Dismissing Employees 

When can an employer dismiss an employee? 

During the probationary period, an indefinite contract may be terminated at will by the employer without assigning any reason. Following the lapse of the probationary period, an indefinite employment contract may be terminated by the employer only on grounds of redundancy or if there is good and sufficient cause for such dismissal. The employer can also terminate the employment of an employee when the employee reaches pension age. 

If the employer terminates a definite contract of employment before the expiration of the time specified by such contract, the employer must 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. However, if there is good and sufficient cause for dismissal, an employee on a definite employment contract may be dismissed without liability to make any of the said payments. 

What is redundancy? 

Maltese law does not define the concept of redundancy, nor does the law specify or describe circumstances which would qualify as redundancy. As such, reference should be made to the interpretation given to the scope and extent of this concept by the Industrial Tribunal and the Maltese courts which, in turn, rely heavily on the interpretation of English legal authors and jurisprudence. 

Redundancy should not be dependent on the performance or behaviour of the employee at the workplace, but should result from issues relating to the business affairs of the employer.  

In the analysis of whether legal and valid grounds for dismissal on the basis of redundancy exist, an employer should start by considering whether his/her business requirements for employees to carry out certain work have ceased or diminished or are expected to do so and, if so, whether dismissal of employees is justified wholly or mainly by such state of affairs. 

Rules an employer should keep in mind when considering redundancy as a ground for dismissal of employees 

Where an employer intends to terminate employment on grounds of redundancy, the employer must terminate the employment of that person who was engaged last in the class of employment affected by such redundancy.  

If the employer is an individual (and not a company or body) and an employee is related to such employer by consanguinity or affinity up to the third degree, the employer may, instead of terminating the employment of such related employee, terminate the employment of the person next in turn. 

Notice of the termination of employment proposed by the employer on grounds of redundancy must be of the following respective duration: 

An indefinite contract of employment with an employee who is engaged in a technical, administrative, executive or managerial post, may prescribe a longer notice period as may be agreed between the employer and the employee.  In any case, if the employer fails to give the said notice, the employer would be liable to pay to such employee a sum equal to the wages that would be payable in respect of the period of notice. 

On receiving notice of termination from the employer, an employee under an indefinite employment contract has the option either of continuing to perform work until the period of notice expires or, at any time during the currency of the period of notice, of requiring the employer to pay him a sum equal to half the wages that would be payable in respect of the unexpired period of notice. 

An employee whose employment is terminated on grounds of redundancy is entitled to re–employment if the post formerly occupied by him becomes available within a period of one year from the date of termination of employment. Such an employee would have to be re–employed at conditions not less favourable than those to which he would have been entitled if his employment had not been terminated. 

Special rules apply in the case of collective redundancies. An employer may not terminate employment on grounds of collective redundancy before it has notified in writing the employees’ representatives of the proposed terminations, and such representatives are given an opportunity to consult with the employer. In this respect, the Collective Redundancies (Protection of Employment) Regulations (Subsidiary Legislation 452.80) specify the circumstances in which collective redundancies would be deemed to occur, and also regulate the manner in which consultations between the employer and the employees’ representatives are to take place, amongst other matters. 

What constitutes a good and sufficient cause for the dismissal of an employee? 

An employer that dismisses an employee for a good and sufficient cause may do so immediately, without giving any notice. The law does not define or otherwise describe what constitutes a good and sufficient cause for the dismissal of an employee.  

However, the law does provide examples of grounds that an employer may not set up as good and sufficient causes for dismissal of employees, such as: 

1. that the employee at the time of the dismissal was a member of a trade union, or is seeking office as, or acting or has acted in the capacity of an employees’ representative; 
2. except in the case of a private domestic employee, that the employee no longer enjoys the employer’s confidence;  
3. that the employee contracts marriage;  
4. that an employee is pregnant with child or is absent from work during maternity leave;  
5. that the employee discloses information, whether confidential or otherwise, to a designated public regulating body, regarding alleged illegal or corrupt activities being committed by the employer or by persons acting on the employer’s name and interests;  
6. that the employee has filed a complaint or is participating in proceedings against the employer involving alleged violation of laws or regulations or is having recourse to competent administrative authorities; or 
7. that the business in which the employee is engaged has undergone a transfer of ownership, unless the employer proves that the termination is necessary for economic, technical or organisational reasons entailing changes in the workforce. 

Applicable laws and regulations contemplate other scenarios in which an employer may not dismiss an employee for certain reasons as are specifically prescribed. 

In the absence of any specific definition or description of a good and sufficient cause for termination, and in light of the examples specified by applicable law as not justifying summary dismissal, an employer should be able to show that he had a serious enough reason to summarily dismiss an employee and that the employer was left with no other reasonable option in the circumstances.  

The importance of adopting clear written procedures 

The employer should never underestimate the importance of having clear internal policies and procedures relating to various aspects of its relationship with its employees, including the types of scenarios in which employees may be dismissed as well as the procedure to be followed by the employer should it decide to dismiss any employees.  

Having such documented policies and procedures in place not only increases transparency with its employees, but also minimises the risk of the employer being deemed as having unjustly dismissed an employee.