Compensation Awarded by the Industrial Tribunal | How is this Changing and Why?

Author: Ann Bugeja

Maltese Legislation does not impose an obligation on the Industrial Tribunal (hereinafter ‘Tribunal’) to include its reasoning for why a certain decision was taken and why damages were liquidated at a certain amount. Over the years this has led to a lot of uncertainties since when one tries to analyse past cases of the Tribunal in order to attempt to identify a pattern in decisions, there appear to be no hard and fast rules upon which the decisions were taken.

This is in fact pointed out in the recent judgement of Michelina Bonnici vs Specialist Group Cleaners Limited[1], wherein the Court of Appeal noted that inferior courts are not obliged to include all the reasons which led them to taking such a decision and are only obliged to mention the main points which the court bases itself on. Chapter 452 of the Laws of Mata (Employment and Industrial Relations Act) states that the Tribunal need only indicate the factors taken into account before establishing compensation.

Upon analysing such decisions, it becomes clear that the Tribunal focuses on certain factors in order to calculate compensation accordingly, when such is due of course. These factors include but are not limited to the following:

• The period of time that one remained unemployed following the unjust dismissal from employment;
• Proof of attempts to find new employment;
• Whether salary at a new job is lower or higher than previous employment;
• Any expenses incurred solely due to said unjust dismissal from employment;
• The length of the employment relationship between the employee and employer; and
• The reputation the employee had within the industry and his/her skills.

The past year (October 2019 – to date) has witnessed a handful of noteworthy cases wherein compensation awarded by the Tribunal was particularly high in comparison to past cases. In view of this, throughout this article we shall be delving into a few of the said cases in order to establish whether there is a common link between them or otherwise.

Case Law

In Pauline Basile Pace vs Malta Football Association[2], the Tribunal awarded compensation for unfair dismissal and specifically made reference to whether the employee had in fact attempted to find a new job and also whether she registered herself as unemployed with the relevant authorities whilst liquidating compensation.

The employee had been employed with the Malta Football Association (hereinafter ‘MFA’) for 20 years and had never had any disciplinary proceedings instituted against her. The employee’s role was demoted to the role of a secretary and she was not consulted about this change in role.  One day the employee’s employment was summarily terminated with a letter allegedly stating that she had not been working the full amount of hours required.

The employee appealed the decision by the Tribunal, basing her argument on the principles of natural justice. The Court of Appeal granted this appeal and sent the case back to the Tribunal to decide on compensation.

The Tribunal commented that the Court of Appeal was right in deciding that the Tribunal had previously not made a decision with regards to compensation owed to the employee, however, no proof of wages or proof of the attempts to find new employment had been given at that time and thus the Tribunal couldn’t have decided on compensation accurately.

The employee asked for compensation amounting to €74,360 and also asked not to be re-instated in her work due to her having been treated badly when the MFA President changed. The Tribunal noted that the applicant requested compensation for all the time she had been unemployed, as well as a 10% inflation rate. The Tribunal also commented that the applicant was assuming that there was a guarantee of employment throughout all this time. It was then decided that she was entitled to renounce to her plea to be re-instated at work and that she was in fact entitled to financial compensation.

The Tribunal liquidated compensation at €46,800 which needed to be paid within two weeks after noting that she had not brought proof of any attempts to find a new job and had not registered as unemployed with JobsPlus.

On the other hand, in the noteworthy case of Publius Davison vs De La Rue Currency and Security Print Limited[3], the Court of Appeal set compensation at €90,374.43. Such an amount was based on the fact that the new job paid a salary which was €18,281.85 less per year, than his previous employment and the applicant was 61 years of age when he was dismissed and retired after 4 years. The difference in pay for a four-year period amounted to €73,127.40. Thus, had the applicant not been dismissed, he would have qualified for a benefit ranging between €13,976.24 and €16,305.61.

In the judgement of Philip D’Anastasi vs Malta Public Transport Services (Operations) Limited[4], the Tribunal also based itself on the amount of years left until retirement as one of the deciding factors. The employee used to earn €659.90 per week excluding his performance bonus. He was unemployed for 3 weeks and would have retired in 10 years. The Tribunal established compensation at €36,111.

On the opposite side of the spectrum, in comparison to the relatively high awarded compensation in the aforementioned cases, in Reuben Friggieri vs Impact Real Estate Limited, F (Advertising) Limited and Owners Best Investment Limited[5] it was noted that the Tribunal set compensation at €800.

The Tribunal here established that even though it was certainly a case of unfair dismissal the employee remained unemployed only from the 25th February to the 1st of March and did not bring proof regarding whether his salary was lower in his new job. Moreover, the Tribunal also noted that the employee did not suffer any damages except for loss of wages during the brief period of unemployment.

In the realm of unfair dismissal, the beginning of 2020 brought about 4 significant Tribunal decisions.

When computing compensation in the following set of cases, the Tribunal took into consideration the period of time the employees remained unemployed following the redundancies, the length of the employment relationship of each employee and whether the employees rejected or accepted the sum of money owed to them as payment in lieu of notice and outstanding leave.

Dr. Jeremy Debono representing the absent Gordon Clark vs Dragonara Gaming Limited[6]; Dr. Jeremy Debono representing the absent Giancarlo Vecchioni vs Dragonara Gaming Limited[7]; Dr. Jeremy Debono representing the absent Andrew Smith vs Dragonara Gaming Limited[8]; & Stephen Thornton vs Dragonara Gaming Limited[9], were heard subsequently in view of the fact that they were very similar in nature.

Gordon Clark was employed on 1st September 2008 as an Assistant Table Games Operation/Poker Manager, Giancarlo Vecchioni was employed on 1st April 2001 as a Slot Machines Operations Manager, Andrew Smith was employed on 3rd August 1999 as a Cash Desk/Slots Floor Manager and Stephen Thornton was employed on 8th February 1999 as a Tables Operations Manager. All 4 were employed with Dragonara Casino Limited.

Dragonara Casino Limited had a concession from Casma Ltd to manage the Dragonara Complex in St. Julian’s. The terms and conditions of the agreement transferring the management of the Dragonara Complex from Dragonara Casino Limited to Dragonara Gaming Limited included an obligation to transfer all the employees.

All 4 employees received a letter on the 8th June 2010 confirming that their employment had been transferred to Dragonara Gaming Limited. Subsequently, the employees received a letter on the 18th June 2010 terminating their employment due to redundancy. With such a letter, the employees also received payment in lieu of notice and payment for outstanding leave. Gordon Clark accepted this payment without prejudice to his rights under law, whilst the other 3 refused the said payments.

The employees had never been offered alternative employment since they were not considered to be competent to work within the new structure of Dragonara Gaming Limited. It was also revealed that subsequent to the alleged redundancies, Assistant Managers had been promoted to Managers and given a raise in pay due to such promotion. The company argued that the employees who had been made redundant, did not have the relevant skill set needed in order to modernize the running of the casino.

If the employee is unfairly dismissed in connection with the transfer, his rights lie against the transferee, not the transferor. This is so even if the dismissal took place before the transfer if the reason was connected with the transfer.

The Tribunal was of the opinion that the company was aware of the situation the Casino was in, including all the problems which it was going to face in order to be modernized and the salaries of all the employees. The Tribunal also noted that from the testimony given by the witnesses, it resulted that the Company had promoted Assistant Managers to Managers and warned them to stay quiet about their promotions due to possible pending action being taken by the employees which were made redundant.

The Tribunal noted that Gordon Clark had accepted the amount of €6968.37 as payment for notice period and outstanding leave, and that he was unemployed for 2 months and awarded compensation at €35,000.

For Giancarlo Vecchoni, compensation was set at €60,000. The Tribunal noted that Giancarlo had not accepted payment of €13,763.59 as payment in lieu of notice and outstanding leave and due to the fact that the employee had found work after 2 months but had to emigrate to Morocco for work.

For Andrew Smith, compensation was set at €75,000. The Tribunal noted that Andrew had not accepted payment of €11,763.71 as payment in lieu of notice and outstanding leave and due to the fact that the employee had found work after 10 months but had incurred expenses in order to move back to England for work.

Stephen Thornton was awarded €140,000 in compensation. The Tribunal noted that he refused €19,354.71 as payment in lieu of notice and outstanding leave and that the employee was unemployed for 16 months.

In addition to the above, one may note that the Tribunal also considers the duration of the employment relationship between the employment relationship and the reputation of such employee within the said industry as significant factors when computing compensation due.

In Ioannis sive John Katakis vs Maltco Lotteries Limited[10], the employee was employed as the CEO on the 1st January 2005. In June 2015, the Board of Directors had appointed an Acting CEO to take over the employee’s responsibilities and subsequently the employee was terminated in October 2015. He was also removed from his position as Director of the company in November 2015.

The termination letter did not give a reason for the termination of employment and the employee was not given a chance to defend himself. In this case, the issue was the rapport between the company and the directors/shareholders. The employee had drawn attention to a potential conflict of interest which a director had, and relationships had deteriorated after that.

The Tribunal noted that the level of commitment of the employee was satisfactory to the effect that the witnesses specifically stated that the problem had nothing to do with John’s performance as CEO of the Company. The Tribunal acknowledged that the relationships between the employee and the Players Groups had deteriorated significantly however it believed should mediation have taken place, that there might have been a different conclusion.

The Tribunal decided that this was an unfair dismissal and set compensation at €83,125 after taking into consideration the length of the employment relationship between the employee and employer, the good reputation the employee had within the industry and his skills. The employee’s salary was €66,500 and he was also paid another €45,000 in fringe benefits.

Concluding note

Maltese Law does not impose neither guidance nor a cap on the amount which the Industrial Tribunal can award, but only outlines the parameters as to how the compensation should be determined[11]. Nevertheless, the past few months have certainly witnessed an increase in the amount of compensation awarded by the Tribunal which may be the commencement of a new trend in this respect.

The rigid method of calculating compensation or rather the lack thereof should be compared to such a method used in other countries. We understand that in the United Kingdom, for one, in a case of unfair dismissal brought before the employment tribunal, one may receive a basic award (based on the length of continuous service, age and weeks’ pay) and a compensatory award (which the Tribunal constitutes just and equitable in the circumstances).

Should this method or others be introduced in our law to avoid uncertainty and introduce some form of parameters?

[1] Michelina Bonnici vs Specialist Group Cleaners Limited, Court of Appeal, 12th June 2020;

[2] Pauline Basile Pace vs Malta Football Association, Court of Appeal, 23 April 2018;

[3] Publius Davison vs De La Rue Currency and Security Print Limited, Court of Appeal, 23 April 2018;

[4] Philip D’Anastasi vs Malta Public Transport Services (Operations) Limited, Industrial Tribunal, 16 January 2020;

[5] Reuben Friggieri vs Impact Real Estate Limited, F (Advertising) Limited and Owners Best Investment Limited, Industrial Tribunal, 7 February 2014;

[6] Gordon Clark vs Dragonara Gaming Limited, Industrial Tribunal, 28 January 2020;

[7] Giancarlo Vecchioni vs Dragonara Gaming Limited, Industrial Tribunal, 28 January 2020;

[8] Andrew Smith vs Dragonara Gaming Limited, Industrial Tribunal, 28 January 2020;

[9] Stephen Thornton vs Dragonara Gaming Limited, Industrial Tribunal, 28 January 2020;

[10] Ioannis sive John Katakis vs Maltco Lotteries Limited, Industrial Tribunal, 12 February 2020;

[11] Article 81 (2) (a) of the EIRA states that “in determining the amount of such compensation,   the  Tribunal   shall   take   into consideration the real damages and losses incurred by the  worker  who  was  unjustly  dismissed,  as  well  as other circumstances, including the worker’s age and skills as may affect the employment potential of the said worker.