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There are two broad categories of employment contracts that an employer may enter into with an employee with a view to formalising an employment relationship. The proposed duration of the employment relationship is the principal distinguishing factor between these types of employment contracts.
An indefinite employment contract has no fixed term or date on which the employment ends. During the probationary period, an indefinite contract may be terminated at will by either the employer or the employee without assigning any reason. If an employee has been in the employment of the same employer continuously for more than one month during the probationary period, the party terminating the contract must give the other party a week’s notice of the termination of employment.
Following the lapse of the probationary period, an employment contract for an indefinite time may be terminated, by giving notice as set out below, by the employee without assigning any reason and by the employer only on grounds of redundancy. Notice of the termination of employment proposed either by the employer or by the employee under a contract of service for an indefinite time, shall be of the following respective duration:
| Term of Service with the same Employer | Notice Period |
| more than one month but not more than six months
|
one week |
| more than six months but not more than two years
|
two weeks |
| more than two years but not more than four years
|
four weeks |
| more than four years but not more than seven years
|
eight weeks |
| more than seven years | eight weeks plus an additional one week for every subsequent year of service or part thereof exceeding seven years, up to a maximum of twelve weeks
|
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.
On receiving notice of termination from the employer, an employee under a contract of service for an indefinite time 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.
On receiving notice of termination from the employee, the employer has the option either to allow the employee to continue to perform work until the period of notice expires or, at any time during the currency of the period of notice, to pay the employee a sum equal to the full wages that would have been payable in respect of the unexpired period of notice.
If an employee under a contract of service for an indefinite time fails to give notice as aforesaid, such employee would be liable to pay the employer a sum equal to half the wages that would be payable in respect of the period of notice. If the employer fails to give the said notice, the employer would be liable to pay to such employee a sum equal to the full wages that would be payable in respect of the period of notice.
As already mentioned above, an employer may dismiss an employee, and an employee may also abandon employment with his employer, without giving notice and without liability to make any of the abovementioned payments, if there is good and sufficient cause for such dismissal or abandonment of service. The “good and sufficient cause” is not defined by the law but determined by the Industrial Tribunal.
A definite or fixed term employment contract is a contract of service entered into between an employer and an employee, where the end of the contract is determined by reaching a specific date, or by completing a specific task, or through the occurrence of a specific event.
The conditions of employment in a fixed term contract may not be less favourable than those which would have been applicable had the same contract of employment at the same place of work been of an indefinite type, unless different treatment is justified on objective grounds.
A fixed term employee whose contract has expired and is retained by the employer shall be deemed to be retained on an indefinite period contract, if the employee is not given a new contract of service for a fixed term within the first twelve working days following the expiry of the previous contract.
If an employee is retained in employment in the same category after the date of termination of a definite contract, or is re-employed in the same category by the employer for a fixed or indefinite term within one year from the date of termination of the previous definite contract, the conditions of employment may not be less favourable than those which would have been applicable had the contract of service been for an indefinite time.
As a general rule, an employer may not retain an employee on a fixed term contract beyond a period of four years. In fact, a definite contract shall be transformed into an indefinite contract of employment if the employee has been continuously employed under such a contract for a fixed term, or under that contract taken in conjunction with a previous contract or contracts of service for a fixed term, once four years of continuous employment elapse.
By way of exception to the said general rule, an employer may only retain an employee on a fixed term contract beyond four years when such retention is justified by objective reasons based on precise and concrete circumstances of a given activity. Such circumstances may result, in particular, from the specific nature, or from inherent characteristics, of the tasks to be performed in the fixed term contract.
If the employer terminates a definite contract of employment before the expiration of the time definitely specified by such contract, the employer must pay to the employee a sum equal to half the wages that would be payable to the employee in respect of the remainder of the time specifically agreed upon. If an employee abandons his employment before the time definitely specified by the contract of service, must pay to the employer a sum equal to half the full wages he would have been entitled to had he continued his services.
Nevertheless, an employee may be dismissed, and an employee may also abandon his employment, without liability to make any of the said payments, if there is good and sufficient cause for such dismissal or abandonment of service.
At Empleo, we provide legal advice to employers on all matters outlined above, including advice on the legal nature and implications of various types of employment arrangements and relative employment terms, as well as providing assistance in the preparation or review of employment contracts.
Some of our services in this area include the following:
You may get in touch with us here to request an initial free legal consultation in relation to any of the matters outlined above.
Mariella graduated from the University of Malta with a doctorate in law in 2005. She completed a master’s degree in ‘European Private Law’ from the La Sapienza, University of Rome, and was admitted to the bar in Malta in 2006.
Mariella is a people person – and it is this attribute which has really characterised and shaped her career.
Over the years, she headed the legal departments of several corporate services firms. Due to her skillset, she was also entrusted with managing and overseeing operations and human resources, where she gained technical and practical experience in various corporate, commercial and employment matters.
Her practical hands-on experience and insight perfectly complement Mariella’s technical knowledge of employment law, thus placing her in an ideal position to understand and advise employers and employees alike on various matters that may arise at the workplace.
Mariella is passionate about employment law matters and provides her clients with the highest-quality legal service to achieve the best possible outcome and resolve any employment law related issues and concerns.
Bradley graduated Doctor of Laws from the University of Malta in 2005 and was admitted to the Bar in Malta in 2006. He advises clients on various corporate, commercial, employment and regulatory matters, with particular focus on company and financial services law.
He has assisted clients in various corporate and commercial matters by providing company law advice and assisting in the implementation of corporate finance, restructuring, mergers and acquisitions and similar transactions.
Bradley has also advised and assisted investment funds, fund managers and other investment services providers, banks and financial institutions, on various legal and regulatory matters relating to the setting up, authorisation and ongoing conduct of their activities in Malta.
His practice also covers general employment law matters. Bradley’s experience in company and financial services law enables him to focus on various corporate and regulatory aspects of employment relationships. In particular, he advises organisations on the implementation of employee share option and participation schemes, the implications of business transfers on employment relationships, as well as relations with senior employees.
Karl graduated Doctor of Laws from the University of Malta in 2005 and was admitted to the Bar in Malta in 2006.
Karl has gained considerable expertise in technology law and regularly assists clients in relation to intellectual property issues, commercial contracts and ways to ensure compliance with the General Data Protection Regulation (GDPR) and privacy laws. Whilst such matters used to be only given incidental importance when dealing with employment matters, they are now widely acknowledged to be vital in all employment relationships.
He is also regularly engaged by C-level executives to assist in negotiating employment contracts and settlement agreements.
Karl advises across a multitude of industries including technology; marketing; adtech; financial services; gaming; esports; consumer products; and media and telecommunications.
