Collective Redundancy

Understanding Redundancies

The provisions of EU Council Directive 98/59/EC (and hereinafter referred to as the “Directive”) apply in the case of collective redundancies locally. These rules have been ratified through the Collective Redundancies (Protection of Employment) Regulations (S.L.452.80, and hereinafter referred to as the “Regulations”).

The concept of a collective redundancy is defined by the Regulations, as meaning the dismissal by the employer of one of the following three (3) categories of employees. This is when either the employer collectively makes redundant, over a period of thirty (30) days:

• Ten (10) or more employees in establishments normally employing more than twenty (20) employees, but less than one hundred (100) employees;
• Ten percent (10%) or more of the number of employees in establishments employing one hundred (100) or more, but less than three hundred (300) employees; and
• Thirty (30) employees or more in establishments employing three hundred (300) employees or more.

Conversely, under the Directive, another category is included in the definition of collective redundancy, including that when the employer collectively makes redundant, over a period of ninety (90) days, at least 20 employees from that establishment.

Collective Redundancy and Fixed Term Contracts

Moreover, terminations of employment which are under fixed term employment contracts (for limited periods of time or for specific tasks) are not considered for the purposes of collective redundancies, unless;

• The terminations take place prior to the date of the contract’s expiry; or else
• The termination takes place prior to the completion of such task stipulated in the contract; and
• The reason for the termination is redundancy of the employees.

In this last example once the collective redundancy of employees under a fixed term contract takes place, the employer is due to pay the employees the penalty of half the remaining wages for that remaining period of time established in the employment contract (as established by law for a breach of a fixed term contract).

Employer’s duties in Collective Redundancies

An employer who is proposing to declare the redundancies, is expected to comply with the procedure of notifying, in writing and consulting with the employee’s representative with a view of minimising the impact of the effect of the collective redundancy. This is also stipulated in the Employment and Industrial Relations Act (CAP.452. of the Laws of Malta).[1]

The consultation process between the employer and the employees’ representative is essentially for the parties to discuss the ways and means of possibly avoiding the collective redundancy or else, if this is not an option,  reducing the number of employees affected by such redundancies with the aim of mitigating the consequences that the process may cause.

The consultation between the employer and the employees’ representative shall begin within seven (7) working days from the day on which the employees’ representatives have been notified of the intended collective redundancies. During this seven (7) working days period, the employer must also provide the employees’ representative and the Director of Labour with a written statement providing information about the:

• reasons for the redundancies,
• the number of employees he intends to make redundant,
• the number of employees normally employed by him,
• the criteria proposed for the selection of the employees to be made redundant,
• details regarding any redundancy payments which are due and
• the period over which redundancies are to be effected.

This information shall be transmitted to the employee representative in any case, irrespective of whether the decision on collective redundancy is taken by the employer or the undertaking which controls the employer.

The Role of the Employee Representative

The main goal of the employee representative is to involve, promote and protect the collective interest of the employees within the company, especially when the participation or involvement of employees is required in business transfers and collective redundancies. The role essentially serves as better communication between the employer and the employees, and offers the chance for employees to consult with the employer through the employee representative.

Effective Collective Redundancy

The collective redundancies may only become effective within thirty (30) days from the date when the employees’ representative and the Director of Labour are notified about the intended redundancies, unless this thirty (30) day period is shortened or extended by the Director of Labour.

[1] Article 37 of the Act;