Contributed By Fenech & Fenech Advocates
The Maltese legislator has published a number of legal notices over the last few months within the employment sphere.
In summary, the enacted changes are as detailed below:
Over the course of the COVID-19 crisis, the Maltese government did not focus on promulgating any new employment legislation specifically aimed at addressing the consequences of the pandemic, except for an amendment to the Minimum Special Leave Entitlement Regulations (SL 452.1010) to introduce a new form of "quarantine leave". The government also published a number of mandatory standards for various sectors with the aim of curbing the spread of the pandemic.
Over the course of the pandemic, the government prioritised the implementation of several temporary incentives with the aim of addressing cash-flow and liquidity concerns.
Such incentives varied from those aimed at employers and businesses, to others aimed directly at individuals and employees.
Currently, the most important temporary incentives, each with their own terms and conditions, aimed at employers and businesses, include the following.
The Maltese work force is commonly divided into two main categories, namely, employed individuals and self-employed individuals.
Over the past years the courts have also cited the term "workers", which broadly incorporates employees, agency workers, contract staff and self-employed persons who are contingent on a single employer.
The Employment and Industrial Relations Act (EIRA), Chapter 452 of the Laws of Malta, defines an employee as "any person who has entered into or works under a contract of service, or any person who has undertaken personally to execute any work or service for, and under the immediate direction and control of another person, including an outworker but excluding work or service performed in a professional capacity or as a contractor for another person when such work or service is not regulated by a specific contract of service". Any person, therefore, who is party to an employment contract is deemed to be an employee. The definition in the EIRA also comprises outworkers and other personnel who work under the direction and control of another person, but it excludes professionals and contractors who have no employment contract with the employer.
In turn, employees may be classed into three categories, namely, full-time workers, full-timer workers on reduced hours and part-time workers (including casual workers). Under Maltese law, an employee is considered to be a full-timer if such person works an average of 40 hours a week.
The EIRA contains rights and obligations that apply across the board, irrespective of the industry or sector of employment, such as on the protection of wages, rules on termination, rules on discrimination and equal pay, amongst others.
Wage Regulation Orders (WROs)
However, Maltese law also establishes various rights and limitations which apply to specific sectors/industries. These sector-specific rules are regulated by means of several sector-specific Wage Regulation Orders (WROs). Typically, these WROs would regulate minimum wages, overtime rates, special allowances and leave entitlements.
One such industry is the wholesale and retail industry, regulated by the Wholesale and Retail Trades Wages Council Wage Regulation Order, SL 452.63. This applies to wholesale merchants, distributors, importers, exporters, commission agents, wholesale and marketing co-operatives, retailers, lending libraries, auctioneers, hairdressers, consumers’ co-operatives and photographic studios, but excludes shops run under the management of a hotel or club (in respect of which, a separate WRO applies).
Sector-specific WROs exist for public transport; cinemas and theatres; printing and publishing; construction; allied industry; private schools; woodworks; hotels and clubs; the beverage industry; food manufacturing; hire of cars; laundry; tobacco industry; seafaring; agriculture; jewellery; clay and glass; travel insurance; plastic; paper and electronics; domestic services; the canning industry; and hospitals and clinics. Each WRO will define the sector to which it applies in more detail.
A Professional Offices Wages Wage Regulation Order applies to offices and establishments of architects, engineers, legal advisers, notaries, accountants, auditors, bookkeepers, trade unions, consultants in branches of engineering, architecture, law and accounting, research and scientific establishments (except labs in private hospitals and market research units and advertising agencies).
Where no WRO applies to an industry (such as the i-gaming industry), other general conditions will apply – and these are primarily regulated by the Minimum Special Leave Entitlement Regulations.
Part-timers are employees who work less than full-timers and who are entitled to pro-rata benefits, calculations and payments. Under Maltese law, part-time workers are regulated by means of the Part Time Employees Regulations, SL 452.79. Maltese law also underlines that part-timers are not to be treated less favourably than full-time workers.
In Malta, self-employment is not regulated, as such, in that a self-employed person is regulated by the general laws on trade and commerce without the protection of employment laws.
The Employment Status National Standard Order, SL 452.108 serves to protect against the abuse of purported self-employment.
This National Standard Order delineates that when an individual is engaged to provide services and satisfies five out of the eight broadly defined conditions, then that relationship between the client and the individual shall automatically (by operation of the law) be deemed to be an employment relationship, and this notwithstanding any declaration to the contrary.
Consequently, such individual shall be afforded the relative protections under the EIRA, and the law makes certain assumptions towards protecting that person (eg, that unless otherwise stated, the assumed employment is of an indefinite duration).
The National Standard Order lays down the following conditions.
Exemptions to such rules may be sought by way of exception. However, the general rule is that an employment relationship cannot be converted into a self-employment relationship except with the authorisation of the relevant authority.
The employment relationship in Malta assumes the existence of an agreement, whether such agreement is written or verbal.
Although Maltese legislation does not mandate that a written contract must necessarily be entered into upon engagement, the standard practice is that written agreements are entered into between the employer and the employee. In any event, in terms of the Information to Employees Regulations, SL 452.83, employers have an obligation to provide employees with a statement detailing the minimum conditions of employment. This may be satisfied by a basic letter of engagement, a contract of employment, as well as a collective agreement.
If an employment contract is signed, then Maltese civil law generally applies the norm that the parties to a contract are free to regulate the conditions between them, insofar as the agreement satisfies certain basic rules (such as the capacity of the parties) and regulates a subject which is lawful. Therefore, the terms of a contract are generally deemed to be the law between the parties (lex contractu). However, a fundamental rule enshrined in Maltese employment law is that a contract of employment cannot provide certain conditions which are less favourable to the employee than those specified in employment law. Thus, by way of exception to the norm, the more beneficial minimum conditions provided by the law must always prevail.
Contracts of Employment
The terms of a contract of employment will vary depending on the type of employment relationship which exists, whether for an indefinite period, a fixed period or the completion of a project.
Each type of contract must necessarily satisfy certain conditions and is subject to diverse rules, primarily in relation to termination of such employment and the consequences of same. Details contained in contracts will also typically differ depending on the grade, nature of employment and on the nature of the employer’s industry.
Specific legislation also exists to regulate the conditions and limitations of the use of definite (fixed-term) contracts (and their possible automatic conversion into indefinite-term contracts), and the use of part-time employment.
Further rules also apply if the employee is employed to work overseas or is an outworker.
Working Hours and Overtime
Working hours tend to vary according to the industry in question and may be regulated by sector-specific WROs.
The average normal working week (excluding overtime) is a 40-hour week. In certain cases, normal working hours can exceed 40 hours a week.
As a general standard, working time should not exceed a maximum of 48 hours a week, although an employee may expressly consent to work in excess of 48 hours per week. Such consent may also be revoked, subject to the provision of prior notice.
It is understood that an employer has a right to instruct an employee to work eight hours of overtime per week. This is subject to certain exceptions provided by the law, such as in the case of a pregnant employee, as well as for a period after an employee has given birth or adopted a child.
Workers are generally entitled to a minimum daily rest period of 11 consecutive hours. In certain circumstances, however, the full rest period may not be availed of, provided that equivalent compensatory rest periods are provided to the employee immediately following the corresponding periods worked.
With respect to overtime, employees who are not regulated by sector-specific WROs are covered by the Overtime Regulations, SL 452.110, which lay down a rate of one-and-a-half times the normal rate for work carried out in excess of 40 hours a week averaged over a four-week period, or over the shift cycle at the employer’s discretion. Sector-specific WROs may mandate different overtime rates. The rules on overtime for public service and public sector employees differ.
In Malta, it is also common for the employer and employee to agree to a consolidated wage which covers payment for all working hours, including overtime hours. Whether such practice is in line with the Overtime Regulations is contentious and would have to be assessed on a case-by-case basis. This practice remains common, particularly in relation to senior grade employees and C-level executives, whose wages surpass double the national minimum wage.
Flexible Working Time
Under Maltese law, there is no express right for employees to request flexible working time, rather, flexible working arrangements are granted at the discretion of the employer.
The new EU Work-Life Balance Directive which is set to be transposed into Maltese law in the coming months should, however, grant working parents and carers of children up to eight years old the right to request flexible working arrangements.
Part-time contracts are regulated by the standard rules applicable to full-time employment, provided that all minimum entitlements are calculated pro rata depending on the hours worked. Part-time employees are protected from being treated less favourably because they work on a part-time basis.
For the year 2021, the national minimum wage for whole-time employees per week is:
Other sector-specific minimum wages regulated by the relevant sector-specific WROs may apply.
The minimum wage is typically adjusted annually to reflect the increase in the cost of living. In 2021 the cost-of-living adjustment for a full-time employee amounted to EUR1.75 per week.
Various WROs impose special overtime rates for work exceeding the normal working hours, or for work carried out on the weekends or public holidays. Some WROs also provide special allowances, such as for night work or shift work.
Bonuses and Allowances
All employees are entitled to a statutory bonus and a weekly allowance, twice yearly. A full statutory bonus of EUR135.10 must be paid at the end of June and another in December, while a full weekly allowance of EUR121.16 is payable at the end of March and the end of September.
Employees may also receive a bonus from their employer as part of their remuneration. Bonuses may be guaranteed, discretionary or a combination of both. Guaranteed bonuses are bonuses which have been agreed upon contractually and which must necessarily be paid by the employer. Discretionary bonuses, on the other hand, leave employers with some flexibility in deciding what payments, if any, are to be made to the employee (generally these are calculated on the basis of performance). A combination of both guaranteed and discretionary bonuses may cater for a discretionary element within a contractual right to the payment of a bonus.
The rules on remuneration for public service and public sector employees vary.
Under Maltese law, employees may avail of a variety of leave entitlements ranging from annual vacation leave, to leave on the occasion of marriage and leave for medically assisted procreation, amongst others.
Annual Vacation Leave Entitlement and Pay
The Organisation of Working Time Regulations, SL 452.87 sets out the minimum leave entitlement and the rules related to carrying forward leave and payments in lieu.
Employees working a 40-hour week and an eight-hour working day are entitled to a minimum statutory vacation leave entitlement of 24 days per annum, as well as an extra day of leave for each public or national holiday falling on a Saturday or Sunday. Therefore, this means that the yearly leave entitlements will fluctuate depending on the number of public or national holidays falling on a Saturday or Sunday of each calendar year paid at the normal rate of remuneration of such employee. Should an employee’s average hours (excluding overtime) calculated over a period of 17 weeks be below or exceed 40 hours per week, the entitlement in hours is to be adjusted accordingly.
Part-time employees and employees who have not completed a full year of service are entitled to paid vacation leave calculated on a pro rata basis.
The Annual Leave National Standard Order, SL 452.115 regulates the procedures.
Other Leave Entitlements
Maltese Law provides for and regulates various other leave entitlements including sick leave, maternity leave, adoption leave, birth leave, parental leave, bereavement leave, jury leave and quarantine leave, among many others.
The sick leave entitlement granted to employees varies significantly according to the applicable sector-specific WRO. Where an employee is not covered by a specific WRO, such employee is entitled to two working weeks per year (calculated in hours) of sick leave. This sick leave entitlement is to be calculated on the basis of a 40-hour working week and an eight-hour working day.
Payment for sick leave is to be footed by the employer. However, should an employee remain unable to work after having exhausted the full entitlement, such employee shall continue to receive the sickness benefit from the Social Security Department.
Part-time employees are entitled to paid sick leave calculated on a pro rata basis. The entitlement is also calculated proportionally for employees who have not completed a full year of service.
Under Maltese law, a pregnant employee may take maternity leave for an uninterrupted period of 18 weeks. The first 14 weeks are to be paid by the employer. Payment for maternity leave beyond the first 14 weeks is not paid by the employer but by the Social Security Department.
Employees may also be entitled to special maternity leave should the conditions required be satisfied.
Similarly, an employee who is the parent of an adopted child is also entitled to an uninterrupted period of 18 weeks of adoption leave. The leave shall commence on the date on which the child passes into the care and custody of the adoptive parent. An employer shall be bound to pay for the first 14 weeks of adoption leave with full wages. However, should the employee choose to take any additional adoption leave beyond the 14 weeks, payment for such additional leave will be obtained from the Social Security Department.
Employees are also entitled to birth leave on full pay on the birth of a child. Entitlement to birth leave varies depending on the applicable sector-specific WRO. Employees not covered by any WRO are entitled to one working day of birth leave. The Work-Life Balance Directive is set to introduce ten full days of paid paternity leave and therefore the entitlement to birth leave should soon be extended.
Furthermore, both male and female employees have a right to be granted unpaid parental leave for a period of four months in case of the birth or adoption, fostering or taking over legal custody of a child up to the age of eight years old. In this case, an employee wishing to take such leave must necessarily have at least 12 months continuous service with the employer unless a shorter period is agreed to. The transposition of the Work-Life Balance Directive is set to implement a number of changes in this regard, as it envisages that an individual will have a right to four months' parental leave, of which two months are non-transferable between the parents and are to be paid.
Confidentiality Clauses, Non-disparagement Clauses and Employee Liability
Confidentiality and non-disparagement clauses in employment contracts are not expressly regulated in Malta. However, they are common clauses introduced within contracts of employment together with other clauses such as those on intellectual property, non-competition, compliance with policies and processing of personal data.
Although not specifically regulated, it is understood that during employment, employees have an implied duty of confidentiality as well as an implied duty to act in the best interest of the employer. These implied obligations have often been upheld by the Industrial Tribunal and the courts. These obligations also apply following the termination of employment but in a more limited manner.
With certain employees one may also invoke duties of a fiduciary nature regulated by the Civil Code.
With regard to employee liability, Maltese law does not explicitly regulate the liability of an employee during the course of their engagement with the employer. However, general civil law principles of contract and tort are applicable in such circumstances.
The law does impose an obligation on an employee to pay a sum to the employer if the employee abandons fixed-term employment without good and sufficient cause, or if the employee fails to give prior notice of termination from an indefinite term contract without good and sufficient cause.
Non-competition clauses effectively seek to prevent an employee from joining a competitor employer or facilitating a competing business during employment or for a defined period after the termination of employment.
Restrictive covenants of this nature do not arise by law, except indirectly insofar as trade secrets are protected, offering limited protection. Therefore, in order to be enforceable, restrictive covenants must necessarily be included in a contract of employment, or in a side letter signed by the employee.
Non-competition clauses applicable during the employment period are standard and there is a general understanding that they should be enforceable. This does not mean that employees can be prevented from undertaking activities for another (non-competing) employer.
Post-termination Restriction Clauses
Conversely, post-termination restriction clauses, including non-competition, are not easily enforceable. Over the past decades, local courts have adopted different interpretations, in some cases dismissing the clauses altogether for being restraints of trade which were deemed to be in breach of public policy, but in other more recent cases enforcing the restraints insofar as they were warranted, narrowly defined and limited in scope and duration. On some occasions, the courts have also enforced a contractual obligation on the former employee to pay a sum by way of pre-liquidated damages, with the courts maintaining that this was not an illegal fine imposed on the employee.
The courts have generally interpreted such clauses restrictively and have emphasised that the limitation of time and industry area imposed have to be reasonable, taking into consideration the small size of Malta and the relatively small market, in that a former employee cannot be forced to leave the country to be able to pursue their vocation/profession. There is no law regulating these types of covenants and therefore there is no maximum period imposed at law. Unlimited periods are not permissible and, typically, restrictions would be for periods of six to 12 months from termination.
There is no mandatory obligation to compensate employees for post-termination restrictions. However, compensation is likely to increase the chances of enforceability.
Therefore, such clauses must be specific in that they must refer to an objective, a time and a place. Should a clause be too vast or too vague, then one might argue that this would be going over and above its original scope, that being the protection of the employer and the business.
The courts have also often highlighted that the employer would need to prove that a loss was or would have been incurred due to the ex-employee moving to a competitor.
Non-solicitation clauses effectively seek to prohibit an ex-employee from soliciting clients of the employer and/or from soliciting other employees/workers of the employer to terminate their employment with the employer.
In a similar manner to non-competition clauses, in order to be enforceable, non-solicitation clauses must form part of a contract of employment or be included in a side letter signed by the employee.
Non-solicitation clauses are relatively common in contracts of employment governed by Maltese law and may be enforced through judicial proceedings insofar as they are deemed to be reasonable. The courts have generally interpreted such clauses restrictively and have emphasised that the limitation of time and market imposed have to be reasonable, taking into account Malta’s small size and its relatively limited market. The non-solicitation of clients is more likely to be enforced than the non-solicitation of employees (as, on occasion, the courts have suggested that employees cannot be treated as assets of a company).
The Maltese courts have enforced clauses which prohibited a former employee from working with a client of the employer.
Protection of privacy rights is enshrined in the Constitution of Malta as well as the European Convention Act (Chapter 319, Laws of Malta) which transposes the European Convention for the Protection of Human Rights and Fundamental Freedoms.
Data protection is primarily regulated by the EU General Data Protection Regulation (GDPR), together with the Data Protection Act, Chapter 586 of the Laws of Malta and subsidiary legislation enacted thereunder.
Except for some basic rules on the processing of personal data in the context of teleworking which were enacted prior to the GDPR, the Maltese legislator has so far not enacted any data protection law specific to the employment sphere, in that no laws expressly regulating the processing of personal data in the employment context and/or which affect the privacy rights of employees, have been enacted. Therefore, the standard data protection principles and rules apply to the employment context.
Generally, as data controllers, employers are likely to rely on the legal grounds of performance of a contract, a legal requirement or legitimate interest (provided that such interest is not overridden by the rights of others) in order to process employee data.
Employers must essentially ensure that they are processing data in accordance with the principles underlined in the GDPR, namely:
As data subjects, employees enjoy a degree of privacy and may take advantage of the various rights granted to data subjects under the GDPR. Such rights are not absolute in nature and are subject to certain limitations.
EU/EEA/Swiss nationals and their family members, as defined, may take up employment and/or self-employment in Malta in the exercise of their EU Treaty rights and accordingly, there are currently no restrictions on EU/EEA/Swiss nationals’ access to the labour market.
Third Country Nationals
Non-EU/EEA/Swiss nationals (Third Country Nationals) typically require an employment licence to work in Malta and cannot legally take up employment or self-employment without this licence. An application for an employment licence is generally submitted to the Department of Citizenship and Expatriates (DCEA) through a Single Permit Application (SPA). On completion of a successful SPA, the Third Country National would be issued with a Maltese residence permit which would allow the person to legally work and reside in Malta, subject to certain conditions. For standard SPAs, the processing time of an application takes roughly 12 weeks from the submission of the application and a successful applicant will be issued with a residence permit for a one-year period.
Labour Market Test
In terms of current policy, the employment of Third Country Nationals by Maltese employers is generally subject to the satisfaction of a Labour Market Test, whereby the employer must demonstrate that an effort was made to first recruit EU/EEA/Swiss nationals for the position, prior to offering the position to the Third Country National – this is subject to any applicable exemptions.
Malta Vacancy Exemption List
Due to exigencies in the current market, certain occupations are exempt from the requirement to satisfy the Labour Market Test. The Malta Vacancy Exemption List is issued by Jobsplus and updated from time to time, depending on shortages in the local labour market. It is important to note that unlike the Key Employee Initiative Scheme, referred to below, when an occupation falls on the Malta Vacancy Exemption List, the role is exempt from the Labour Market Test irrespective of the gross annual salary earned by the Third Country National or the seniority of the position. The Malta Vacancy Exemption List currently includes the following occupations: accountants, auditors, personal carers, IT consultants, and vets, among others.
Key Employee Initiative Scheme
In addition to the Malta Vacancy Exemption List, a Third Country National may also submit a SPA under the Key Employee Initiative Scheme (KEI). The KEI applies to Third Country Nationals who:
The KEI is beneficial as, in addition to being exempt from the Labour Market Test, it is a fast-tracked application process, whereby SPAs are processed in around ten working days from submission of the application. Furthermore, a successful applicant is issued with a one-year residence permit on first submission and on renewal, subject to the discretion of the DCEA, may be issued with a residence permit for a three-year period.
It is important to note that once a SPA is successfully approved and the Third Country National issued with a residence permit, that residence permit solely allows the Third Country National to work in Malta:
Should the Third Country National change occupation with their current employer and/or change employer, then a new SPA must be submitted. Furthermore, should a Third Country National remain in the same position, then a renewal application would need to be submitted prior to the expiration of the residence permit.
EU/EEA/Swiss nationals who have been residing in Malta for a period of three months must submit a Residence Permit Application to the DCEA. An EU/EEA/Swiss national is issued with a residence permit for a five-year period. Unlike Third Country Nationals, EU/EEA/Swiss nationals are not subject to labour market considerations and are not required to change their residence card when changing employer and/or occupation.
In addition to the requirement to apply for a residence card, EU/EEA/Swiss nationals who are employed and working in Malta are generally also required to register for tax and social security purposes. The employer should register the employee with the revenue office for payroll purposes. Furthermore, the employer is required to register the employment with Jobsplus, through the submission of the requisite form.
Third Country Nationals
As indicated in 5.1 Limitations on the Use of Foreign Workers, Third Country Nationals are typically required to apply for an employment licence in order to legally work and reside in Malta and the most common type of application is the SPA. The documentation required for a SPA depends on the occupation and whether or not the position is exempt from the Labour Market Test. A SPA may be submitted whilst the Third Country National is still abroad or already in Malta. In fact, the forms and documentation required depend also on whether the SPA is a new – ie, first-time application – or whether the person is already in Malta and changing jobs, among other matters.
A typical SPA includes, inter alia:
On completion of a successful SPA, the employer should register the employee with the revenue office for payroll purposes. Furthermore, the employer is required to register the employment with Jobsplus, through the submission of the requisite form.
The right of assembly and association is a fundamental human right enshrined in the Maltese Constitution.
The formation of trade unions and the process by which a union is recognised by an employer is regulated by law. However, it is generally only employers with a large number of employees and parastatal companies that are unionised or have employee representation.
The responsibilities, privileges and obligations of trade unions in Malta are regulated by means of the EIRA. Trade unions have the power to enter into contracts and, subject to certain restrictions, may sue and be sued. Trade unions also enjoy a certain degree of protection from liability in carrying out their legitimate activities, particularly when acting in contemplation or in furtherance of a trade dispute. However, the EIRA delineates exceptions to industrial disputes relating to essential-service industries.
The EIRA also extends protection to employees who follow directives issued by a union in contemplation or furtherance of a trade dispute.
Where no trade union is recognised within a place of work, the law grants the right to employees to elect an employee representative. This applies to workplaces with more than 50 employees. Employee representatives are not granted any voting or decision-making rights but, in certain instances, are entitled to receive information and engage in consultation with the employer.
Collective bargaining agreements are contracts negotiated between trade unions and employers to regulate minimum conditions within a work force, or sections of the work force. The EIRA recognises collective agreements insofar as they are duly registered. Clauses in collective agreements cannot provide for conditions which are less favourable than the minimum provided by the law.
Collective agreements generally regulate, among others, employees’ terms and conditions of employment such as employee wages and benefits, employee duties, and health and safety. Such agreements also delineate the duties and responsibilities of the employer and also often lay down the applicable rules for cases that require disciplinary proceedings.
Termination during Probation
For both definite and indefinite contracts of employment, the law imposes a probationary period during which both the employer and the employee may terminate employment without providing a reason, although parties may decide to contract out of such a probationary period. One-week prior notice must be given should the employee have been in employment for more than one month. Special rules apply to employees who are pregnant or on maternity leave or who have suffered a work injury.
Termination of Definite Contracts of Employment
With regards to fixed-term contracts, such contracts cannot be terminated prior to the expiration of the stipulated term, except on the basis of "good and sufficient cause". Should either party terminate prior to the lapse of the specified term, the terminating party would be liable to pay the other party half of the wages that would have accrued to the employee in respect of the remainder of the time specifically agreed upon.
Termination of Indefinite Contracts of Employment
With regards to termination of employment following the expiration of a probationary period, if any, an indefinite contract of employment may be terminated by the employer on the grounds of:
With regards to the latter, an employer may terminate an employee's employment when the employee reaches pensionable age without giving prior notice or having any other valid reason by law. Pension age in Malta is 62; however, the pensionable age may also vary depending on the employee’s birth year.
The term "good and sufficient cause" is not defined by law. However, the law delineates what does not constitute "good and sufficient cause", such as, for eg, termination on the occasion of an employee’s marriage.
There is no specific procedure that an employer must follow when terminating for "good and sufficient cause", however, the Industrial Tribunal generally emphasises that warnings ought to be given to an employee prior to dismissal, particularly if termination is based on issues of performance or conduct, and the employer must demonstrate that they engaged in a due process prior to dismissal.
In such cases, the employer is not required to give the employee advance notice of termination and is also not required to pay the employee any wages relating to such notice period.
With regards to termination of employment by way of redundancy, Maltese law requires employers to follow the Last-In-First-Out rule, in that the employer must terminate the employment of that person who was last engaged in the class of employment affected by such redundancy. In such cases, the employer must give prior notice of such termination, depending on the employee’s length of employment. Should the employee not wish to work the full notice period, the employee may require the employer to pay them a sum equal to one half of the wages due for the unexpired period of notice. If the employer fails to give notice, the employee will be entitled to a payment in lieu thereof.
Furthermore, should the post formerly occupied by the employee who was rendered redundant be made available within a year, such person shall be entitled to be reinstated in that post.
Collective Redundancies are regulated by means of SL 452.80. A collective redundancy can arise depending on the size of the work force and the number of employees to be declared redundant within a period of 30 days.
Consultation with the appropriate representatives must take place at the earliest possible opportunity and is to cover ways and means of avoiding the collective redundancies or reducing the number of employees affected by such redundancies and for mitigating the consequences thereof. Employers must provide the employee representative with a written statement detailing all pertinent information including, inter alia, the selection of the employees who are to be made redundant, as well as the period over which such redundancies are to be carried out. A copy of the written notification and a copy of the written statement must also be provided to the Director of Employment and Industrial Relations.
Unless otherwise authorised, the employer cannot terminate the employment of employees effected by any projected collective redundancy before the lapse of 30 days from notification.
Termination by an Employee of an Indefinite-Term Contract
Employees are entitled to terminate their indefinite contract employment at any time, without assigning any reason, provided that the employee provides the employer with the required notice period.
In such cases, the employer may either allow the employee to work their full notice period or, alternatively, terminate the employment and pay the employee a sum equal to the full wages due for the unexpired period of notice.
In cases where the employer terminates an indefinite-term contract on the basis of redundancy, as well as in cases where the employee resigns from their post, the terminating party is obliged to provide the other party with notice of such termination.
Minimum statutory notice periods are based on the length of continuous employment with the employer in that, for eg, employees who have been employed for between six months and two years have a notice period of two weeks. The maximum notice period contemplated by law is 12 weeks.
Notwithstanding the minimum notice period by law, in the case of employees with a technical, administrative, executive or managerial post the parties may agree to longer notice periods.
Should an employee fail to give the required notice, the employee will be liable to pay the employer a sum equal to half the wages that would have been payable in respect of the notice period. Should the employer fail to give the required notice to an employee being rendered redundant, the employer shall be liable to pay the employee a sum equal to the full wages that would have been payable in respect of the notice period.
Maltese law does not require employers to pay any severance pay over and above the wages covering the relevant notice period. Generally, severance pay is only rewarded if the employer gives enhanced payments or wishes to have a settlement agreement signed.
Summary dismissal is a form of dismissal whereby the employee is dismissed due to grave misconduct. Although summary dismissals do occur in practice, the courts have held that such dismissals are the exception, not the norm, and that the employer must have good and sufficient cause, which is gross and thus warrants a dismissal rather than a mere warning.
The law does not establish any specific procedure that must necessarily be followed; however, the tribunal generally wants to see that an employee was given the opportunity to defend themselves and have a fair hearing. In recent years, the Court of Appeal has directed the tribunal not to award compensation to employees if such a procedure was not applied, insofar as there was genuinely good and sufficient cause warranting a dismissal.
In such cases where the employer dismisses the employee summarily, the employer is not required to give the employee advance notice of termination or payment for such notice.
An employee who feels aggrieved by the dismissal has four months within which to file a claim before the Industrial Tribunal. Both parties would then have the right to be represented before the tribunal and to present their evidence and bring any relevant witnesses forward to testify.
Should the employer fail to prove that the dismissal was based on good and sufficient cause, the Industrial Tribunal may either order reinstatement and/or award monetary compensation. Employees holding a managerial or executive post are not typically reinstated, but are provided with monetary compensation should the dismissal be deemed unfair by the tribunal.
Termination agreements are not regulated under Maltese law, although parties may agree to terminate the employment relationship by mutual agreement and/or to settle disputes. In this case, general principles of contract law would apply, as well as the rules on compromise agreements.
Maltese law seeks to protect specific groups of employees from dismissal. Such protection applies to terminations connected with individuals who are pregnant or on maternity leave, individuals availing themselves of parental leave, and individuals who are terminated due to the fact that they are members of a trade union or involved in the activities of a trade union, among others.
The law also explicitly prohibits the termination of employment of an employee on injury leave.
A termination may also be deemed unfair, despite there being good and sufficient cause, if the termination is deemed to be discriminatory.
Maltese law contemplates the possibility for employees to claim “unfair dismissal” which would be termination without just cause or which is discriminatory. Although not expressly regulated by law, the tribunals and courts also recognise the concept of constructive dismissal, whereby the employee would resign in protest and claim compensation for having been forced to abandon the employment. The burden to prove that the termination was lawful rests with the employer.
The law makes no specific reference to the concept of “wrongful dismissal”, that being a claim based in contract law for breach of contract. That being said, insofar as there is a breach of contract, the employee would be able to raise that as a fact corroborating the unfair dismissal, keeping in mind that when a tribunal liquidates compensation for unfair dismissal, it is entitled to take into account all relevant considerations, including damages arising out of a breach of contract. An employee may also raise a claim for damages arising out of breach of contract before the civil courts and may also seek a remedy for the performance of the contract.
In certain cases, employees may also have recourse to the Department of Employment and Industrial Relations which, in turn, has the competence to investigate and if need be, prosecute offences committed in breach of employment law.
Protection against discrimination is one of the fundamental rights and freedoms enshrined within the Maltese Constitution and it effectively protects persons from being discriminated against in every aspect of work life.
The EIRA broadly defines discriminatory treatment as any distinction, exclusion or restriction which is not justifiable in a democratic society. This includes, but is not limited to, discrimination on the grounds of pregnancy, disability and gender. The list of grounds provided for in the EIRA is non-exhaustive in nature and therefore, although not specifically mentioned therein, age or sexual orientation can also be deemed as grounds on which to claim that treatment was discriminatory, provided that the distinction, exclusion or restriction in question is not otherwise justifiable.
The EIRA also prohibits discriminatory treatment throughout the employment life cycle, in that discriminatory treatment is unlawful at the recruitment stage, during the employment relationship and during termination.
Differential treatment may be justified and is not deemed discriminatory – taking into account the nature of the vacancy to be filled or the employment offered – where a required characteristic constitutes a genuine and determining occupational requirement, or where the requirements are established by applicable laws or regulations.
The law also protects part-timers and fixed-term contract employees from being discriminated against by virtue of their employment status.
Burden of Proof
An employee claiming discrimination must merely establish a prima facie case sufficient to indicate discriminatory treatment. Once the employee succeeds in showing a prima facie case of discrimination, it is then up to the employer to prove the contrary.
Employers are obliged to respond to queries alleging discrimination within a fixed period of time.
Damages and Relief
An employee who alleges that they have been subjected to discriminatory treatment must file a claim before the Industrial Tribunal within four months of the alleged breach. Should an employee succeed in their claim against the employer, the employee will be entitled to monetary compensation. It is worth noting that the parties are free to reach an out-of-court settlement at any point during the proceedings.
There is no statutory formula by which the tribunal determines compensation. However, in determining the amount of such compensation, the tribunal must take into consideration the real damages and losses incurred by the worker who was unjustly dismissed, as well as other circumstances, including the worker’s age and skills, as may affect the employment potential of said worker. Employees are expected to mitigate their losses.
Employees are entitled by law to raise various complaints should they arise. The competent authority before which a complaint must be brought varies depending on the nature of the claim in question.
The Industrial Tribunal in Malta is the competent forum to hear claims relating to unfair dismissals, trade disputes, and other specialised employment law disputes such as discrimination, harassment and victimisation.
Employees may also lodge certain claims, mainly contractual, before the civil courts, as well as seek intervention from competent authorities in the event of offences against the law, such as the Department of Employment and Industrial Relations, the Office of the Information and Data Protection Commissioner, as well as the National Commission for the Promotion of Equality.
The EIRA does not expressly cater for class actions to be brought before the Maltese Industrial Tribunal, however, there are instances where a dispute/claim may be filed on behalf of several employees contemporaneously.
The Industrial Tribunal
The tribunal is free to regulate its own procedures; however, it is expected to abide by the rules of natural justice and decide the case at hand based on its substantive merits. The Industrial Tribunal is vested with the powers of the courts in accordance with the Code of Organisation and Civil Procedure.
The configuration of the tribunal is determined depending on the issue at hand. In disputes which relate to conditions of employment, the tribunal is composed of one chairperson, whereas, where the situation relates to industrial relations, the tribunal is composed of a chairperson and two other members who are selected by the chairperson of the tribunal.
Sittings before the tribunal are generally open to the public, although the tribunal may decide that a case should proceed behind closed doors.
The process before the Industrial Tribunal begins with an application being filed. The tribunal then allows time for the defendant to rebut the allegations by means of filing a reply. A practice generally adopted by the tribunal is that of asking whether the parties have sought to resolve the matter amicably prior to moving forward with proceedings. Following the reply being filed, and provided that the parties have not reached an out-of-court settlement, the parties are then given the opportunity to support their case with evidence and oral and/or written pleadings. It is worth noting that the parties may reach a settlement at any point during the proceedings prior to the final decision.
Although Maltese law delineates that the tribunal must decide cases within one month, the vast majority of cases are not decided within such period and, on average, they are not determined before one to two years have passed, and this may be extended in the case of an appeal.
The EIRA refers to the exclusive jurisdiction of the tribunal in certain instances and therefore it is argued that the possibility to arbitrate is limited. While Maltese law does not expressly prohibit pre-dispute arbitration agreements in employment disputes, neither does it provide that pre-dispute arbitration agreements are enforceable and therefore, these may be disputed, particularly in cases where the tribunal is declared to have exclusivity.
Prevailing employees are generally reinstated and/or awarded monetary compensation. The tribunal will typically award a token payment towards representation costs, and the parties are otherwise expected to cover their own costs and legal fees.