Employment contracts are broadly divided into two categories: definite and indefinite contracts. These two types are principally distinguished by a single factor: the proposed duration of the employment relationship.
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 giving any reasons.
If an employee has been working for 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.
Once the probationary period comes to an end, an indefinite employment contract 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 an indefinite contract of service, 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
|more than six months but not more than two years
|more than two years but not more than four years
|more than four years but not more than seven years
|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 employer, an employee under a contract of service for an indefinite time has the option to do two things: either to continue to work until the period of notice expires or, at any time during the period of notice, to request the employer to pay a sum equivalent to half the wages that would be payable to employee in respect of the unexpired period of notice.
On receiving notice of termination from the employee, the employer has the option either to allow 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 an indefinite contract to give notice as aforesaid, 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.
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 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, which comes to an end when a specific date is reached, or when a specific task is completed, or through the occurrence of a specific event.
The conditions of employment in a fixed term contract must be as favourable as those which would have been applicable to an indefinite contract at the same place of work, unless different treatment is justified on objective grounds.
If you are a fixed term employee whose contract has expired and are being retained by your employer without being given a new contract of service for a fixed term within the first twelve working days following the expiry of the previous contract, you shall be deemed to be retained on an indefinite period contract.
If you are retained in employment in the same category after the date of termination of a definite contract, or are 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, once four years of continuous employment elapse, 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.
Exceptionally, an employer may only retain an employee on a fixed term contract beyond four years when such retention is justified by objective reasons based the circumstances of a given activity, usually resulting from the specific nature, or from inherent characteristics, of the tasks to be performed in the fixed term contract.
If the employer terminates definite contract of employment before the date of expiration specified by the contract, the employer must pay to the employee a sum equal to half the wages that would have been acquired by the employee during the remainder of the time agreed upon in the contract.
Employees who abandon their employment before the time definitely specified in the contract of service must pay the employer a sum equal to half the full wages they would have been entitled to had they continued their 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.