The Appeals Court, presided by Judge Lawrence Mintoff, upheld a ruling of unfair dismissal and sent the case back to the Industrial Tribunal for reassessment of damages.
The court dismissed the employer’s appeal, upholding the original judgement, while also upholding the employee’s appeal regarding compensation.
The judgement was delivered on 16 September 2026 in the case Manuel Caruana vs Leadership Consultancy & Training Services Ltd.
The dispute concerned the termination of the employment of Manuel Caruana, who had been employed by Leadership Consultancy & Training Services Ltd since 9 June 2020. Having initially served as administration officer, he was promoted to the position of head of administration on 1 January 2022. His employment was terminated with effect on 4 October 2022.
Before the Industrial Tribunal, Caruana alleged that he had been subjected to persistent criticism and hostility by senior management, particularly the company’s director. He further claimed that he was dismissed while absent on certified sick leave and without being afforded an opportunity to respond to allegations made against him. He maintained that the reasons advanced for his dismissal were unfounded and insufficient at law.
The employer contested the claim, arguing the dismissal was justified on the basis of serious misconduct, loss of trust and confidence, poor performance, and alleged involvement in discussions contrary to the company’s interests.
In a decision delivered on 15 September 2025, the Industrial Tribunal found that Caruana had not been granted a fair hearing before the termination of his employment. The tribunal concluded that the disciplinary process adopted by the employer breached the fundamental principles of natural justice and therefore rendered the dismissal unlawful and unjust.
The tribunal emphasised that where an employer intends to take disciplinary action against an employee, the employee should be informed in writing of the allegations, be given the opportunity to defend himself, and allowed to participate fully in the disciplinary process. The evidence showed that no such procedure had been followed before the dismissal.
The tribunal consequently awarded compensation amounting to €12,333, comprising notice pay and additional compensation for the unlawful termination.
The company appealed, claiming the tribunal had incorrectly applied the law. It argued that the Employment and Industrial Relations Act, does not expressly require employers to conduct disciplinary proceedings before terminating employment.
The employer relied principally on Article 36(14) of Chapter 452, which recognises that employment may be terminated without notice where there exists a “good and sufficient cause” for dismissal. According to the company, the tribunal should have focused exclusively on whether the facts established such cause rather than on the absence of disciplinary proceedings.
The employer further argued that, as a small enterprise, it was impractical to establish a disciplinary board and that the Industrial Tribunal itself effectively serves as an independent forum in which the employee can obtain a fair hearing after dismissal. It maintained that the employee had breached fiduciary duties analogous to those contemplated by Article 1124A of the Civil Code, through alleged disloyalty, participation in employee chat groups discussing management, and involvement in plans that allegedly conflicted with the company’s interests.
The Court of Appeal rejected the employer’s submissions and confirmed the tribunal’s conclusion that the dismissal was unfair.
While acknowledging that Article 36(14) of Chapter 452 permits dismissal without notice in appropriate circumstances, the court held that an employer must still demonstrate the existence of valid and sufficient grounds and observe fundamental principles of fairness before imposing what it described as the most severe employment sanction.
The court examined the allegations made against Caruana and found that several were based on assumptions and unsubstantiated suspicions. It noted that the evidence showed his inquiries about real estate qualifications were linked to a desire to supplement his income through part-time work as a property negotiator, rather than to establish a competing educational institution.
The court also criticised the employer’s treatment of employee communications and its management practices, observing that participation in employee WhatsApp discussions could not automatically be equated with disloyalty or insubordination. Moreover, the dismissal was affected by email while the employee was on sick leave and without any opportunity for him to respond to the allegations levelled against him.
Central to the court’s reasoning was the principle that an employee should not be found guilty of misconduct without being granted an adequate hearing. The court agreed with the tribunal that a disciplinary process, even if adapted to the size and structure of the undertaking, remained an important procedural safeguard.
The judgment referred to several past rulings concerning unfair dismissal and disciplinary procedures, including Eileen Leone Ganado vs Link School of Languages Limited, confirmed on appeal in 2017, that argued the principle that each dismissal case must be assessed according to its own facts and circumstances, and whether misconduct occurred and whether dismissal was a proportionate response.
Reference was also made to Owen Catania vs Fiona Farrugia, decided by the Industrial Tribunal on 6 December 2021 and confirmed on appeal on 19 October 2022. In that decision, reliance was placed on the judgment of the Italian Court of Cassation (24 June 2000, No. 8631) concerning the concept of “just cause” dismissal and the need to evaluate both the seriousness of the employee’s conduct and the proportionality of the sanction imposed.
The court additionally quoted Selwyn’s Law of Employment, describing disciplinary procedures as mechanisms intended to give employees an opportunity to correct conduct and to ensure the fair resolution of workplace grievances.
The Appeals Court also dealt with an incidental appeal filed by Caruana, who challenged the tribunal’s assessment of compensation. The tribunal had refused to compensate him for the period during which he remained unemployed and for the reduction in salary in his subsequent employment because it considered that he had expressed an intention to resign.
The court disagreed. Referring to Article 81(2)(a) of Chapter 452, it held that compensation for unfair dismissal must take into account the actual damages and losses suffered by the employee together with any other relevant circumstances affecting employment prospects.
The court found that there had been no voluntary resignation. Rather, Caruana’s remarks about resigning were made immediately after learning of his dismissal and while he was undergoing treatment for stress-related health issues. The evidence showed that he remained unemployed for approximately one year before securing alternative employment at a lower salary.
The Court of Appeal ultimately dismissed the employer’s appeal and upheld the employee’s cross appeal. It ordered the case be remitted to the Industrial Tribunal to reassess compensation within one month, taking into account the period during which Caruana remained unemployed and the lower remuneration earned in his subsequent employment. Costs were awarded against the employer.
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