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The Vodacom v Makate “Please Call Me” dispute stands as one of South Africa’s most significant and protracted legal battles, spanning nearly two decades and ultimately engaging all three tiers of the South African court system.

This case has evolved from a straightforward contractual dispute into a complex examination of employment law principles, Intellectual Property (IP) considerations, and the fair treatment of employees within corporate environments.

For labour law and human resources (HR) practitioners, this case presents critical lessons about the management of employee ideas, contractual clarity, the binding nature of informal agreements, and the legal obligations that employers owe to their workforce when commercial products result from employee innovation.

Background and Chronology of the Matter

In 2000, Mr Nkosana Kenneth Makate – then a trainee accountant at Vodacom – conceived of an innovative idea that would later revolutionise the mobile telecommunications industry in South Africa. The idea, which became known as “Please Call Me” (PCM), allowed cellular phone users without airtime to send a free message requesting a callback from another user who possessed airtime. This simple yet commercially brilliant concept addressed a genuine market need and generated billions of rands in revenue for Vodacom.

Mr Makate presented his idea to Mr Phillip Geissler, who was Vodacom’s Director of Product Development and Management at the time, with whom he discussed the prospect of compensation for his innovation. According to Mr Makate’s account, an agreement was reached between him and Mr Geissler that Vodacom would negotiate compensation with him for the use of his idea. Vodacom launched the PCM service shortly thereafter, but the promised compensation never materialised.

Proving that Makate was the brain behind the concept for Vodacom was simplified through the emergence of a company newsletter from March 2001 which credited him with the idea.

Litigation Timeline

The protracted series of court appearances and findings can be summarised as follows:

• 2007-2008: Mr Makate sent numerous letters to Vodacom seeking recognition and compensation for his idea. When these communications proved unsuccessful, he instituted action against Vodacom in the High Court in 2008.
• Initial High Court Proceedings (2008-2011): The High Court initially found against Mr Makate on several grounds. The court accepted that an agreement may have been concluded between Mr Makate and Mr Geissler but held that Vodacom was not bound by this agreement because Mr Makate had not properly pleaded ostensible authority in his replication. Furthermore, the court found that Mr Makate’s claim had prescribed under the Prescription Act 68 of 1969, as more than three years had elapsed between when the debt allegedly arose (November 2000) and when the action was instituted (July 2005). Both the High Court and the Supreme Court of Appeal refused Mr Makate leave to appeal.
• First Constitutional Court Application (2016): Mr Makate approached the Constitutional Court for leave to appeal, which was granted. In Makate v Vodacom (Pty) Ltd ZACC 13 (delivered on 26 April 2016), the Constitutional Court ruled in his favour on all material points. The court declared that Vodacom was bound by the agreement concluded between Mr Makate and Mr Geissler. The judgment ordered that Vodacom and Mr Makate negotiate in good faith to determine reasonable compensation. Significantly, the court mandated that if the parties could not reach agreement on the compensation quantum, Vodacom’s Chief Executive Officer (CEO) would serve as a deadlock-breaker and make a binding determination on the amount payable.
• CEO Determination (2019): Following unsuccessful negotiations between the parties, CEO Shameel Joosub undertook a thorough process to determine reasonable compensation. After receiving comprehensive written submissions and expert reports from both sides, and conducting a two-day hearing with further oral and written argument, the CEO determined that R47 million represented reasonable compensation to Mr Makate. This determination considered four different compensation models, with the CEO ultimately taking the average of the two models most favourable to Mr Makate, namely the “2001 looking forward model” (R51.5 million) and the “revenue share model looking backwards” (R42.2 million).
• High Court Review (2022): Dissatisfied with the CEO’s determination, Mr Makate took the decision on review to the High Court, arguing that it was manifestly unreasonable, unjust, and inequitable. The High Court found in Mr Makate’s favour, setting aside the CEO’s determination but remitting the matter to the CEO for fresh consideration with specific parameters. Notably, the High Court directed that Mr Makate was entitled to 5% of total voice revenue from the PCM product from March 2001 to March 2021, incorporating specific calculation methodologies.
• Supreme Court of Appeal (February 2024): Vodacom appealed the High Court’s remittal order to the Supreme Court of Appeal. In a 3-2 split decision, the court dismissed Vodacom’s appeal and upheld the High Court’s reasoning that the CEO’s determination was contrary to the Constitutional Court’s mandate. However, the Supreme Court of Appeal went further than the High Court. Despite Mr Makate not filing a cross-appeal, the court substituted the High Court’s remittal order with its own substantive determination. The court held that Mr Makate was entitled to “5%-7.5% of total revenue of the PCM product” together with either mora interest or interest under the Prescribed Rate of Interest Act 55 of 1975. This order was essentially based on Mr Makate’s own models (Models 9A and 9B), which would have valued his entitlement at between R9.74 billion and R14.61 billion in capital terms, potentially ballooning to between R28.99 billion and R55.37 billion when interest was included.
• Constitutional Court Final Hearing (July 2025): Vodacom applied to the Constitutional Court for leave to appeal against the Supreme Court of Appeal’s judgment. In a unanimous judgment delivered on 31 July 2025, the Constitutional Court (Acting Deputy Chief Justice Mbuyiseli Madlanga) identified significant procedural and substantive flaws in the Supreme Court of Appeal’s reasoning. The court found that the Supreme Court of Appeal had substantially disregarded crucial evidence and issues, failed to properly apply the relevant legal test (the “Bekker test” used to evaluate CEO determinations), and granted Mr Makate relief he had not properly sought through a cross-appeal. The Constitutional Court upheld Vodacom’s appeal and remitted the matter back to the Supreme Court of Appeal for rehearing before a differently constituted panel of judges. Vodacom was awarded costs in the Constitutional Court, including the costs of three counsel.
• Settlement and Resolution (November 2025): Just days after the Constitutional Court’s judgment, the long-running dispute took an unexpected turn. On 4 November 2025, Vodacom announced that it had reached a settlement agreement with Mr Makate out of court. In a statement to shareholders, Vodacom confirmed that the legal dispute had been settled and that a notice withdrawing the company’s appeal had been sent to the Supreme Court of Appeal. The terms of the settlement were not disclosed to the public, though the company noted that the settlement had been accounted for in its interim results for the six-month period ended 30 September 2025.

This settlement concluded nearly 17 years of litigation spanning multiple court levels and effectively ended the second phase of what has been called “one of South Africa’s most publicised intellectual property disputes”.

Key Legal Principles Established

It is critical that we are acquainted with the four key legal principles that were established through this case.

1. Ostensible Authority and Representation Authority

The 2016 Constitutional Court judgment established important principles regarding how ostensible authority may be demonstrated in contractual contexts. The court confirmed that a company can be bound by agreements concluded by its employees who lack actual written authority to act on behalf of the company, provided that the company represented (or represented through its conduct) that the employee possessed such authority. This principle, termed “authority by representation”, recognises that in some circumstances, an estoppel can bind the principal even when no formal delegation of authority was granted.

For HR practitioners, this principle underscores the importance of controlling who within the organisation communicates about commitments that could bind the company. Employees in positions such as product development or strategic planning should be provided with clear written guidelines about what commitments they are or are not authorised to make on behalf of the employer.

2. Prescription and Continuing Wrongs

The Constitutional Court clarified that the Prescription Act’s provisions must be interpreted with reference to constitutional principles. The court held that where a continuing wrong is involved (as opposed to a single past act), the period of prescription does not commence until the wrong is abated or the liability crystallises. In the context of a contractual obligation to compensate, prescription does not begin until agreement is reached on the precise amount owed.

3. Good Faith Negotiations as an Enforceable Obligation

The 2016 judgment confirmed that an agreement to negotiate in good faith constitutes a binding and enforceable contractual obligation. This was a significant development because it meant that even where parties have not reached agreement on specific commercial terms, a court can compel them to continue negotiating in good faith and, ultimately, require a third party (such as an arbitrator or CEO) to determine the quantum if agreement cannot be reached. The obligation here is on the duty to negotiate, not necessarily on reaching an agreement.

4. The Duty of Proper Consideration

The Constitutional Court’s final judgment reinforced that courts have a constitutional duty of proper consideration that flows from the rule of law and the right to a fair hearing protected in section 34 of the Constitution. This duty requires that courts consider all material evidence and material submissions bearing on the issues that they must decide. Where a court fails to discharge this duty so fundamentally and pervasively that its judgment is vitiated, it constitutes a denial of the right to a fair hearing, potentially engaging the Constitutional Court’s jurisdiction despite the matter essentially involving disputed facts.

Implications for Labour Law and HR Practitioners

This case presents several learnings for labour law and HR practitioners, from how to avoid disputes in the first place, to best practice recommendations for creating channels for innovation and for determining compensation, to the importance of clarifying levels of authority.

1. Documentation and Contractual Clarity

The most immediate and pressing lesson from the Makate case for HR practitioners and employers is the paramount importance of clear, written agreements governing the ownership and compensation of IP created by employees. The entire 17-year dispute might have been avoided if Vodacom and Mr Makate had documented their understanding in writing at the point when the idea was presented.

Take note of the following best practice recommendations to avoid disputes:

• Employment contracts should explicitly address IP ownership, specifying whether ideas conceived during employment (particularly within the employee’s scope of duties) belong to the employer or the employee.
• Where employees are in innovation-focused roles (product development, engineering, research), contracts should contain detailed provisions addressing who owns innovations and what compensation, if any, is payable.
• For employees outside innovation roles who present ideas, companies should establish formal procedures through which ideas can be submitted, with clear agreements reached in writing regarding ownership and potential compensation.

Vodacom’s approach was problematic because, as a trainee accountant, Mr Makate was not in a role where innovations were expected, yet he conceived of a commercially valuable idea. The company’s failure to either formally reject the idea or document a compensation agreement, and the fact that there was a verbal commitment by a person in authority to compensate Makate, left room for dispute about what had been agreed.

2. Managing Employee Submissions and Ideas

Professor Malebakeng Forere, an IP law expert, has emphasised that companies should establish proper submission channels and processes for employee-conceived ideas. This allows the company to demonstrate that it has the necessary authority to hear and make decisions about such ideas, thereby protecting both the company and the employee.

Practical implementation should be handled as follows:

• Establish a formal innovation submission process with clear documentation requirements.
• Designate specific individuals with explicit authority to receive and evaluate employee ideas.
• Create a policy addressing the treatment of employee ideas, including whether the company will provide compensation, recognition, or other incentives.
• Communicate the process clearly to all employees.

3. The Need for Formalised Negotiation Processes

Where an employer acknowledges a debt or obligation to an employee for innovative work, the Makate case demonstrates that vague promises or informal understandings will not protect either party. Instead, both employers and employees should insist on formal negotiation with professional representation, resulting in documented agreements. Alternatively, a policy or framework should stipulate from the outset how compensation should be determined, which should then be consistently applied.

4. Implications for Valuation and Compensation Methodologies

The case illustrates the complexity and potential for dispute when quantifying compensation for employee innovations where there is a duty to do so. The dispute between the CEO’s determination (R47 million), the High Court’s parameters (which could yield significantly higher amounts), the Supreme Court of Appeal’s range (5%-7.5% of revenue, potentially billions of rands), and the eventual settlement, demonstrates the difficulty in arriving at “reasonable compensation”.

For HR practitioners, this highlights several important points in calculating compensation for employee innovations:

• Where possible, use multiple valuation methodologies and explain how different models were considered and why one was ultimately selected.
• Consider expert input from professionals such as economists, industry specialists and patent valuators to support compensation determinations.
• Document the reasoning behind compensation decisions thoroughly, including evidence considered and assumptions made.
• Ensure that the decision-maker has proper terms of reference and clear instructions about the principles to be applied.
• Consider the commercial context, including what the company would reasonably have agreed to at the time when the idea was presented, what similarly situated employees have received, and what protection the IP actually provided to the company.

Managerial Authority and the Binding Nature of Employee Commitments

The Makate case confirms that companies can be bound by commitments made by employees who lack explicit written authority to do so, provided that the company represented (through conduct, position, or other means) that such authority existed. For HR practitioners, this means:

• Clear policies should govern who within the organisation can commit the company to significant obligations.
• Employees in certain positions (particularly in product development, sales, and client-facing roles) should be provided with explicit written guidance about the scope of their authority.
• Training should be provided to ensure that employees understand the limits of their authority and the mechanisms for obtaining approvals for commitments beyond that scope.
• Communication with customers, suppliers, and other external parties should clearly identify the authority of the person communicating with them.

6. Intersection of Contract Law and IP Law

While the Makate case was decided on contractual grounds rather than on IP law principles, it has important implications for how these two areas of law intersect in practice. Under South African law, copyright and patent law generally provide that inventions created by employees during the course and scope of their employment belong to the employer. However, the Makate case shows that this legal principle can be displaced by contractual agreements or representations regarding compensation.

For HR practitioners, this creates a tension: The law may favour the employer’s ownership of employee-created IP, but the employer’s liability depends on what it has agreed to or promised the employee. The case underscores that employers must ensure alignment between their IP policies, their employment contracts, and the specific commitments made to individual employees regarding compensation for innovations.

Broader Impact on Corporate Governance and HR Practice

The Makate case has already influenced corporate practice in South Africa. Following the initial 2016 Constitutional Court judgment, many companies began reviewing and updating their IP policies and employment contracts to explicitly address the treatment of employee-conceived ideas and compensation arrangements. The case has become a standard reference point in HR training and legal education, illustrating the real-world consequences of failure to manage employee innovation and compensation properly.

Remain Vigilant

It is critical that labour law and HR practitioners remain up-to-date even with cases that are still being heard and amend their ways of working based on even interim findings so that they do not find themselves in a similar – or worse – situation. Who knows what this ground-breaking case will mean for other businesses without robust processes or watertight contracts that find themselves in a similar situation.