A situation of employment emanates from a relationship between an employer or employee by virtue of a definite or indefinite contract of employment, or from a situation in which there is no contract per se, but a written acknowledgement of the terms as required by law. In employment relationships, the employee is deemed to be the weaker party until proven otherwise. This is not only instilled in Maltese law, but is a concept safeguarded by European Law.
Considering the above, the termination of the employment relationship is not left entirely to the free will of the contracting parties but is regulated by law to ensure that employees may not be dismissed without a valid reason justifying such dismissal.
What does Maltese Law provide?
The Employment and Industrial Relations Act (“EIRA” or the “Act”) offers ample protection against the unfair dismissal of employees. The Act states that definite and indefinite employment contracts may be terminated by either party, without giving notice, if there is ‘good and sufficient cause'. The term good and sufficient cause is not defined, but the law gives several examples of what does not constitute good and sufficient cause (such as union membership, pregnancy or maternity leave, whistleblowing, or the commencement of proceedings against the employer for breach of employment rights).
In the absence of good and sufficient cause, the employer may terminate the employment of the employee only in the event of redundancy and once the employee reaches pensionable age. If the termination of the employment contract does not fall within the aforementioned criteria, i.e. good and sufficient cause, redundancy or retirement, such termination would then be deemed to have been a result of an unfair dismissal.
At its crux, Maltese law recognises that the employee may face difficulties that extend further than financial hardship, because of unfair dismissal, and therefore it aims to protect such weaker party. In fact, Maltese law specifically provides that ‘unfair dismissal’ is the termination by the employer:
- Of an indefinite contract of employment other than during the probationary period, provided for in Article 36 of the Act, which is not made on the grounds of redundancy or a good and sufficient cause in accordance with the Act.
- Which is made in contravention of the provisions of the law that protect employees, who carry out acts in contemplation or furtherance of a trade dispute and in pursuance of a directive issued by a trade union, whether he or she belongs to it or not; or
- Which is made on the grounds of redundancy or on any other good and sufficient cause but is deemed to be discriminatory. This also includes the employer’s failure to re-employ the individual if the post formerly occupied by him is again available within a period of one year from the date of termination of employment, according to what is provided for in Article 36(3) in relation to redundancy.
- Of a definite employment prior to the automatic termination agreed between the parties. Provided that the automatic termination or expiration of the terms of employment shall not be deemed unfair.
How have the Maltese courts upheld the legislation?
The Maltese Courts and the Industrial Tribunal refer to English common law and English authors for any doubts or lacunae encountered. Therefore, the local repertoire of case law significantly features these two resources. The Courts have established several elements to be considered to establish what a good and sufficient cause encompasses. These include whether and how the matter is specifically regulated in Maltese law, an objective and subjective test on what is deemed acceptable and whether the dismissal took place in accordance with principles of natural justice.
The Courts have also repeatedly expressed that a dismissal shall not be the first measure taken against the employee, rather it should be the last possibility in the arsenal of the employer. Therefore, it is always recommended that an employer sends warning letters specifying the issues which occur in the employment relationship. Proceeding with a dismissal without sending warning letters would likely give rise to claims of an unfair dismissal.
Notwithstanding the vast case law relating to unfair dismissals, and the guidance that jurisprudence provides, this is in no way exhaustive and unmalleable. When confronted with a case of unfair dismissal, the Courts must adjudicate on a case-by-case basis, considering the merits of each case.