Terminating Employment

Managing the complexities of employment relationships can often feel akin to a strategic chess match, where every move must be carefully planned with an eye on both immediate consequences and future outcomes. Just as a skilled chess player weighs up the risks and rewards several moves in advance, employers must anticipate the broader implications of their decisions.

Yet, it is essential to remember that employees are not mere pieces to be manoeuvred at will and an employment relationship is simply not a ‘game’; Employees are individuals with rights, expectations, and a vital role in the organisation’s overall success. Striking the right balance between business objectives and fair treatment is not just a legal obligation, but also the cornerstone of a constructive and respectful workplace.

DISMISSAL

Under Maltese law, dismissal (sacking / firing of an employee) must be based on a “good and sufficient cause”, to be assessed on a case-by-case basis. The law only indicates some examples of what cannot be relied on as a good and sufficient cause, and therefore employers must be aware of the nuances and mode of interpretation adopted by the Industrial Tribunal before considering dismissals. Reasonableness, proportionality and consistency are key. Employees who feel aggravated by a dismissal may demand reinstatement (except in certain circumstances) and, or demand compensation for unfair dismissal.

Employers must act cautiously when dismissing employees, and although not explicitly mandated by law, will be expected to comply with overarching principles of fairness in procedures leading to dismissals, permitting employees an opportunity to know what they are accused of and to raise a defense. A lack of due process will not go unnoticed, and is tolerated only in rare occasions (such as when an employee admits to gross misconduct). Employees are expected to mitigate their losses, and may lose out on compensation for contributory negligence.

TERMINATION OF FIXED-TERM CONTRACTS

The ramifications of terminating fixed-term employment contracts vary from those associated with terminating indefinite-term agreements.

REDUNDANCY

Employers might be able to terminating the employment relationship for “redundancy”, which must be routed in genuine reasons, generally demonstrating that a role is superfluous and is being abolished),. Employers may need to consult affected staff and at times (particularly when collective redundancy thresholds are met) must consult employee representatives and notify the DIER. Rules on selection criteria and notice of redundancy apply and employers must offer reemployment if the job is reinstated within twelve months from the redundancy.

RETIREMENT

Employers may ALSO be entitled to terminate the employment of an employee who reaches pensionable age in terms of Maltese law.

SPECIAL RULES

Special rules apply for terminating the employment of employees who working their probationary period, are pregnant or on maternity leave, or have suffered an work injury.

RESIGNATION

Employees are generally free to resign from their employment, provided that they give the appropriate prior-notice period (as stipulated in the law, or contract as applicable). However, the early (pre-term) termination of fixed-term contracts will give rise to monetary repercussions, unless the employee has a “good and sufficient cause” to terminate the contract.

CONSTRUCTIVE DISMISSAL

Although Maltese law is silent on the subject of ‘constructive dismissal’, the Maltese Tribunals have adopted the concept and, over the past decades has, by way of practice and custom, heard cases of constructive dismissal, and at times awarded compensation for unfair (constructive) dismissal.

MUTUAL TERMINATION

Employers and employees are not prohibited from agreeing to a mutual termination of employment – and this is often done through a settlement agreement, where the parties agree to compromise a dispute. Employers must approach settlement agreements carefully, ensuring compliance with the standard requirements for the validity of contracts.

How we help: Employment360 advises employers on lawful termination procedures, assists with redundancy planning, drafting compliant notification letters, and represents clients in conciliation, negotiating and disputes.