Employment Contracts

What is a Contract of Employment?

A contract of employment is an agreement – whether oral or in writing and which may take any form – whereby a person binds himself to render service to, or conduct work for, an employer, in return for wages.

Although an employment contract may be verbal, we strongly advise employers to formalise their employment relationships with their employees in writing, in the form of a written contract of employment signed by the employer and each employee and which clearly sets out the applicable employment terms between the parties.

Important Employment Formalities

Where a written contract of employment has been signed between the employer and the employee, the employer must deliver to the employee a signed copy of such agreement by not later than eight working days from the date of the contract in terms of Subsidiary Legislation 452.83 of the Laws of Malta.

In those cases where no such written contract of employment has been signed, the employer is bound to give the employee a letter of engagement or a signed statement by not later than eight working days from the commencement of the employment relationship, in order to record the principal employment terms. In the case of any employee required to work outside Malta for a period exceeding one month, the said documents must be in the employee’s possession before departure from Malta.

Details required in a Contract of Employment

Any such written contract of employment or letter of engagement or signed statement must set out certain information relating to the employment relationship, which shall include the following details:

1. the name, registration number and registered place of business of the employer and a legally valid identification document number, sex and address of the employee and the place of work. In the absence of a fixed place of work, it should be stated that the employee will be employed at various places together with the registered place of business. If there is no registered place of business, the domicile of the employer is to be stated;
2. the date of commencement of employment;
3. the period of probation. The first six months of any employment under a contract of service shall be probationary employment, unless otherwise agreed by both parties for a shorter probation period. In the case of a contract of service relating to employees holding technical, executive, administrative or managerial posts and whose wages are at least double the minimum wage established in that year, such probation period shall be of one year unless otherwise specified in the employment contract;
4. normal rates of wages payable;
5. the overtime rates of wages payable;
6. the normal hours of work;
7. the periodicity of wage payments;
8. in the case of a fixed term contract of employment, the expected or agreed duration of the contract period;
9. the paid holidays, and the vacation, sick and other leave to which the employee is entitled;
10. the conditions under which fines may be imposed by the employer;
11. the title, grade, nature or category of the work for which the employee is employed;
12. the notice periods to be observed by the employer and the employee should it be the case;
13. the collective agreement, if any, governing the employee’s conditions of work;
14. in the case of an employee required to work in a country other than Malta for a period exceeding one month:
15. the duration of the employment abroad;
16. the currency to be used for the payment of remuneration;
17. where appropriate, the benefits in cash or kind attendant on the employment abroad; and
18. where appropriate, the conditions governing the employee’s repatriation;
19. any other relevant or applicable condition of employment, whether agreed between the parties or otherwise required to be specified by any applicable law.

If any of the above information is regulated by any law, regulation, national standard order, sectoral regulation order or collective agreement, the information may be given in the form of a reference to the laws, regulations, orders or collective agreements governing that same information.

Changes to Employment Contracts

Insofar as an employment contract is an agreement between two parties, any changes to an employment contract may only be effected with the consent of both the employer and the employee.

If the details or the conditions of employment are amended or modified as aforesaid, the employer is required to notify the employee of the relevant changes by means of a signed statement which must be delivered to the employee by not later than eight working days from the date when the changes come into effect.

If any such amendments are agreed in writing between the parties in the form of an addendum to the original employment contract, a signed copy of such addendum should likewise be delivered to the employee within the said eight working day period.

Amendments to employment conditions resulting from a change in any applicable laws, regulations or collective agreement, need not be notified by the employer to the employee as aforesaid. Nevertheless, we strongly advise employers to maintain an open and regular channel of communication with their employees on any legislative or regulatory developments that may affect their employment.