Employment and Industrial Relations Law

Amendments to Employment Law | What you Need to Know – part I

17 Jul 2023

8 min read

Authors: Ann Bugeja & Christine Borg Millo

Act no. XX of 2022 came into force on the 20th of December 2022, to amend the Employment and Industrial Relations Act (Chapter 452 of the Laws of Malta), partially transposing EU Directive 2019/1152 on transparent and predictable working conditions in the European Union. The latter considers the main conditions of work within an employee and employer relationship, including minimum rights on working time, information provided to the employee, parallel employment and probation.

Secondly, the Transparent and Predictable Working Conditions Regulations has been introduced through Legal Notice 267 of 2022. It transposes the EU Transparent and Predictable Working Conditions Directive (2019/1152)[1] and repeals the national Information to Employees Regulations.[2] The objective of the Transparent and Predictable Workings Conditions Directive is to improve all the working conditions of an employee through legislation reform, by promoting more transparent and predictable employment and  ensuring the adaptability of the EU labour market.[3] The Regulations mainly lists more requirements on information that is to be provided to an employee, whether working in Malta or outside Malta. It discusses further rights of the employee and new obligations of the employer, together with certain legal prohibitions such as refusal of parallel employment and zero-hour contracts. 

The below are the most salient points that one should be aware and should take note of in an employment relationship between the employer and the employee.

Part 1 – Amendments to EIRA

Defining an Employment Relationship

For better clarity on the subject, a new definition to identify what an “employment relationship” is, has now been provided. It is now defined as an agreement, whether oral or in writing, in any form, whereby a person binds himself to render service to or to do work for an employer, in return for wages, and…includes an agreement of apprenticeship”.[4] Hence, whenever the employer exercises effective direction, control and choice over the nature of the work or tasks being performed by the employee, for the employer; then that relationship is one of an employment relationship and the person carrying out the work is an employee of the employer.

Probationary Period

The most pertinent amendments made through this act tackles the notion of “reasonable”[5] probation for fixed term contracts, under article 36 (1) of the principal act. “Probationary periods allow the parties to the employment relationship to verify that the workers and the positions for which they were engaged are compatible while providing workers with accompanying support.”[6] 

During this trial period, the employment relationship may be terminated by either party upon their will, without assigning a valid reason for termination. What would be required is simply one (1) week’s notice of such termination to be given by one party to the other, if the employee was working continuously with the same employer for more than one (1) month.

The general rule holds that when any employment relationship is subject to a probationary period, the length is of six (6) months[7]. However, this rule been elaborated to create a more proportional probationary period for those employee relationships which are of a fixed term nature.[8]

Firstly, in a fixed-term employment relationship, the length of probation must be proportionate to the expected duration of the contract and the nature of the work. When there is a renewal of a work contract which consists of the “same function and tasks”, then that employment relationship will not be subject to a new probationary period, although it is the start of a new fixed-term contract. This resembles more the essence of an indefinite contract, making a fixed term contract more continuous and without staggering periods of uncertainty for both the employer and employee.

Secondly, no fixed term contract can be shorter than the prescribed six months unless it is “justified on objective reasons”. The latter is based on precise and concrete circumstances which characterise a given activity, but are not defined at law. Where the employer still wishes to enter into a fixed work contract of service with an employee for a period shorter than six (6) months, the employer has the duty to list the objective reasons for its justification in the written contract.

Thirdly, for a fixed term contract that holds a duration of between six (6) months to fifteen (15) months, the time of probation is calculated on a two (2) month probation period, for every six (6) months of employment. For instance, should the contract stipulate a work period of twelve (12) months, the employee is entitled to a four-month (4) probationary period. Moreover, if the fixed term contract is shorter than six (6) months, probation will be 1/3rd the duration of that contract. As an example, if the fixed employment contract is (12) twelve weeks long, the duration of probation would be four (4) weeks.

Lastly, as a fixed rule, should the employment contract of a fixed term nature exceed fifteen (15) months, probation is a maximum of six (6) months.

To recap:

  • Category 1: Fixed Contract less than six (6) months – No fixed term contract can be shorter than six months unless shorter period is justified. If permitted, probation will be 1/3rd of the duration of the fixed term contract;
  • Category 2: Fixed Contract between six to fifteen (6-15) months – period is calculated on basis of two-month probation per six months work duration;
  • Category 3: Fixed Contract more than fifteen (15+) months – probation of six months maximum.

Under article 36(1b), the law further holds that those employees under a definitive or indefinite employment contract, who hold technical, executive, administrative or managerial posts and their wages are at least double the national minimum national wage of that year, are entitled to a longer probation – twelve (12) months.

Further, if the parties agree, the probation period prescribed at law can be shorter than the respective periods stipulated above.[9]

The probationary period is suspended, or held in abeyance, in the eventuality that there is any two (2) weeks or more of approved leave, such as in the case of vacation leave, sick leave, injury leave, maternity leave, adoption leave and jury leave . Overall, it is unlawful for an employer to dismiss an employee during this suspension of probation.

Other Minor Amendments

The term “penalties” in article 45 was substituted by the word “punishments”. Therefore, where an employer contravenes any condition of employment stipulated in any law, order, or collective agreement, he will be liable to a fine not less than two thousand and thirty-two euros and ninety four cents, (€232.94) and not more than two thousand, three hundred and twenty nine euros and thirty seven cents (€2,329.37). However, besides the punishment of a fine imposed on the employer, for more serious and specific convictions mainly dealing with different forms of non-payments of wages, the Court may also order the offender to refund the employee concerned the said amount due by the employer. [10] Moreover, for holidays with pay and which were not allowed by the employer, the refund will amount to a sum which is equal to the pay of those holiday dates. Any order given by the Court results to a direct and enforceable decision similar to a civil action between the parties.

A last remark to make is with regards to unfair dismissals of employees. The Industrial Tribunal has exclusive jurisdiction to decide on three forms of claims as per article 75;

  1. those cases of alleged unfair dismissals;
  2. claims related to Article 36 of the principal act, on termination of employment contracts; and
  3. all cases falling within their jurisdiction under Title 1 of the principal act, namely all rules determining Employment Relations, including but not limited to the main recognised conditions of employment such as working time and leave entitlement and payment of wages, protection against all forms of harassment, victimisation and discrimination at the workplace as well as probation matters and termination of employment contracts.

Hence, through this amendment, the third category of cases can also be appealed on a point of law. 

[1] Directive (EU) 2019/1152 of the European Parliament and of the Council of 20 June 2019 on transparent and predictable working conditions in the European Union

[2] Subsidiary Legislation 452.83 of 1st January 2003

[3] Article 1 of Directive (EU) 2019/1152

[4] Article 2 of Cap.452

[5] Directive (EU) 2019/1152 of the European Parliament and of the Council of 20 June 2019 on transparent and predictable working conditions in the European Union

[6] Directive (EU) 2019/1152 of the European Parliament and of the Council of 20 June 2019 on transparent and predictable working conditions in the European Union Para.27

[7] Refer to article 36 (1), (1a) and its provisos under Cap.452 which transposes article 8 of the EU Directive

[8] A fixed term contract of work is a definite yet atypical contract in which the termination of employment is known to both parties, agreed among them and defined in the contract itself. This is as opposed to an indefinite work contract, acting as the presumption to the rule of employment contracts, in that it is favoured by local legislation and does not possess a termination date.

[9] Refer to article 36(1c) of Cap.452