File photo of Nestle CEO Laurent Freixe.
Image: AFP
In a move that grabbed global headlines on September 3, 2025, Nestlé terminated CEO Laurent Freixe following an internal probe into an undisclosed romantic relationship with a direct subordinate, a breach of its code of conduct.
The company called it “a necessary decision” rooted in its commitment to strong values and governance principles.
But what are the corporate governance implications behind such actions, and why do relationships between supervisors and subordinates raise red flags?
In South Africa, as in many jurisdictions, there is no specific law forbidding consensual romantic relationships at work.
For example, private-sector companies with fewer than 50 employees face no blanket legal prohibition, but disciplinary action may still be taken if such a relationship disrupts operations or breaches conduct rules.
That said, employers are well within their rights to require disclosure of workplace relationships to manage potential conflicts of interest.
In 2019, Anli Bezuidenhout, a senior associate at Cliffe Dekker Hofmeyr told Cape Talk that while a blanket prohibition on romances is not appropriate, certain regulations need to be in effect.
“All an employer can do is have a policy that makes it a requirement for employees to disclose the existence of a relationship,” she said.
At the governance level, South Africa’s corporate oversight framework is anchored by the Companies Act, the King IV Code, and voluntary compliance through the JSE Listings Requirements.
King IV, though voluntary, carries weight through "apply-and-explain" disclosure obligations and exerts influence on policy development, including in areas like ethics, conflicts of interest, and stakeholder relationships.
King IV emphasises that the governing body (e.g., a board) should approve codes of conduct and ethics policies, and these must be communicated and implemented effectively throughout the organisation.
These policies typically address conflicts of interest and ethical conduct, areas where workplace romances, particularly involving power dynamics, are often flagged.
1. Conflict of Interest & Preferential Treatment
When one partner holds influence over the other's appraisal, promotion, or remuneration, objectivity is at risk. Potential favouritism or perceived bias undermines fairness, erodes morale, and may breach fiduciary duties enshrined in governance frameworks.
2. Potential for Sexual Harassment or Coercion
Even consensual relationships in such imbalanced power contexts can raise concerns because of undue influence or perceived coercion, akin to quid pro quo arrangements. South Africa's Employment Equity Act and Code of Good Practice classify harassment, especially when influenced by power dynamics, as a form of unlawful discrimination and oblige employers to prevent and address it.
3. Disruption to Culture and Productivity
A deteriorating romantic relationship can spill over into the workplace, causing distractions, team conflicts, and decreased performance. Governing guidelines permit employer intervention when a relationship materially affects business operations.
4. Damage to Governance Credibility
For publicly listed companies and those bound by King IV or industry listing rules, leaders are expected to uphold the highest standards of integrity. Any undisclosed or ethically questionable conduct by executives damages stakeholder trust and board legitimacy, a foundational element of good corporate governance