Employment 2023 Comparisons

Self-employed individuals do not have the same rights as employees under Gibraltar law. Self-employed individuals are also responsible for their own tax and social insurance payments, which are normally handled by the employer in respect of the employees.

Employment contracts may be for an indefinite period or for a fixed term. The Fixed Term and Part-Time Employees (Prevention of Less Favourable Treatment) Regulations 2003 aim to prevent fixed-term and/or part-time employees being treated less favourably than similar permanent and full-time employees and limits the use of successive fixed-term contracts.

In order to engage an employee, an employer must be registered as such under the Business Trades and Professions Registration Act 1989 and must also register with the Income Tax Office.

In addition, a Notification of Vacancy form must be completed, and all vacancies must be registered with the Department of Employment before seeking to engage a person as a worker.

A Notice of Terms of Engagement must also be completed and submitted to the Department of Employment for all workers. This Notice must set out certain terms of the employee’s employment, including wages and notice periods. A copy must be given to the employee. Any changes to the employment relationship must be notified to the Department of Employment on a prescribed form.

The Working Time Act (WTA) provides specific rules governing the working hours, breaks and holidays of workers. A person is considered a worker for the purposes of the WTA if such a person is engaged under a contract of employment or provides work or services under a contract which is not a contract for professional services.

There is a 48-hour limit on average weekly working hours, including overtime. The average number of hours worked are calculated by reference to a 17-week period. There are some special case exemptions that allow for a 26-week reference period, and possibly a reference period of a full year where a collective or workforce agreement provides for this:

• it is possible for individuals to opt out of the 48-hour limit, but such agreements are terminable on not more than three months’ notice and increase the employer’s record-keeping burden; and
• the 48-hour limitation does not apply to those whose working time cannot be measured or predetermined.

The first category above is open to wide interpretation, and employment contracts frequently include provisions for working hours above the 48-hour limit for professionals and managerial staff.

Night-Time Work

The normal working hours of a night worker must not exceed an average of eight in each 24-hour period. In the case of a night worker whose activities involve special hazards or heavy, physical or mental strain, there is an absolute limit of eight hours. Night-time means the period between 11pm and 6am. The precise period can be determined in a relevant agreement, and in the absence of such an agreement, it will be construed as 11pm to 6am.

Part-Time Work

Part-time workers have the same rights/entitlements as full-time workers, unless there is an objective justification for the difference in treatment. Part-time workers accrue rights over time in the same way as full-time workers. The duration of the annual holiday of part-time employees is calculated pro rata to that of an employee who works a five-day working week.

Overtime

If an employee is expected to work regular overtime, it is good employment practice to state this clearly in the employee’s contract of employment, together with:

• whether overtime is compulsory or voluntary;
• rates of overtime pay;
• when overtime becomes payable;
• any notice arrangements for overtime working; and
• the authorisation process for overtime work.

Overtime rates are a matter for agreement between employer and employee or on an industry-wide basis. There are certain minimum statutory levels, and overtime pay varies from business to business.

Typical rates for overtime are listed below.

• Weekdays and Saturdays – the normal hourly working rate x 1.5.
• Sundays and public holidays – double the normal hourly working rate (Sunday shop workers may be an exception).
• Christmas Day and New Year’s Eve – double the normal hourly working rate and above.

Under the Conditions of Employment (Standard Minimum Wage) (Amendment) Order 2022, the statutory minimum wage as of 1 August 2022 increased from GBP7.50 to GBP8.10 per hour. The weekly wage was increased to GBP315.90 per week (hourly remuneration x 39) and the monthly wage to GBP1,368.90 per month (weekly remuneration x 52 ÷ 12).

All employees in any undertaking, or any branch or department of an undertaking, are entitled to a minimum hourly, weekly and monthly remuneration. This does not include:

• employees who are engaged in a full-time course of education and who are employed during academic holiday periods;
• apprentices or trainees whose service ends at the end of their apprenticeship or traineeship; and
• domestic servants working in private households or seafarers employed on a sea-going vessel registered in Gibraltar.

It is not unusual to reward employees through bonuses in some sectors, such as financial services. Although many bonus schemes are described as discretionary, they are likely to be subject to implied duties and should be operated in a way that does not discriminate or breach the Equal Opportunities Act 2006.

The Employment (Annual and Public Holidays) Order 1969 (EAPHO) provides specific rules on the duration of an employee’s annual holidays and the related payment.

According to Section 4 of the EAPHO, between 1 January and 31 December each year, an employer is required to allow a holiday to every employee who was employed for a period of four weeks or more during the 12 months immediately preceding 1 January in that year (such 12 month-period is hereinafter referred to as the “qualifying period”). The duration of an employee’s annual holiday entitlement is linked to the period of his or her employment with the employer during the qualifying period, the employee’s continuous service and the amount of working days a week the employee is contracted to work. The duration of an employee’s annual holidays are calculated in accordance with the tables set out in Schedule 2 of the EAPHO. The duration of the annual holiday of part-time employees is calculated pro rata to the full-time employees’ entitlement.

Application of Annual Holiday Entitlements

The initial minimum paid annual holiday entitlement is 15 days for employees working at least five days a week, increasing gradually to 25 days for employees who have attained eight years of service. There is no statutory unpaid holiday entitlement.

Employees are entitled to take annual holidays on consecutive days, and any rest days or public holidays that fall during the annual holiday period do not count as days of annual holiday.

An employer is required to give employees a reasonable notice of the commencement date(s) of their annual holiday periods, and such notice may be given individually or by the posting of a notice in the place where the employees are employed.

End of Employment

Where an employee ceases to be employed by an employer, the employer is required to, on termination of the employment, pay to the employee one day’s holiday pay in respect of each day of accrued annual holiday to which the employee would have been entitled to, less any days of annual holiday already allowed.

However, holiday pay is not payable to an employee where the employee is dismissed on the grounds of either dishonesty or misconduct and is so informed by his or her employer at the time of dismissal, or where the employee leaves the employment without giving the employer notice of termination of employment in accordance with Section 54(2) of the Employment Act 1932. Where an employee dies while in the employment of an employer, the amount of any accrued holiday pay to which he or she would have been entitled had a notice to terminate the employment been given to the employer, expiring on the date of his or her death, is due and payable to the legal personal representative of the employee by the employer.

Nonetheless, the provisions of the EAPHO discussed above do not prevent any employer allowing annual or public holiday conditions or the payment of holiday remuneration on terms more favourable than those prescribed.

There are no statutes pertaining to covenants not to compete in Gibraltar.

The types of covenants commonly used in employment contracts are:

• non-solicitation covenants to prohibit a former employee from soliciting the customers or clients of the employer;
• non-dealing covenants to prohibit a former employee from dealing with the customers or clients of the employer;
• non-competition covenants to prohibit a former employee from engaging in a competitive activity within a particular area or a time-scale, or both; and
• non-solicitation or non-poaching of employees covenants to prohibit a former employee from soliciting his or her ex-colleagues.

Covenants will only be enforceable if they are considered reasonable, taking into account factors such as:

• the nature of an employee’s work and what information he or she had access to;
• whether the “clients” and “employees” are restricted to those with whom the former employee had dealings; and
• the size of an area restriction and its duration.

This may be particularly relevant to a jurisdiction as small as Gibraltar.

If restrictive covenants are disregarded or if confidential information is misused, an employer can seek damages against an employee/ex-employee or obtain an injunction restraining him or her from breaching said covenants or misusing said confidential information. It may also be possible to sue the new employer for inducing a breach of contract or breach of confidence.

See 2.1 Non-competition Clauses.

Pursuant to the General Data Protection Regulation (GDPR) which came into force on 25 May 2018, data collected, processed, stored and accessed should be restricted to the minimum for each specified purpose, and only be kept for as long as necessary. Current legislation in Gibraltar maintains the data protection standards that applied in Gibraltar as a result of EU Law (ie, the EU General Data Protection Regulation 2016/679 and the Law Enforcement Directive 2016/680) prior to Brexit and the end of the transition period. 

Individuals, including employees, have the right to be informed of how their data will be used. They can access, rectify, erase and object to data being held or processed. They also have the new right of portability; that is, the data can be transferred to another organisation on request.

Employers are not able to process data until they show that a legitimate interest or legal basis outweighs the interests or rights of the employee. Any data held on paper or electronically should be available to the individual, free of charge, in a commonly used format, electronically and within one month.

Legal Basis

In the employment context, a “legal basis” is needed to justify the processing of each data category. A legal basis can be a statutory requirement, such as recording for tax purposes, necessary for a legal obligation, or for the performance of the contract, such as paying the individual or ensuring work is performed. For much employee data, the legal basis will be a “legitimate interest”, for example, capturing data to improve workforce performance or to respond to a dispute.

The Employment Regulations 1994 provide that it is an offence to engage a worker other than an entitled worker, as defined in the Employment Regulations, without having first obtained a permit in respect of that worker.

“Entitled workers” are defined in Regulation 6(4) and include:

• European Economic Area (EEA) nationals and their family members;
• Swiss nationals;
• persons entitled to seek and take up employment in Gibraltar by virtue of their nationality or residency; and
• persons falling within Section 14(1) of the Immigration, Asylum and Refugee Act, etc.

All other workers require a work permit to work in Gibraltar. It is as yet unclear what the position of EU workers will be in the future given that the UK and Gibraltar left the EU on 31 December 2020.

Currently, discussions between the Gibraltar, Spanish and UK governments have meant that there is an expectation that “a Gibraltar solution” will be found that will accommodate the parties’ desire that Gibraltar enters the Schengen area and free movement prevails. This is currently the subject of a treaty negotiation between the EU and the UK. In the meantime, the treatment of previously “entitled workers” remains the same.

Work Permit Applications

Where applicable, a work permit must be obtained before employment commences and will only be issued for 12 months at a time. The application is made by the employer to the Director of Employment. The employer must lodge a deposit with the Director of Employment for the amount that would be required to repatriate the employee on termination.

Applications are usually processed within two to three weeks. Failure to obtain a work permit is subject to financial penalties. Non-EU nationals require residency permits if they wish to reside in Gibraltar. A person who is not entitled to reside in Gibraltar and does so without a permit will not be allowed to stay.

Applications must be made to the Civil Status and Registration Office. It takes around four weeks (or in some cases more) to obtain a residency permit.

In order to engage an employee, the employer must be registered as such under the Business Trades and Professions Registration Act 1989 and must also register with the Income Tax Office.

Employers and employees may agree on working from home arrangements or for employees to be working whilst in transit, where this is appropriate for the type of business.

Depending on the implementation of the arrangement, this may involve the employer issuing IT equipment or software which, once installed in an employee’s premisses or on their private devices, enables them to have the same level of access to the employer’s network, systems and resources as they would have if they were in the workplace. Employers must, however, implement appropriate technical and organisational measures to ensure compliance with data protection obligations under the Gibraltar General Data Protection Regulation (GDPR) and the Data Protection Act 2004 (DPA) with regards to the employees working remotely.

With regards to the monitoring of the working from home arrangements, the employer must ensure that any use of employees’ personal data complies with the data protection law and identifies a lawful basis under Article 6 of the Gibraltar GDPR and Article 9 of the Gibraltar GDPR in respect of special categories of personal data, where applicable.

There is no statutory right to request or take a career break or a sabbatical (paid or unpaid) for employees but such arrangements may be included in an employment contract or employee handbook as part of the employer’s employee retention strategy.

A sabbatical would generally be subject to a negotiation between the employer and the employee, and not a contractual or legal right. 

Gibraltar does not currently have in place extensive regulations regarding new working arrangements, such as desk sharing.

The law on trade unions is largely governed by the Trade Unions and Trade Disputes Act 1947, which was recently supplemented by the Employment (Trade Union Recognition) Regulations 2023 in respect to the recognition of trade unions by the employers.

In order for a trade union to be able to conduct effective collective bargaining on behalf of its members, it must be registered in accordance with the provisions of the Trade Unions and Trade Disputes Act 1947.

An employee has the following rights in relation to his or her employer:

• the employee may not be refused employment because of membership or non-membership of a trade union; and
• dismissal for membership of, or for taking part in the activities of, an independent trade union is deemed automatically unfair for the purposes of the Employment Act 1932 (as amended).

Where an employer is proposing to dismiss as redundant five or more employees at one establishment within a period of 90 days or less, the employer is required to consult about the dismissals all the persons who are the appropriate representatives of any of the employees who may be affected by the proposed dismissals or may be affected by measures taken in connection with those dismissals.

The appropriate representatives of any affected employees are (if the employees are of a description in respect of which a trade union is recognised by their employer) the representatives of the trade union or, in any other cases, the employees’ representatives elected by the employees in accordance with Section 76(3)(b) of the Employment Act 1932 (as amended).

Collective bargaining agreements are negotiated between trade unions and the employers or employers’ associations and form the basis of an individual’s contract of employment provided certain conditions are met.

Employees with at least a year of continuous service can only be dismissed for a fair reason, namely:

• a reason related to capability;
• a reason related to conduct;
• redundancy;
• that the employee could not continue working without contravening the law; or
• some other substantial reason of a kind to justify the dismissal.

The employer has the burden of proving the reason for dismissal.

Redundancy

Redundancy is a potentially fair reason for dismissal, if there is a genuine redundancy situation. Employers must follow a fair and reasonable process, which should involve:

• properly assessing what roles are at risk of redundancy; and
• using fair, objective criteria when selecting for redundancy.

Consultation

Employers must usually consult employees about the proposed redundancy, and consider ways of avoiding it. Where the employer proposes to dismiss as redundant five or more employees within a 90-day period, collective consultation requirements are triggered. The employer must consult employee representatives (being either trade union representatives, or employee representatives elected in accordance with the requirements of the Employment Act 1932 (as amended)) at least 60 days before the first dismissal. The consultation will include a discussion of ways to avoid redundancies or mitigate the consequences of the redundancies.

The employer must also notify the Director of Employment (appointed under the Employment Act 1932 (as amended)) in writing of:

• the reasons for the proposed redundancies;
• the number of employees involved;
• the methods proposed for selecting employees; and
• the redundancy payments that will be made.

Minimum statutory notice periods the employer must give vary depending on the employee’s length of service. If the employee is paid monthly, notice periods are as follows.

• Up to eight years’ service – one month.
• Between eight and ten years’ service – two months.
• Over ten years’ service – three months.

If the employee is paid more often than monthly, notice periods are as follows.

• Less than two years’ service – one week.
• Between two and five years’ service – two weeks.
• Between five and eight years’ service – four weeks.
• Between eight and ten years’ service – eight weeks.
• Over ten years’ service – 13 weeks.

Employment contracts can provide for longer notice periods and for payment in lieu of notice.

Dismissal Without Notice and Breach of Contract Claims

Employees can be dismissed without notice in cases of gross misconduct. Otherwise, failure to provide appropriate notice will give rise to a claim for wrongful dismissal. Fixed-term employees who are dismissed before the expiry of their contract are entitled to 50% of the sum that would have accrued during the unexpired period of the contract.

The employer must file a Notice of Termination with the Department of Employment within seven days of the dismissal.

To avoid breach of contract claims, the employer must comply with any contractual obligations regarding termination. A fair process must be conducted to avoid claims for unfair dismissal. Although not a statutory requirement, the Employment Tribunal will consider the process followed by the employer.

Different considerations will apply in cases where dismissal is on the grounds of capability or redundancy.

Generally speaking, an act of gross misconduct is considered to be serious enough to overturn the contract between employer and employee, thus justifying summary dismissal.

It is still vital that the employer follows a fair procedure as for any disciplinary offence.

Failure to establish the facts before taking action and to hold a meeting with the employee, and denying the employee the right to appeal, are highly likely to be considered unfair at an Employment Tribunal and lead to a claim against the employer.

The conditions regulating compromise contracts in respect of complaints presented to the Employment Tribunal for harassment or discrimination are set out in Section 62(2) of the Equal Opportunities Act 2006. The conditions under Section 62(2) are that:

• the contract must be in writing;
• the contract must relate to the particular complaint;
• the complainant must have received advice from a relevant independent adviser as to the terms and effect of the proposed contract and in particular its effect on his or her ability to pursue a legal complaint;
• there must be in force, when the adviser gives the advice, a contract of insurance, or an indemnity provided for members of a profession or professional body, covering the risk of a claim by the complainant in respect of loss arising in consequence of the advice;
• the contract must identify the adviser; and
• the contract must state that the conditions regulating compromise contracts under Section 62(2) are satisfied.

A person is a relevant independent adviser for the purposes of Section 62(2):

• if he or she is a qualified lawyer (barrister or solicitor);
• if he or she is an officer, official, employee or member of a trade union who has been certified in writing by the trade union as competent to give advice and as authorised to do so on behalf of the trade union; or
• if he or she works at an advice centre (whether as an employee or a volunteer) and has been certified in writing by the centre as competent to give advice in relation to employment and equal opportunities law and as authorised to do so on behalf of the centre.

A person is not a relevant independent adviser in relation to the complainant:

• if he or she is employed by, or is acting in the matter for the other party, or a person who is connected with the other party;
• in the case of a person within subsection (3)(b) or (c), if the trade union or advice centre is the other party or a person who is connected with the other party; or
• in the case of a person within subsection (3)(c), if the complainant makes a payment for the advice received from them.

Any two persons are to be treated as connected:

• if one is a company of which the other (directly or indirectly) has control; or
• if both are companies of which a third person (directly or indirectly) has control.

It is unlawful to discriminate against employees on the basis of any protected characteristic under the Equal Opportunities Act 2006. The protected characteristics are as follows:

• gender;
• gender reassignment;
• marital or civil partnership status;
• racial and ethnic origin;
• pregnancy or maternity leave;
• age;
• disability;
• sexual orientation; and
• religious beliefs.

Under the Equal Opportunities Act 2006, the employees are protected from:

• direct discrimination;
• indirect discrimination;
• harassment; and
• victimisation.

Breach of a notice term, whether express or implied, and breach of a contractual disciplinary procedure are examples of grounds for a wrongful dismissal claim. The remedies available for wrongful dismissal are damages and equitable remedies such as a declaration, and an injunction will only be granted if damages would be inadequate.

Legislation in Gibraltar, in particular the Equal Opportunities Act 2006, outlaws discrimination in the workplace on the basis of:

• age or age group;
• disability;
• pregnancy or maternity leave;
• racial or ethnic origin;
• religion or belief;
• sex (including marital or family status);
• sexual orientation; or
• victimisation.

Discrimination may take the form of direct discrimination, indirect discrimination, harassment or victimisation. Almost all categories of workers are protected from discrimination including employees, contract workers, past employees or workers and those applying for jobs or in the process of going through recruitment procedures.

Any termination which can be shown to be due to a discriminatory reason will be unlawful.

There is no cap on awards for discrimination or harassment, and a successful applicant may be awarded damages, including damages for injury to feelings.

The majority of disputes between the employees and employers are brought before the Employment Tribunal and the proceedings are typically held in person. However, the Employment Tribunal has a discretion to implement video conferencing facilities if deemed appropriate).

Standard forms are available on the Department of Employment website and are required to be completed and sent to the Department of Employment in the event of a termination or a change to employment status. The Employment Tribunal Claim Form (“Claim Form”) is also available on the Department of Employment website.

An employee may take a claim to the Employment Tribunal if he or she thinks someone has treated him or her unlawfully, eg, his or her employer, a potential employer or a trade union.

Unlawful treatment can include:

• unfair dismissal;
• discrimination; and
• bullying at work.

Making a Claim

A claim has to be made to the Tribunal within three months of employment terminating or the act constituting the basis of the claim occurring.

To make a claim, a Claim Form needs to be completed and submitted to the Secretary of the Employment Tribunal. The Tribunal Secretary will send a copy of the Claim Form to the respondent and a blank Response Form for him or her to complete. The respondent then has an opportunity to file a response. The employee will receive a copy of the response.

Once the Tribunal has accepted a Claim Form and any Response, it will appoint a mediator.

Arbitration is possible if included in the employment contract, and pre-dispute arbitration agreements are enforceable.

The Employment Tribunal may on its own initiative or on application make a costs order or a preparation time order, where it considers that a party (or that party’s representative) has acted vexatiously, abusively, disruptively or otherwise unreasonably in either the bringing of the proceedings (or part) or the way that the proceedings (or part) have been conducted, or where it considers that any claim or response has no reasonable prospect of success.

The Employment Tribunal may also make a costs order or a preparation time order where a party has been in breach of any order or any of the Employment Tribunal (Constitution and Procedure) Rules, or where a hearing has been adjourned or postponed on the application of or as a result of the conduct of a party.