While there are various reasons why such an employment contract may be terminated, in no case should it prejudice the other respective party.
1. Termination of Definite Contracts
Definite contracts should not be terminated before the time specifically agreed upon. Maltese law specifically provides that the termination by the employer in respect of that employee of a contract of employment for a fixed term would in itself constitute an unfair dismissal. Provided that the expiration of a fixed term contract of employment shall not be deemed to be a termination of the fixed term contract of employment.
Maltese law provides that an employer who terminates the fixed-term contract before its expiration shall be obliged to pay to the employee a sum equal to one-half of the full wages that would have accrued to the employee in respect of the remainder of the time specifically agreed upon. Similarly, if the employee abandons the fixed-term contract prior to the expiration thereof, then the employee would have to pay the employer a sum equal to one-half of the full wages that would have accrued. However, in the presence of a “good and sufficient cause” for such dismissal or abandonment, the contract of employment may be terminated by either party without incurring any liability.
2. Termination of Indefinite Contracts by Employers
Grounds for termination
An employer may only terminate an employment contract upon:
- Good and sufficient cause being shown;
- Redundancy; or
- When the retirement age is reached.
If neither of these conditions are met, and, in any case, where an employee feels that he/she has been unfairly dismissed, the employee would be able to file a complaint with the Industrial Tribunal within four months of the dismissal. If the Tribunal finds the complaint to be well-founded, the Tribunal may order the employee's reinstatement or re-engagement, or award compensation.
Required Notice Period
Termination during the first month of the probationary period does not give rise to the obligation to pay severance or any portion of the salary for the unelapsed period. However, in the case of an employee who has been in employment for more than 1 month, a one-week notice applies.
The notice period required at law is calculated based on an employee's continuous service to the employer, as follows:
- For not more than one month - No notice
- For more than one month and up to six months - One week
- For more than six months and up to two years - Two weeks
- For more than two years and up to four years - Four weeks
- For more than four years and up to seven years - Eight weeks
- For more than seven years and up to eight years - Nine weeks
- For more than eight years and up to nine years - Ten weeks
- For more than nine years and up to ten years - Eleven weeks
- For more than ten years - Twelve weeks
The employer and employee may also agree to longer periods in the case of technical, administrative, executive, or managerial positions due to the nature of the responsibilities involved in such roles and the hand over which is typically necessary in such circumstances. In any other case, the above-mentioned notice periods cannot be extended.
Upon providing notice of such dismissal, the employer should give the employee the option to either (i) continue working until the period of notice expires, or (ii) to stop working. If the employee chooses to cease performing work, the employer would then be obliged to pay a sum equivalent to ½ of the wages that would have accrued during the period of notice. Nevertheless, if the employee is not given the opportunity to work the notice period, the employer would then be obliged to pay the employee a sum equivalent to the full wages that would have accrued during the notice period.
The only event where advance notice is not required is when there is a good and sufficient cause for immediate dismissal. Unfortunately, the law provides no guidance on what may constitute ‘good and sufficient cause’ and the presence of a ‘good and sufficient cause’ is determined on a case-by-case basis. Therefore, in the event of termination without providing the required notice at law, the employer would need to provide very compelling reasons for the dismissal of the employee. In cases where no verbal or written disciplinary warnings have been provided prior to the dismissal, this may more likely be deemed to constitute an unfair dismissal.
A dismissal shall be for reason of redundancy if it is wholly or mainly attributable to the fact that the employer has ceased, or intends to cease, to carry on that business for the purposes for which the employee was employed; the fact that the employer has ceased or intends to cease to carry on that business in the place where the employee was employed or the fact that the requirements of that business for employees to carry out work of a particular kind or for them to carry out that work in the place where they were so employed have ceased or diminished or are expected to cease or diminish. This type of dismissal should still be applied as a measure of last resort, and the employer should be able to prove that it did everything in its power to avoid this outcome.
In the case of redundancy, an employer is obliged to first terminate the employment of the employee who was engaged last in the class of employment affected by such redundancy. The rule of ‘last in first out’ was established at law in order to prevent employers from using the grounds of redundancy to dismiss employees who are, in the employer’s opinion, underperforming. The only exemption to this rule allowed at law is in cases where the employee who was last employed is related to the employer by consanguinity or affinity up to the third degree. In such cases the law provides that the next employee in line in accordance to the ‘last in first out’ criteria would be dismissed.
Moreover, Maltese law also established the obligation of re-employment of an employee whose employment has been terminated on the grounds of redundancy, should the position formerly held by the redundant person become available again within a year. Once again, when dismissing an employee on the grounds of redundancy, the employee shall have the option of either (i) continuing to work until the period of notice expires, or else, (ii) stopping at any time during the notice period and requesting his/her employer to pay a sum equivalent to ½ of the wages that would have accrued during the period of notice.
Moreover, in cases of collective redundancies, which are defined as the termination of the employment by an employer on grounds of redundancy, over a period of thirty days, of: ten or more employees in establishments normally employing more than twenty employees but less than one hundred employees; 10% or more of the number of employees in establishments employing one hundred or more but less than three hundred employees; or thirty employees or more in establishments employing three hundred employees or more, the employer would be obliged to inform both the ‘employees representative’ and the DIER with information regarding the redundancies in question prior to making such redundancies.
3. Termination of Indefinite Contracts by Employees
Employees wishing to terminate a contract are not required to provide a reason for such termination as long as the employee provides the employer with a notice period in terms of law. Where the statutory notice of termination is not provided, the employee would be liable to pay the employer a sum equal to ½ of the wages that would have accrued during the notice period.
4. Entitlements and Obligations upon Termination
When a contract of service lasting more than one month is terminated, the employer, at the employee’s request, may be required to provide the employee with a certificate stating the duration of the employment, the nature of the work or services performed, the reason for the contract's termination, as well as the rate of wages paid. If the employment was terminated during the probation period, the employer is not compelled to provide the reason for the termination.
Settlement of outstanding dues
Without prejudice to any rights that the employee may have under the legislation relating to notice, the employee is entitled to be paid for all entitlements on a proportional basis based on the length of service. Employees who have had their jobs terminated are responsible for ensuring that they receive any income that is owed to them, such as salary, overtime payments, statutory bonuses, notice money, and monetary settlement of unpaid leave. Following the termination of employment, any due wages should be paid by the next pay day. If an employee is not paid for his or her labor or does not receive his or her wage on time, he or she must first notify his or her employer, and if the employer still refuses to make the required payment, the employee may file a complaint with the Department of Industrial and Employment Relations, which should in turn take appropriate action.
Declaration of Termination of Employment
Employers are also required to notify Jobsplus of any termination of employment of any workers by completing a termination form which shall then be acknowledged by Jobsplus within 15 working days. Alternatively, one can use the online application provided by Jobsplus to fill in such a termination form. Upon submission, the employer will receive a system generated acknowledgment email. The processing can then take one to four days, depending on the winter and summer opening hours.