ICLG to Employment & Labour Law 2021 – Termination of Employment
6.1 Do employees have to be given notice of termination of their employment? How is the notice period determined?
Employees are only given notice of termination of their employment in the case of indefinite contracts. Such notice period must be given in the case of redundancies or resignations, however, no notice period is applicable when the termination of employment is done for a good and sufficient cause. The notice period given is based on the duration of employment of the employee, however it may never exceed a total of 12 weeks. Longer notice periods may be agreed in the contract of employment when the employee holds a technical, executive, administrative or managerial role.
Conversely, when terminating a definite contract prior to the agreed termination date, the party effecting such termination must pay the other party a sum equal to half of the wages which would have been due to the employee for the remaining period of the contract.
However, when the probationary period is still in force and the employees would have been in employment for at least one continuous month with the same employer, then a notice period of one week would be applicable in the case of both indefinite and definite contracts.
6.2 Can employers require employees to serve a period of “garden leave” during their notice period when the employee remains employed but does not have to attend for work?
According to Maltese employment law, upon the termination of employment by an employer, the employer must decide whether the employee shall be kept in employment for the duration of the notice period or whether such employee will be dismissed with immediate effect. In the latter case, the employer will be obliged to pay the employee an amount equal to all the wages which the employee would have earned during such notice period. Although this seems to serve a similar purpose as garden leave, this concept is not catered for under Maltese law and therefore, garden leave may only be served upon agreement between the employer and the employee.
In fact, if upon termination of employment, the employee fails to work all or part of the notice period, then the employer does not have the right to force the employee to remain in employment on the basis of garden leave, but according to Maltese law the employer would simply be entitled to receive from the employee an amount equal to half of the wages which the employee would have earned during that notice period or the remaining period of the notice period which the employee would have failed to work.
6.3 What protection do employees have against dismissal? In what circumstances is an employee treated as being dismissed? Is consent from a third party required before an employer can dismiss?
An employee employed on the basis of an indefinite contract may only be dismissed in the case of redundancy or for a good and sufficient cause. In order to dismiss an individual on the grounds of redundancy, then an employer must follow the ‘last in first out’ rule, whereby the latest person to be engaged in a specific class of employment is to be dismissed first. Furthermore, should the post formerly occupied by the redundant employee be made available again within a period of one year, then the employer is obliged to offer such post to that employee.
When it comes to dismissal on the basis of a good and sufficient cause, Maltese law does not explicitly define what constitutes such a cause. However, it provides some of the reasons for which employees may not be dismissed, such as if an employee is a member of a trade union, contracts marriage or is pregnant or absent from work during maternity leave. When an employee is dismissed for a good and sufficient cause, then the employee will not be entitled to a notice period.
In the case of a definite contract, if an employer dismisses an employee without a good and sufficient cause, then such employer would be obliged to pay the employee an amount equal to half the wages which the employee would have earned in the remaining period.
Should an employee be unfairly dismissed, without a good and sufficient cause, then such employee will have the right to contest the dismissal before the Industrial Tribunal.
Although the consent of a third party is not required for an employer to dismiss an employee, in the case of collective redundancies, an employer is obliged to notify the employees’ representatives and the Director of Employment and Industrial Relations of the said collective redundancy, in order to provide an opportunity for consultation. This consultation should cover ways and means to avoid such collective redundancies, reduce the number of employees affected by such redundancies or mitigate the consequences thereof.
6.4 Are there any categories of employees who enjoy special protection against dismissal?
Employees who would have notified their employer, by means of a certificate issued by a registered medical practitioner or midwife, of her pregnancy may not be dismissed by the employer from the date of such notification until the end of the maternity leave, or during any period of special maternity leave, due to such employee being pregnant or due to the employee availing or seeking to avail herself of any rights in terms of law. Furthermore, the law also protects employees who are pregnant or on maternity leave from dismissal during their probationary period. In this case, the employer would have to provide a good and sufficient reason in writing in order to dismiss the employee and send a copy of such notice to the Director of Employment and Industrial Relations, in order to ensure that such employees are not terminated due to their pregnancy or due to them having availed themselves of maternity leave or any other entitlement due to them by law.
Employees who are on injury leave may not be terminated from employment during such period.
Furthermore, employers may not dismiss a person for having contracted marriage. The law also safeguards employees from being dismissed due to such employees being or having been employees’ representatives or members of a trade union. Employees who act as whistle-blowers and divulge information, whether confidential or otherwise, to a designated public regulating body, or who have filed a complaint or are participating in proceedings against their employer before competent administrative authorities are also safeguarded from being terminated on such grounds.
6.5 When will an employer be entitled to dismiss for: 1) reasons related to the individual employee; or 2) business related reasons? Are employees entitled to compensation on dismissal and if so, how is compensation calculated?
An employee may be dismissed due to reasons pertaining to him individually only if such reasons constitute a good and sufficient cause according to law. In this case, the employee will not be entitled to any compensation or to a notice period.
However, an employee may be dismissed for business-related reasons only in the case of a redundancy. A transfer of business is not deemed to be a valid reason for dismissing an employee. In the case of redundancy, the employer would be obliged to either keep the employee in employment for the duration of the notice period or if the employee is not required to attend work during such period, the employee is to receive compensation in an amount equal to the wages which such employee would have accrued during the notice period.
6.6 Are there any specific procedures that an employer has to follow in relation to individual dismissals?
Maltese employment law does not impose any specific procedures which an employer must follow in order to dismiss an individual employee. However, Maltese jurisprudence established that a fair procedure must be followed prior to the termination of employment, whereby employees are given the opportunity to defend their case and be fairly heard. To this end, it is common practice for employers to set out specific policies and procedures at the workplace, including procedures of disciplinary hearings and the issuance of written warnings. Such policies and procedures may also be concluded through collective agreements.
6.7 What claims can an employee bring if he or she is dismissed? What are the remedies for a successful claim?
An employee may bring a claim before the Industrial Tribunal for unfair dismissal, that is, when the termination is not done for a good and sufficient cause. Such a claim must be brought before the Industrial Tribunal within four months of the alleged breach.
If successful, the Industrial Tribunal may order the re-engagement or re-instatement of the employee with the employer. The re-engagement or re-instatement of the employee may only be ordered if the employee specifically makes a request for such re-engagement or re-instatement. However, the latter remedy is not available in the event that the employee would have occupied a managerial or executive post which requires a special trust in the employee as the holder of that post or in his ability to perform the duties thereof.
Otherwise, the Industrial Tribunal may order monetary compensation in favour of the employee.
6.8 Can employers settle claims before or after they are initiated?
Employers may always settle claims before or after they are initiated by reaching a settlement agreement with the employees. In the event that a claim would have already been initiated, such claim may always be withdrawn upon the conclusion of such settlement agreements.
6.9 Does an employer have any additional obligations if it is dismissing a number of employees at the same time?
Maltese law imposes a specific procedure which an employer must follow in the case of collective redundancy. The employer must first inform the employees’ representatives by means of a notice in writing about the collective redundancy which is about to take place. This notice shall provide the said representatives with an opportunity to consult and discuss this collective redundancy with the Employer. The law then obliges the Employer to have this consultation with the employees’ representatives within seven days from notifying them in writing about the redundancies. The purpose of this consultation should be to determine ways in which: the collective redundancy is avoided; the number of employees affected by such redundancy is reduced; or the consequences thereof may be mitigated.
Within this seven-day period, the employer would also be obliged to supply the employees’ representatives with a written statement outlining all relevant information in relation to the redundancy. This shall include, namely:
· the reason for the redundancy;
· the number of employees intended to be made redundant by the employer;
· the number of employees normally employed by the employer;
· the criteria proposed for the selection of the employees to be made redundant; and
· the details regarding any redundancy payments which are due and the period over which redundancies are to be affected.
Employers are also obliged to present a copy of the abovementioned written notification and written statement provided to the employees’ representatives, to the Director responsible for the Employment and Industrial Relations on the same day in which these are notified to the employees’ representatives. It is important to note that the collective redundancy may only take place upon the lapse of 30 days from this notification to the Director responsible for the Employment and Industrial Relations. This period of time may be shortened or extended by the Director, should he deem it fit to do so, in light of a potential resolution.
6.10 How do employees enforce their rights in relation to mass dismissals and what are the consequences if an employer fails to comply with its obligations?
Employees may enforce their rights in relation to mass dismissals through the employees’ representatives. However, when the employer fails to follow the proper procedure imposed for collective redundancies, then employees may make a claim in court. The Department for Employment and Industrial Relations may also bring an employer to court for civil damages and criminal actions. In fact, if found in breach of the Collective Redundancy (Protection of Employment) Regulations, the employer will be guilty of an offence and may become liable to a fine of not less than €1,164.69 for every employee that is declared redundant.
This article forms part of the ICLG to Employment and Labour Law 2021 publication.
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