who is a board member at Transnet. Prof, good afternoon, thank you for your time.
Professor Edward Kieswetter (Transnet):
Good afternoon, Xolani.
Xolani Gwala:
Thanks indeed for coming on Prof. Well firstly, let’s talk about what is happening today. According to the board, Mr Gama’s last day at work was yesterday. But according to reports he insists he will continue reporting for work. Is he at work today?
Professor Edward Kieswetter:
To the best of our knowledge, no, he is not at work. I have had word from the company secretary that he will respect and not report for duty.
Xolani Gwala:
Oh okay, so the company secretary says he will not come to work?
Professor Edward Kieswetter:
That he has indicated that he will not come to the office.
Xolani Gwala:
So how do you interpret that? Do you interpret it as him accepting the termination of his employment?
Professor Edward Kieswetter:
No, Xolani; Mr Gama has been very clear that he disagrees with the boards’ process. And he is taking legal steps to have the board pursue [inaudible 01:25-01:27] and he will continue to engage in that process.
But if we just take a step back. As far as the board is concerned, his employment terminated yesterday following a case that got started already on the 1st of October when we served Mr Gama with a notice of our intention. And gave him 10 days to make representation on to any reasons why the board should not dismiss him. And as it is now widely known and reported, Mr Gama chose not to use this opportunity. And the board therefore acted on its decision.
Xolani Gwala:
Sure, and I’m going to come back to that in a minute. But I also understand that he’s written a letter to the board after Sunday’s firing. Where, among other things, he’s said that he will challenge this matter in court but also said, made it very clear, that he will continue to come to work. Now you have clarified this issue about coming to work, but can you confirm the letter?
Professor Edward Kieswetter:
I think the letter [Inaudible 02:38-02:40], the board had a short meeting with Mr Gama, and he presented us with a letter to the board Chair. And the letter has been responded to through our legal representatives. We will continue to engage as is required by the process.
What the employment contract of Mr Gama allows for is obviously referring to an arbitration. And from this is Mr Gama’s choice; We will continue to work within the framework of the law to have this matter settled. But where we stand now, the board is unequivocal in its view that the employment relationship between Mr Gama and Transnet has terminated.
Xolani Gwala:
Sure, but let me ask you this Prof: Are you confident, as the board, that you complied with all elements of the contract that you have with Mr Gama? You are, for instance, saying that the contract talks about arbitration. That’s one part of the story. But also, the contract talks about a disciplinary code before you fire him. Did you comply with all two?
Professor Edward Kieswetter:
Well, the contract allows for the termination of the employment relationship of a CEO under certain [Inaudible 04:08]. Now, the basis on which the board terminated the service does not require a disciplinary hearing. Because, again as we have reported, the basis for us reaching the decision of the board is that the board has lost trust and confidence in Mr Gama as the CEO.
Xolani Gwala:
But is there anywhere in the contract that says that you can terminate the contract without following this disciplinary code?
Professor Edward Kieswetter:
So, the requirement is that a fair process is followed. So, disciplinary processes are not always the basis on which employment matters are dealt with. An employment matter, for example, is that the board alleged that Mr Xolani Gwala has been guilty of some misconduct. It can pursue that to confirm the misconduct and on [Inaudible 05:19] basis reach a conclusion
But there is also, and this is particularly relevant when dealing with a senior executive who is also a member of the board, three things have to exist that has nothing to do with a specific event necessarily. But for the board and the Chief Executive to function effectively and serve the best interest of the company, there has to be firstly a relationship of trust and confidence. Secondly, the board must feel at a conviction that the individual is in full compliance with his or her fiduciary accountability. And thirdly, that there is a complete alignment with the values and integrity standards that the board upholds for the company. And the CEO is the first of the leaders in the executive team to [Inaudible 06:22] this out.
Xolani Gwala:
Prof, sorry to interrupt you, because I need to go back to that point about a fair process.
Whether or not the process then, that you followed, do you consider it to be a fair process? I’m assuming that a fair process is when you would then put charges to him, he responds, and you go through the entire thing. And that is the fair process. In his case, would you consider what has happened a fair process?
Professor Edward Kieswetter:
So, remember, Xolani, we are also acting, working with a legal team, with legal counsel. And so, the board applies its mind on these matters and reaches a conclusion – which conclusions can always be challenged in the processes that are allowed.
But let me be very clear: When the board served the notice of intention to Mr Gama on the 1st of October it was very clear that it intends to terminate the employment contract. However, fairness requires the right of representation. And the board therefore invited Mr Gama to say, ‘this is my intention’, you have 10 days to tell us, and give reasons why you think we should not proceed with this. If the individual then decides not to use that, there is no representation.
The fact that Mr Gama decided to make an application to the court to interdict the board’s decisions does not preclude the board from proceeding with its intension. Particularly so since Mr Gama did not use the opportunity to make any representation.
Xolani Gwala:
Sure. Just a last question to you about than the outcome of the court process. I’ve got with me the judgement. And specifically, I’m going to read you paragraph 12, or at least part of paragraph 12, which says:
Had the applicant referred a dispute to an arbitrator and the respondent, which of course yourselves, sought to take the law into its own hands, as it were, the applicant could approach this court for an interim relief pending the outcome of the arbitrator. Since it is now common cause that there is a dispute, the nature of which is to be specified by the referring party, I can only stay these proceedings pending the outcome of the arbitration process. At this stage, I can only assume that the respondent would not take the law into its own hands. It would be an unnecessary exercise for the applicant to return to this court for an interim relief pending the outcome of the arbitration process.
Gama’s lawyers assume, and maybe correctly, on the basis of this paragraph, that what Transet has done was to take the law into its hands. Because Transet has not allowed the arbitration process to continue first.
Professor Edward Kieswetter:
So, first of all, again for clarity, Transet is acting in terms of its employment contract with Mr Gama, the [Inaudible 09:29] Chief Executive.
The judgment also says very specifically that Mr Gama is not entitled to not be dismissed. The application which he brought to the court; the court did not provide the relief that he sought. And so, the court simply says to Mr Gama that your application, it stays until there is an arbitration. But at the same time, the court did not nullify the intent of the board to proceed with the termination. So, there is a basis both in law and in the employment contract for the board rightfully to terminate the contract. Now, it also common cause that subsequently [Inaudible 10:27] decision that there is the opportunity for arbitration. And so, the opportunity for arbitration runs, if not prohibited, it continues to be there for the individual to follow. And so, the two are not in conflict with each other, Xolani.
Xolani Gwala:
Alright, Prof, thank you for your time. I really appreciate it. That is Professor Edward Kieswetter who is a board member of Transnet.
But let’s get some analysis on this. We are on the line now to Patrick Deale who is a labour law expert at Deale Attorneys. Patrick, good to talk with you this afternoon. Thank you for your time.
Patrick Deale (Deale Attorneys):
My pleasure, Xolani.
Xolani Gwala:
I’m assuming that you’ve had a look at the judgement in particular. And I’m very much interested in paragraph 12 that I read a short while ago. Because to me it seems to suggest that the court has opened the door for Gama to come back, and has warned the board not take the law into its own hands, i.e., not to fire him unless they follow a fair process including the arbitration that is clearly stipulated in his employment contract.
Patrick Deale:
That’s the way I read it as well, Xolani. The court is saying is that it’s not appropriate to get interim relief, but it is also not appropriate to terminate without following the due process of going through the arbitration to determine what the issues are. And in fact, to determine whether the board has, in fact, got grounds to believe that the trust relationship with Mr Gama has broken down. That’s the very point of the arbitration.
Without it, the implication would be that the board ultimately has the discretion to determine in its own reasoning why there’s grounds to terminate without giving Mr Gama an opportunity to have his say. That’s the essential problem and that should be determined in arbitration.
Xolani Gwala:
It’s interesting that the judge in this matter talks about taking the law into their own hands, the respondent, i.e., the board. Would you then say the decision that they made on Sunday is tantamount to the taking law into their own hands?
Patrick Deale:
Effectively, yes. Because there’s a term in the context of labour relations or labour law of an unlawful termination of a contract of employment. Effectively what the court is saying, in the subtext here, that to terminate in this way is unlawful, or would be unlawful if they proceeded with their intention as they had said to terminate by the, well, in a few days’ time. And so, what the court is saying: we expect you not to proceed to terminate because that would be an unlawful termination. Effectively, taking the law into your own hands. I think that’s what the message is from the court.
Xolani Gwala:
And what do you think is going to happen then going forward? Because it seems to me that we in for a very long battle in court, one, which may cost the taxpayer money a lot of money in the end. Is this a bad decision?
Patrick Deale:
This is a good decision that the court has made in my view. It’s because it has upheld the principles of complying with the contract, A, and B, due process. But also recognising that the seniority of the individual concerned, of Mr Gama, could require a special treatment.
There is talk in [Inaudible 14:12] of what they call a truncated way to terminate. And I think your previous guest talked about the three things that would need to be determined as to whether the relationship has broken down. The trust issues, the fiduciary issues, and alignment with values. But still, that would need to be an arbitration, that would be a long and lengthy process.
But what is interesting, Xolanai, is that the court actually expressed, in a way, an opinion of what the parties should do instead of going to arbitration – which would be a long, drawn-out process of taxpayer money. There’s a quote that I’ve got, you’ll see lower down, in 12 of the judgement, it says: it seems to be in the best interest of these parties to consider finding a long-lasting solution.
So, I think the idea is that the parties should talk to each other and try and settle this in one way or another. I think that’s what the, sort-of, sub-text suggestion of the court is.
Xolani Gwala:
Sure. Just a quick and final one though if you can, Patrick: Is it a bad decision on the part of the Transnet board to continue to fire him?
Patrick Deale:
Yes, I think so, yes.
Xolani Gwala:
Fantastic. Alright, Patrick Deale – thank you very much for talking to us as a labour law expert at Deale Attorneys.
End of interview transcript.
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