The Cost of Neglect: Why Disciplinary Procedures Are Essential for Fair Dismissal

Authors: Ann Bugeja & Chantal Borg

The Industrial Tribunal’s latest decision addresses the unfair dismissal of the Chief Operations Officer at the Malta Financial Services Authority (‘MFSA’). The case centres on the MFSA’s failure to adhere to the legally requisite dismissal procedure. This issue is a recurring theme in the unfair dismissal cases that come before the Tribunal.

In the dismissal, the MFSA neglected to adhere to the legally binding procedure explicitly outlined in the Staff Handbook, which addresses the legal principles governing dismissals. The Tribunal placed significant emphasis on the principle of pacta sunt servanda, as articulated in Article 5 of the Employment and Industrial Relations Act, Chapter 452 of the Laws of Malta, asserting that a collective agreement – which acknowledges the conditions of employment – must be respected and upheld by the employer.

The law safeguards employees by ensuring their right to a fair disciplinary procedure. In the context of dismissal, the employee has the right to be informed of the charges against them in enough detail to sufficiently prepare their defence. They should have the opportunity to present their case regardless of the circumstances, as well as the right to be represented or accompanied in accordance with the established procedures. Additionally, the employee must be made aware of their right to appeal to a higher level of management – who has not been involved in the previous decision – or to seek an independent arbitrator. This requirement is based on the principle of impartiality, as a fair investigation necessitates an independent investigator who conducts a thorough and conscientious inquiry, ensuring that the employee’s defence is considered without any bias or preconceived notions.

As demonstrated by prior Tribunal decisions, a vital step before an actual dismissal is providing the employee with ‘warning letters.’ These letters must clearly outline the conduct that the employer finds unacceptable and state unequivocally that failure to comply with these warnings will result in dismissal. Given this context, it is evident that the MFSA’s claim that ‘feedback letters’ were issued to the plaintiff is unfounded, as the necessary criteria for true warning letters were absent. This distinction is essential as therefore the feedback letters could never be considered as warning letters according to established jurisprudence.

The Tribunal observed that the MFSA’s independent decision to dismiss the plaintiff without following the disciplinary procedures constituted a clear case of unfair dismissal, as defined by established legal principles. Additionally, the Tribunal highlighted that disregarding the Staff Handbook and failing to consult legal counsel were significant errors that resulted in such legal breach. After a lengthy five-year deliberation, the Tribunal ultimately determined the compensation to be €413,688, which included a €50,000 award for moral damages.