Employment and Industrial Relations Law

Unfair Dismissal – A Closer Look at the Termination of Employment Contracts

12 Oct 2023

8 min read

Authors: Ann Bugeja & Christine Borg Millo

The termination of an employment contract of an indefinite nature is attributed a high level of protection under Maltese employment law, that is, the Employment and Industrial Relations Act (“the Act”). An indefinite contract shall continue to run up until the moment it is terminated, either voluntarily by the employee or by the employer. Contrastingly, the employer may only terminate an employment contract in the case of redundancy, retirement age or for what is known as a ‘good and sufficient’ cause.

Good and Sufficient Cause.

Employment law does not define the meaning of ‘good and sufficient cause’. Nor does it give scenarios which fall under this umbrella term. However, it does indeed provide instances which are not considered to be ‘good and sufficient’ causes in article 36(14) of the Act, such as:

  • Being a member of a trade union;
  • Losing the employer’s confidence;
  • Contracting marriage;
  • Pregnancy or maternity leave;
  • Disclosing information to a public regulating body with regards to alleged illegal or corrupt activities being committed by his employer;
  • The business, in which the employee is engaged, has undergone a transfer of ownership and the termination was not necessary for any economic, technical, or organisational reasons entailing changes in the workplace.

An aggrieved employee may institute legal proceedings within four (4) months from the date of dismissal in front of the Industrial Tribunal as a means of recourse. The Tribunal is authorised to examine and evaluate the circumstances of the case, to deduce whether such dismissal was justified with good and sufficient cause.

Reinstatement, Re-Engagement or Compensation.

Where the Tribunal decides that the employment has been terminated without a good and sufficient cause, the employee may seek redress by either of the following: reinstatement, re-engagement, or compensation.

  1. Reinstatement refers to the situation where the employee returns to his former position as if the dismissal never took place;
  2. Re-engagement comprises of the re-employment of the party who had primarily been dismissed, under a new contract, and possessing comparable working conditions to his previous position.

The principle of proportionality is deemed fundamental in determining whether a dismissal was unjust or otherwise. In order to be deemed as just, the dismissal must be a proportionate sanction commensurate to the action that initially gave rise to the dismissal.

The notion of proportionality was upheld in the case of Publius Davison vs De La Rue Currency and Security Print Limited (Court of Appeal, inferior jurisdiction, (27/04/2016). In this case, the Court stipulated that the appellant’s employment contract (as a security guard) was terminated after taking into his possession, a packet of glue from the office without authorization. Notwithstanding this, the Court ruled that being dismissed from his employment was not a proportionate sanction for taking glue. Consequently, the employee was awarded ninety thousand, three hundred and seventy-four Euro and forty-three cents (€90,374.43) in compensation.

The Maltese Courts and Tribunal have consistently held that a dismissal shall not be the first measure taken against the employee. Rather, it should be the last possible resort taken, hence, proceeding with a dismissal without sending a warning letters or without following a disciplinary process would most likely bring to the surface claims of unfair dismissal.

When the Courts are confronted with a case of unfair dismissal, it must adjudicate on a case-by-case basis, considering the merits of each case. Thus, the element of subjectivity is fundamental at this point.

The case of Barti Erik sive Zara vs DIZZ Limited (Case No. 3903/ET) (23/02/2023) depicts this reasoning.  The applicant was employed by the respondent company as a Delivery Person in line with her employment contract. However, after some time, she had some doubts over her position. She began to present unacceptable behaviour at work. At the same time, she failed to listen to the instructions given at work by her supervisors. Such incidents regularly occurred, resulting in three (3) written warnings, the last of which led to the termination of her employment.

While still in employment the applicant argued that her salary was not in line with the number of hours that she worked and that she had a physical impairment, restricting her from working as a delivery person, she was offered a different role, ensuring job security. This is regarded as one of the fundamental duties of the employer.

This however still resulted in the display of unacceptable attitudes and behaviour in the workplace. In this sense, the Tribunal decided that the termination of her employment was just and made for the right reasons. Based on the three (3) written warnings given to the employee in the time span of one (1) year, the Tribunal ruled that the employee failed to exercise the necessary care to take care of her employment with the company and ruled in favour of the company.

Another judgement dealing with unfair dismissal is Marlon Mallia vs Methode Electronics Malta Limited ġja Hetronic Malta Ltd (C-664) u li b’digriet data 15 t’Ottubru, 2020 l-isem tas-soċjetà għandu jinqara biss bħala Methode Electronics Malta Limited, (16/02/2023).

The applicant was employed with the company in 2000, as a storekeeper, where in 2013 he was offered a role in Sales and Technical Support. On one occasion, Mallia answered a telephone call during a meeting with his Manger, Bonavia, who expressed his anger by scolding him in his office in front of the secretary. Following a confrontation between the two, Bonavia gave the applicant two options: to resign himself personally; or get dismissed. Mallia was eventually dismissed, which he claimed was neither just, nor based on good and valid reasons.

The Tribunal stated that Mallia went against company policy by using his mobile phone during meetings and behaving inappropriately with his superior. The respondent company believed that such termination was based on a good and sufficient cause as the incident fell in line with the criteria of clause ten (10) and twelve (12) of his employment contract. Clause ten (10) in fact read as follows:

“The company shall be entitled to dismiss the employee summarily … in the event that any act or omission on the part of the employee renders the continuation of the employment relationship untenable.” While Clause twelve (12) held that:

“Disobedience to lawful instruction, misconduct … may result in suspension from work or dismissal”.

The Tribunal was convinced that Mallia was accountable for “disobedience to lawful instruction” and “misconduct”. However, according to this clause, the respondent company could have resorted to other disciplinary measures and not necessarily the immediate termination of his employment. It was added that no disciplinary measures were ever taken against the applicant throughout the twenty (20) year period in which he was working for the company. Rather, he was offered a raise four (4) times over the past ten (10) years.

In situations concerning the employee’s conduct, employers must always weigh out instances of both positive and negative behaviour. The Tribunal held that the company’s decision to terminate the applicant’s contract was unilateral, and Clauses ten (10) and twelve (12) of his employment contract were not deemed to be enough to justify such termination. Hence, the Tribunal decided that there indeed was the unfair dismissal from the workplace and ordered the respondent company to pay fifteen thousand four hundred sixty-three euros (€15,463) as compensation over the period of two (2) months from the date of the decision.

A final judgement examined is Michelle Zammit vs Gutenberg Press Limited (Case No. 3899/JHP) (06/02/2023).  In this judgement, the applicant held that whilst her employment contract was terminated by means of a letter for disciplinary means, this termination was not based on a good and sufficient cause. When employed as a clerk on a full-time contract for an indefinite period, she was held accountable for her inappropriate behaviour at the workplace on several occasions. In fact, she was caught using different means of social media and other means of communication for reasons other than work, which eventually resulted in time-wasting and a lack of productivity. Adding insult to injury, this hindrance was accompanied also by alcohol use and other issues, which were deemed inappropriate by the company.

In its considerations, the Tribunal confirms that the termination of Zammit’s employment was based on a few factors, which accumulated over time, and were indeed indicative of the fact that she failed to take her job seriously, to the extent that she was found time-wasting and casting aside her tasks on several occasions.

The Tribunal involved the HR manager, who said that prior to the termination of Michelle’s employment, a formal disciplinary procedure should have taken place, albeit never instituted. And on this basis the Tribunal decided against the company and demanded the respondent company to pay Zammit the sum of five thousand euros (€5,000) as compensation. The Tribunal believed that whilst there were reasonable grounds to terminate Zammit’s employment, the lack of disciplinary procedures resulted in such termination to be deemed as unjust and contrary to law.

Concluding remarks.

Against this background, the Courts base the justification and the legality of one’s termination of employment on a “good and sufficient” cause. In the Mallia judgement, it was deduced that the respondent company’s lack of proof along with Clause ten (10) and twelve (12) of the applicant’s employment contract was simply not enough to justify the termination. Although, despite having reasonable grounds to terminate one’s employment contract, the failure to exercise disciplinary procedures renders the formerly mentioned grounds to be futile (as established in the Michelle Zammit case). In this sense, such termination would be regarded as unjust and contrary to law.