AE Legal

1

GENERAL PRINCIPLES

Forums For Adjudicating Employment Disputes

The Industrial Tribunal has exclusive jurisdiction to consider and decide all cases of alleged unfair dismissal, as well as issues concerning protection against employment related discrimination. Appeals are heard by the Court of Appeal in its inferior jurisdiction, appeals must concern only points of law.


The Main Sources Of Employment Law

Malta is considered a civil law jurisdiction and therefore all employment arrangements are governed by general principles of contract law. There are nevertheless several legislative requirements which override those general principles in some instances. In addition to individual contracts, collective bargaining agreements also form part of the contractual relationship.

The legal sources of Maltese employment law can be generally broken down into a hierarchy of a number of sources. The primary source of legislation in this regard is the Employment and Industrial Relations Act (Cap 452) (hereinafter, the “Act”). The Employment and Training Services Act (Cap 594), the Equal Opportunities (Persons with Disability) Act (Cap 413) and the Equality for Men and Women Act (Cap 456) must also be considered as primary sources of legislation.

There are a number of secondary sources which must be considered with importance when discussing the sources of employment law. Under the Act itself, there are a number of subsidiary regulations which serve to not only implement EU regulations and directives, but also to put into place regulations set out by the Act, The Wage Regulation Orders (WROs) are those that stand out the most amongst these subsidiary pieces of legislation. The WROs set out specific conditions of employment regulating specific sectors. Other subsidiary legislation of the Act regulates amongst others, part time employment, the maximum hours of work, the minimum wages, overtime rates, sick leave and special leave.


National Law And Employees Working For Foreign Companies

The statutory rights under national law will apply to all individuals physically working in Malta, regardless of their nationality and regardless of the law governing their contract of employment. National contractual law may also apply in appropriate cases.


National Law And Employees Of National Companies Working In Another Jurisdiction

The statutory obligations imposed by law on employers residing in Malta would apply even if certain employees are working in another jurisdiction. The contractual relationship is also determined in accordance with the law of the contract.


Data privacy

By means of Act XX of 2018, Malta brought into force the Data Protection Act (Cap 586), effectively bringing into force Regulation (EU) 2016/679, titled ‘General Data Protection Regulations’ of the European Parliament and Council.

Like in many other industries, this new set of data privacy legislations altered various aspects of the relationship between the employer and the employee. The Employer, being a data collector must, in terms of the new legislation, ensure that all employee data collected is done so for specific and legitimate purposes. The employer must ensure that the data is accurate, regularly updated and is held strictly for the purpose for which it was collected.

More importantly, employers must ensure that all data is well protected and that additional security measures are put in place to decrease the chance of personal employee data being made available to third parties or other personnel who do not need to be in possession of such data.

It has also become a standard practice in most employment contracts, to include clauses ensuring that employees are not only aware that their personal data will be controlled and handled by the employer and specific employees acting on the employers’ instructions, but to also make employees aware that data might be subject to surveillance and monitoring amongst other things.

2

HIRING THE EMPLOYEE

Legal Requirements As To The Form Of Agreement

A contract of employment, or a contract of service can be made orally or in writing. There is no prescribed form under the laws of Malta which regulate the manner in which such a contract may or may not be valid. The laws of Malta clearly stipulate that when a person binds themselves to render a service for an employer, in return for wages, and where such employer exercises effective direction, control and choice over the nature of the work or the task being performed, it shall be considered to be a contract of service and the person carrying out such work shall be considered an employee of the employer.

Nevertheless, where no written contract is signed, the employer is bound to give to the employee a letter of engagement. The employee must receive the letter of engagement no later than 8 working days after the commencement of employment. The letter of engagement must include the information listed in the Information to Employees Regulations (S.L 452.83) (see “compulsory terms” below).


Mandatory Requirements
  • Trial Period

    • The first 6 months of any employment are probationary unless both parties agree to a shorter probation period. During this period, both the employer and the employee, may choose to terminate the employment without giving any reason.

    In the case of employees holding technical, executive, administrative or managerial posts, and whose wages are at least double the minimum wage established in that year, the probation period can be extended for up to one year.

  • Hours Of Work

    • Subject to certain exceptions, and unless an employee opts out, he/she may only work 48 hours per week (averaged out over a 17-week period). The opt-out must comply with certain statutory requirements.

    There are circumstances where an employee may choose to work on average, more than 48 hours per week, provided that he/she waives the time limit in writing. This can only be done for a short period of time and only under specific conditions found in various subsidiary legislation regulating such instances. The employee may be withdrawn the written consent at any time.

  • Special Rules For Part-time Work

    • Part-time employees are those described in the Act as those workers whose normal hours of work, calculated on a weekly basis or on an average of up to one year, do not reach or in any way exceed the total number of hours worked by a full-time employee (excluding over-time and reduced hours).

    Part-time employees shall not be treated less favourably than full-time employees solely on the basis of them being employed part-time. The Part-Time Employees Regulations (S.L 452.79) provides for the safeguarding of the rights of part-time employees and seeks to facilitate the development of part-time work and the flexibility of working time.

  • Earnings

    • There is a restriction prohibiting employees from earning below a minimum wage (which is reviewed annually). The minimum wages are prescribed by a national standard order or a sectoral regulation order.

    Employees are to be paid in legal tender and no other form of payment is permitted unless expressly stated in the Act. However additionally it is illegal for any other provision of law to prohibit the making of a contract between employer and employee for other additional benefits to be provided besides wages including the provision of food as well as a place for the employee to reside. The abovementioned act also creates a legal privilege over all the assets of the employer, for a maximum of three months wages together with any compensation for termination or payment for leave due, notwithstanding the existence of any other law. Therefore, this privilege should be considered together with those found in the Civil Code (Cap 16).

  • Holidays/Rest Periods

    • All employees are entitled to paid annual leave of at least 208 hours (which would translate to approximately 4 weeks and six days’ worth of paid annual leave) calculated on the basis of a forty-hour working week and an eight-hour working day (calculated pro rata for part-time employees and employees who have been in the service of their employer for less than a year). Of this, a minimum period equivalent to four weeks must be taken as holiday and cannot be replaced by a payment in lieu.

    The Organisation of Working Time Regulations (S.L 452.87) also provide for various compulsory daily and weekly rest periods and breaks.

  • Minimum/Maximum Age

    • Normally, the minimum age is that at which compulsory full-time schooling ends. The employment of persons below the age of 18 is regulated by the Young Persons (Employment) Regulations (S.L452.97). Different rules (e.g. on working time) apply to children or young workers. There are no maximum age limits. However, the employer can terminate the employment of an employee who reaches the retirement age.

  • Illness/Disability

    • There are no mandatory requirements relating to illness and disability apart from the employer’s duty to make social security contributions. (See also ‘Harassment/ Disability/ Equal Pay’ below).

    With regard to sickness absence, a full-time employee is entitled to statutory sick leave of the equivalent in hours of two weeks every year (unless such employees entitlements are covered by a Wages Council Wage Regulation Order) while part-time workers shall have a pro-rata entitlement to sick leave. The first 3 days of any claim for sick leave shall be paid in full by the employer. When an employee is in employment for less than 12 months, the employee shall only be entitled to sick leave as is in proportion to the period of employment.

  • Location Of Work/Mobility

    • The employee’s fixed place of work, or the places in which the employee will be expected to work, must be specified by the employer in writing. Where the job requires travel to other temporary locations, it is normal for the employer to reimburse all reasonable travel expenses.

  • Pension Plans

    • The employer is under no obligation to contribute towards a pension scheme.

    The Retirement Pensions Act (Cap 514) regulates the manner in which retirement schemes are organised as well as all matters relating to retirement funds and services providers to this sector.

  • Parental Rights (Pregnancy/ Maternity/ Paternity/ Adoption)

    • The Protection of Maternity (Employment) Regulations (S.L 452.91) provides pregnant employees with employment safeguards. Pregnant employees are entitled to maternity leave of 18 consecutive weeks (split before and after the birth) where the first 14 weeks are with full wages. The employer is not bound to supplement the Social Security benefit due for the last four weeks of maternity leave with any further payment. Fathers are entitled to one day Paternity leave with pay. Both male and female employees have, in addition, a right (granted on a non-transferable basis) to unpaid parental leave on the grounds of birth, adoption or legal custody of a child to enable them to take care of that child for a period of 4 months until the child is 8 years old.

    Any employee who is the parent of an adopted child is entitled to an uninterrupted adoption leave period of 18 weeks, which period commences on the date when the adopted child passes into the care and custody of the adoptive parent.

    Furthermore, Subsidiary Legislation 452.114, brought into force the Leave for Medically Assisted Procreation National Standard Order, whereby a prospective parent is entitled to 100 hours of leave paid by the employer to enable the prospective parent to undergo the necessary medical procedures.

  • Compulsory Terms

    • Other terms that must be provided by the employer within 8 working days from the commencement of employment, as stated above, these include:

    • full identity of the parties, sex of the employee and the place of work;
    • date of commencement of employment;
    • period of probation;
    • normal and overtime rates of pay and the frequency of wage payments;
    • (in the case of fixed term contract), the expected or agreed duration of the contract;
    • Title, grade, nature or category of the job in question;
    • Collective agreement (if any).

     

  • Non-Compulsory Terms

    • The employer and the employee are free to agree any other terms in addition to the compulsory provisions, provided that these terms are no less favourable than certain statutory rights.


Types Of Agreement

All employment relationships (whether concluded verbally or in writing) are contractual in nature. Contracts of employment exist in several different forms: fixed term, indefinite, full-time, full-time with reduced hours or part-time. The compulsory terms apply regardless of the type of contract contemplated.

There are discrimination laws which prevent employees from being treated less favourably than other employees because of working part-time or working on a fixed term contract.


Secrecy/Confidentiality

There are certain specific employees who are bound by their duty of secrecy by virtue of their profession, including doctors, advocates, legal procurators, social workers, psychologists, accountants, auditors, employees and officers of financial and credit institutions and employees of the State. Such duty is accompanied by criminal sanctions.

It is also established practice for employers to include clauses in their employees’ employment contracts binding the employees to secrecy in respect of commercial and business information of the employer. Such confidentiality usually survives the termination of the employment contract and therefore employees would be bound to secrecy even after their termination of employment.


Ownership of Inventions/Other Intellectual Property (IP) Rights

In the absence of any contractual terms, there are statutory provisions which will apply to determine ownership of IP rights. In the case of computer programs and databases, the economic rights conferred by copyright belong to the author’s employer. In respect of other works eligible for copyright, the copyright shall always vest in the author. The right to a patent for an invention shall belong to the employer. The employee shall have a right to equitable remuneration.


Pre-Employment Considerations

N/A


Hiring Non-Nationals

As a member state of the European Union, the principles of free movement of European nationals and their family members applies in Malta. Any Union citizen may choose to enter, reside and work in Malta indefinitely and shall enjoy the same and equal treatment as any other Maltese person working in Malta. Such persons would need to apply for an employment licence from Jobsplus (The national employment authority of Malta), which licence however shall not be unreasonably withheld.

On the other hand, when it comes to the non-EU nationals, a higher degree of discretion is given to the authorities in the granting or otherwise of an employment licence. An employer will be liable to criminal sanctions under the Immigration Act 1970 if he/she employs, or gives work to, any person who is not in possession of the required work permit.


Hiring Specified Categories Of Individuals

Specific rules apply as to who can be employed to carry out certain hazardous activities and on the types of work that vulnerable groups (e.g. children or pregnant women) can be required to undertake.


Outsourcing And/Or Sub-Contracting/Temporary Agency Work

N/A

3

MAINTAINING THE EMPLOYEE RELATIONSHIP

Changes To The Contract

In accordance with civil law contractual principles, an employer may not change any terms of the employee’s contract without the employee’s consent. Such consent may be express (by the employee agreeing to the change) or implied (by the employee continuing to work for the employer without protest after becoming aware of the change).

Any change of terms to which the employee does not consent will amount to a breach of contract. If the change is a significant one which goes to the root of the contract, the employee is entitled to resign and treat the contract as terminated. In so doing, the employee may also claim that he/she has been constructively dismissed and seek damages accordingly.


Change In Ownership Of The Business

The Transfer of Business (Protection of Employment) Regulations (S.L 452.85) regulate the transfer of a business or undertaking, whether in whole or in part, by a person from an employer. In situations where the Act applies, employees carrying out the work in question automatically transfer with the work and thereby become employees of the new entity carrying out the work. The employees must generally remain on exactly the same terms of employment as they enjoyed prior to the transfer (with the exception of old age, invalidity or survivors’ benefits under supplementary company pension schemes outside the Social Security Act).

There are obligations imposed on both the old and the new employers to consult with the affected employees though elected representatives, or a recognised Trade Union, prior to the transfer taking place (and financial penalties for failure to do so).

Employees are allowed to refuse to transfer to the new employer. However, if they do, they will be deemed to have resigned and will not be entitled to any compensation (unless the refusal relates to a failure to maintain the same terms and conditions after the transfer).


Social Security Contributions

Both employers and employees are required to make social security contributions.


Accidents At Work

Under the Occupational Health and Safety Authority Act (Cap 424) it shall be the duty of an employer to ensure the health and safety at all times of all persons who may be affected by the work being carried out for such employer. The employer therefore has a duty to take up all the necessary measures as defined in the Act itself, to prevent the physical and psychological ill-health, injury or death of all employees.

Employers also have a duty to have regard to the safety of third-party injuries or death resulting from acts of their employees.


Discipline And Grievance

There is no specific legislation which deals with issues of discipline and grievances of employees. However, the Industrial Tribunal has consistently held that, before terminating the employment of an employee, the employer should give more than one warning to the employee in order to give the employee an opportunity to mend his ways. Furthermore, the employee should be given the opportunity to explain his/her actions before a decision is taken by the employer on the future of the employee’s employment.


Harassment/Discrimination/Equal pay

Employees are protected from discrimination on the grounds of marital status, pregnancy or potential pregnancy, sex, colour, disability, religious conviction, political opinion or membership in a trade union or in an employers’ association, as well as discrimination in relation to whether they are employed on part-time or fixed fixed-term basis.

Discrimination may occur before the employment relationship commences (for example in advertising the job), during the employment (for example in failing to promote), on termination or even after the employment has ended (for example in writing a reference).

The Equal Treatment in Employment Regulations (S.L 452.92) makes special provisions for discrimination on grounds of religion or religious belief, disability, age, sexual orientation and racial or ethnic origin. Discrimination may be direct (for example refusing to employ a man or woman), or indirect (for example by imposing a condition which will place certain persons at a disadvantage).

A person claiming to have been subjected to discriminatory treatment, whether direct or indirect, in relation to his employment may, within four months of the alleged breach, refer the matter to the Industrial Tribunal for redress. The Industrial Tribunal may take such measures as it deems appropriate including the cancellation of any contract of service or of any clause in a contract or in a collective agreement which is discriminatory and shall order the payment of compensation for loss and damage sustained by the party suffering the discrimination.

Harassment and sexual harassment are separate types of claim but are linked with discrimination. Harassment involves unwanted conduct that has the purpose or effect of violating a person’s dignity or creating an intimidating, hostile, degrading, humiliating or offensive environment. It is unlawful if it is related to any of the discriminatory grounds listed above.

An employer must take effective measures to prevent all forms of discrimination on grounds of sex, in particular harassment and sexual harassment in the workplace, in access to employment, vocational training and promotion.

Victimisation is also a form of discrimination that involves treating a person less favourably because they have complained (or intend to complain) about discrimination, or because they have given evidence in relation to another person’s complaint. An employee must not be disciplined or dismissed, or suffer reprisals from colleagues, for complaining about discrimination or harassment at work.

Victimisation occurs when the employer takes retaliatory action against a person for having made a complaint to the lawful authorities or for having initiated or participated in proceedings for redress on grounds of alleged breach of the provisions of the Act, or for having disclosed information to a designated public regulating body regarding alleged illegal or corrupt activities being committed by his employer.

The concept of equal pay is recognised by legislation. It provides that a woman is entitled to enjoy working terms that are as favourable as those of a man in the same employment, provided that the woman and the man are employed to carry out work of equal value.


Compulsory Training Obligations

There are no compulsory training obligations for employees generally.


Offsetting Earnings

Except where expressly permitted by law, or where ordered by a competent court, or authorised in an agreement entered into between an employer and a trade union, an employer shall not make any deductions nor enter into any contract with an employee authorising any deductions to be made from the wages due to the employee.


Payments For Maternity And Disability Leave

Employees will benefit from certain payments subject to satisfying the relevant necessary requirements.

A pregnant employee is entitled to maternity leave with full wages for an uninterrupted period of 14 weeks if she notifies her employer at least 4 weeks before the maternity leave begins. (She is furthermore entitled to an extra period of four weeks of maternity leave, during which she will only be statutorily entitled to receive social benefits.) Where a female employee does not resume work on the expiration of maternity leave or after having returned to work, abandons the service of her employer without good and sufficient cause within 6 months from the date of such return, she shall be liable to pay the employer a sum equivalent to the wages she received during the maternity leave.

With regard to sickness absence, an employee is entitled to statutory sick leave of the equivalent in hours of two weeks every year. The first 3 days of any claim for sick leave shall be paid in full by the employer. When an employee is in employment for less than 12 months, the employee shall only be entitled to sick leave as is in proportion to the period of employment.

Employees who are injured in the course of their employment enjoy a maximum of one year leave on full wages, less the amount of any injury benefit to which they may be entitled under the Social Security Act.


Compulsory Insurance

There are no compulsory insurance obligations.


Absence For Military Or Public Service Duties

Employees are entitled to leave to carry out military or jury service for as long as necessary.


Works Councils or Trade Unions

An employer may voluntarily agree to recognise a Trade Union for collective bargaining purposes. A Trade Union can demand recognition if the majority of the workforce in a specific class belong to it. The Industrial Tribunal will award recognition to the trade union where there is a dispute between the employer and a union or a dispute between two or more unions.

An employee who is a member of a Trade Union has certain rights in relation to his employer. For example, dismissal for membership of or for taking part in the activities of a Trade Union in the capacity of an employees’ representative is automatically unfair for the purposes of unfair dismissal. Discriminatory treatment against an employee for membership of or for taking part in the activities of a Trade Union gives the employee the right to complain to the Industrial Tribunal.


Employees’ Right To Strike

While the right of association is entrenched in the constitution, there is no general right for employees to strike. However, certain immunities will be granted in respect of acts done by a person in contemplation of a trade dispute and in pursuance of a directive issued by a trade union, whether he belongs to it or not.


Employees On Strike

Acts by employees in contemplation of a trade dispute and in pursuance of a directive issued by a trade union, as stated above, shall not be actionable in damages as such acts do not constitute a breach of the employment contract. When an employee is on strike the employer cannot terminate the contract of employment or discriminate against the employee, unless the employee’s actions are in breach of a collective agreement/ settlement, decision or agreement that has been subject to the voluntary settlements procedure, or of a decision of the Industrial Tribunal.


Employers’ Responsibility For Actions Of Their Employees

Under civil law, an employer will be liable for damage caused to third parties by the incompetent or negligent acts of its employees in circumstances whether the employer knew the employee was incompetent or negligent, or simply failed to consider whether there were reasonable grounds for believing that the employee was competent.

In Contracts of Work situations, the contractor is responsible for the acts of all persons employed by him.

An employer may also be responsible for the acts of its employees where it does not comply with certain occupational health and safety obligations, such as by failing to provide workers with sufficient information, instruction, training and supervision.

4

FIRING THE EMPLOYEE

Procedures For Terminating the Agreement

In all cases, the termination of an employment contract must comply with the terms of the contract or collective agreement. Contracts may, and collective agreements usually do provide for a certain procedure which must be followed before termination to avoid the termination amounting to an unfair dismissal. An employer must be able to demonstrate a good and sufficient cause for dismissal. The law does not define the term ‘good and sufficient cause’ but gives a non-exhaustive list of causes which definitely do not constitute a good and sufficient cause for dismissal.

Whether the reason(s) for the dismissal is / are fair, and consequently constitute a good and sufficient cause depends on the Industrial Tribunal’s view as to the reasonableness of the employers’ actions.

The Industrial Tribunal has consistently held that before terminating the employment of an employee, the employer should give more than one warning to the employee. A warning should be given in order to provide the employee with the opportunity to improve. If the employee fails to improve, having been given a warning, the employer would then be justified in dismissing the employee. Although there is no legal obligation to do so, it is encouraged that the employee is given the opportunity to explain his/her actions before a decision is taken by the employer on the future of the employee’s employment.


Instant Dismissal

The employer can terminate an agreement by instant dismissal if there is good and sufficient cause. However, if the contract or the collective agreement provide for a specific procedure to be followed before dismissing an employee, that procedure must be respected in all cases.


Employee's Resignation

An indefinite contract of employment can always be terminated by the employee’s resignation. The notice period required to be given is specified in the Act in accordance with the length of service.


Termination On Notice

For indefinite contracts of employment there are statutory minimum periods of notice which will override conflicting contractual notice period. The minimum period of notice, depending on the period of continuous employment, ranges from one week up to a maximum of 12 weeks.


Termination By Reason Of The Employee's Age

An employment can be terminated by the employer upon the employee reaching the retirement age. The current retirement age is 62 years for both men and women. For those born between 1952 to 1955, the pensionable age is 62 years. The pensionable age is 63 years for those born between 1956 to 1958; 64 years for those born between 1959 to 1961; and 65 years for those born on or after January 01, 1962.


Automatic Termination In Cases Of Force Majeure

In accordance with civil law contractual principles the contract will be deemed terminated where intervening events make its continued performance impossible, although instances are rare. Death of the employee or complete destruction of the workplace are examples.

In most cases, the well-established principles of redundancies and collective redundancies will be applied.


Collective Dismissals

The Collective Redundancies (Protection of Employment) Regulations (S.L 452.80) regulate the manner in which such a procedure can take place. An employer has a duty to consult with appropriate representatives of any employees who may be affected where the employer is proposing collective redundancies. These regulations apply where the employer proposed to terminate the following number of employees over a 30-day period:

    1. ) 10 or more employees in establishments normally employing between 20 and 99 employees;
    2. ) 10% or more of the number of employees in establishments employing between 100 and 299 employees; and
    3. ) 30 employees or more in establishments employing 300 employees or more.

Termination By Parties’ Agreement

The parties are entirely free to agree termination on any grounds they desire.

Where the parties agree to terminate the employment, they are not required to obtain the courts’ or regulatory body’s approval before the termination is effective.

The Employment and Industrial Relations Act also caters for the scenario where an employee has been kept on after the termination of a particular fixed term contract. In such a case the employee shall be considered to be employed indefinitely provided that he/she is not provided with a new fixed term contract within twelve working days following the expiry of the previous contract.


Directors Or Other Senior Officers

There are no special rules which relate to the termination of a director or other senior officer’s employment. In the case of a director (or other company officer), termination of employment does not automatically bring to an end the directorship. Separate steps will be required to bring the directorship to an end (pursuant to the company’s memorandum and articles of association).


Special Rules For Categories Of Employee

Special rules apply for the protection of disabled employees (such as the duty of the employer to make reasonable accommodation for the disability of such a person, unless the employer can prove that the required accommodation would unduly prejudice the operation of the trade or business). Certain categories (e.g. pregnant women and persons injuring themselves or contracting specified occupational diseases in the course of employment) benefit from more generous rules for protection from unfair dismissal.


Whistleblower Laws

The Protection of the Whistleblower Act (Cap 527) puts into place measures whereby a whistleblower is afforded the opportunity to disclose information to the relevant authorities, provided that the whistleblower is acting in good faith and not for personal gain, and that the whistleblower genuinely believes that the information he/she has provided is true. The information, which is deemed to be a ‘protected disclosure’ by this Act, would consequently afford the whistleblower with protection from detrimental action against him/her and against revealing his/her personal identity.


Specific Rules For Companies in Financial Difficulties

If a company goes into liquidation, rules for collective redundancies apply.

Claims by employees for a maximum of 3 months wages, compensation for leave to which the employee is entitled, compensation due to the employee in consideration of the termination of employment, and for any notice constitute privileged claims over the assets of the employer. Such privileged claims are subject to a maximum amount equivalent to 6 months of national minimum wage.

A further factor to consider is when the assets (including employees) of a company in administration are packaged up and are sold to another company the Transfer of Business (Protection of Employment) Regulations (S.L 452.85), as described above, will apply.

The Civil Code has also created a guarantee fund, by means of which wages that remain unpaid due to the insolvency of the employer are made good. This fund has a distinct legal personality and also has the right to be subrogated into the rights of the employee once these unpaid wages have been catered for.


Special Rules For Garden Leave

The concept of ‘garden leave’ is not incorporated in Maltese law and therefore there is no obligation for ‘gardening leave’ to be included into an employment contract. Nevertheless, it is common practice for companies, especially foreign companies, to impose this concept by way of forced leave.


Restricting Future Activities

Generally, clauses that attempt to restrict the future activities of an employee are deemed to be contrary to public policy and therefore unenforceable. The courts will however consider these restrictive clauses (also referred to as non-competition clauses) if they are included in writing in the employees’ employment contract, if the employee has been adequately compensated for respecting such a clause and if it is clear that the employer might suffer prejudice by allowing a certain future activity to go on.

It is important to point out here that any condition in a contract of service which empowers the employer to terminate the employment of a female employee subject to her getting married or becoming pregnant shall be considered to be null and void.


Severance Payments

In the case of fixed term contracts, if the employer terminates the contract before the expiry date, the employer shall pay to the employee one-half of the full wages due in respect of the remainder of the time specifically agreed upon.

In the case of indefinite contracts of employment, where an employer has given notice of redundancy, the employee may at any time during the currency of the period of notice opt to be paid a sum equal to half the wages in respect of the unexpired period of notice instead of working the notice period.

Normal contractual principles apply to severance payments included in the contract.

There are no statutory payments for redundancy and unfair dismissal. However, in awarding compensation for unfair dismissal the Industrial Tribunal, at its own discretion, will consider the real damages and losses incurred by the dismissed employee, as well as other circumstances, including the employee’s age and skills.


Special Tax Provisions And Severance Payments

In certain circumstances lump sum payments given by employers to employees upon termination of employment, including early retirement, are exempt from tax.


Allowances Payable To Employees After Termination

There is no requirement for employers to contribute to any allowances payable to employees after termination.


Time Limits For Claims Following Termination

Claims for unfair dismissal, discrimination and gender equality, victimisation and harassment have to be brought before the Industrial Tribunal within 4 months of dismissal.

5

GENERAL

Specific Matters Which Are Important Or Unique To This Jurisdiction

The Employment Status National Order (S.L 452.108) was introduced in an effort to remove abuse by employers which engage individuals on a self-employment basis in order to avoid employment obligations. The law sets the following criteria to determine whether a person is truly a self-employed person or whether such person should enjoy all the rights and protection appertaining to an employee. If the engagement conditions of any individual satisfy any five of the following criteria the said individual is to be considered as an employee:

The individual:

    1. depends on one single person for whom the service is provided for at least 75% of his income over a period of one year;
    2. depends on the person for whom the service is provided to determine what work is to be done and where and how the assigned work is to be carried out;
    3. performs the work using equipment, tools or materials provided by the person for whom the service is provided;
    4. is subject to a working time schedule or minimum work periods established by the person for whom the service is provided;
    5. cannot sub-contract his/her work to other individuals to substitute themselves when carrying out work;
    6. is integrated in the structure of the production process, the work organisation or the company’s or other organization’s hierarchy;
    7. the person’s activity is a core element in the organization and pursuit of the objectives of the person for whom the service is provided, and
    8. carries out similar tasks to existing employees, or, in the case when work is outsourced, he performs tasks similar to those formerly undertaken by employees.

Any person who is found to be contravening the provisions of this Order, shall be guilty of an offence and shall be liable, on conviction, to a fine of not less than one thousand Euros (€1000) in respect of each employee affected.



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Nicolette Spiteri Bailey
AE Legal
Malta


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© 2021, AE Legal. All rights reserved by AE Legal as author and the owner of the copyright in this chapter. AE Legal has granted to Multilaw non-exclusive worldwide license to use and include this chapter in this guide and to sublicense Lexis Nexis, a division of RELX Inc. and its affiliates certain rights to use and distribute this Guide.

The information in the How to Hire and Fire Guide provides a general overview at the time of publication and is not intended to be a comprehensive review of all legal developments nor should it be taken as opinion or legal advice on the matters covered. It is for general information purposes only and readers should take legal advice from a Multilaw member firm.

Publication Date: June 2021