Post Termination Restrictions

Post-termination restrictions in terms of Maltese Employment Law – enforceable or not?

Post-termination restriction clauses, including non-competition, are not easily enforceable in Malta and are not specifically regulated in terms of law. Over the past decades, local courts have adopted different interpretations, in some cases dismissing the clauses altogether for being restraints of trade which were deemed to be in breach of public policy, but in other more recent cases enforcing the restraints in so far as they were warranted, narrowly defined and limited in scope and duration and also, in some cases compensated for. On some occasions, the courts have also enforced a contractual obligation on the former employee to pay a sum by way of pre-liquidated damages, with the courts maintaining that this was not an illegal fine imposed on the employee.

The courts have generally interpreted such clauses restrictively and have emphasised that the limitation of time and industry area imposed have to be reasonable, taking into consideration the small size of Malta and the relatively small market, in that a former employee cannot be forced to leave the country to be able to pursue their vocation/profession.