The Employment Contract

Where the minimum conditions of employment are established by law or regulation, only those provisions that are more favourable to the employee are considered as being legally valid and enforceable. Collective agreements work in the same way, binding the employer party to the agreement and the members of the trade union negotiating on the employees’ behalf. Individuals not belonging to the trade union in question may also agree to be governed by the terms of the collective agreement.

If the period of employment exceeds one month and the employee’s working hours exceed eight hours per week, the employer is bound to give the employee, within 8 working days from the commencement of employment, either

(i) a written contract of employment, or
(ii) a written statement of minimum conditions, which must be furnished to the employee.

Moreover, as established by the Transparent and Predictable Working Conditions Regulations, introduced through Legal Notice 267 of 2022, the employer has the duty to inform their employees about the fundamental and basic aspects of the employment relationship, such as:

1. Details on the name, registered place of business of employer and valid ID, gender and address of employee and the place of work (note that if there is no fixed place of work, the employer states that the employee will be employed at various places, and include the registered place of business nonetheless; if there is no registered place of business, the domicile of the employer should be stated instead);
2. Place of work (whether fixed, not fixed, various places, if employee is allowed to determine his own place of work, the registered place of business or domicile of employer);
3. Title/Grade/Nature/Category of work that the employee is employed in;
4. Brief description of work or specification;
5. Date of commencements of contract;
6. End date or expected duration (for fixed term contracts);
7. Identity of user undertakings when known (for temporary agency workers);
8. Duration and conditions of probation;
9. Training entitlement provided by employer (if any);
10. Amount of paid leave entitled to worker including, but not limited to: vacation leave, parental leave, paternal leave, maternity leave, carer’s leave, urgent family leave, bereavement leave; and marriage, quarantine, jury service, sick leave and injury leave;
11. Procedure observed by employer and employee for termination of employment – including notice periods, length and method for termination;
12. Remuneration (basic amount of pay), overtime, special rates of pay, method of payment of wages, conditions of fines and quantum of fines by employer for non-payment of any due wages;
13. Organisation of working time – especially for specific occupational activities, length of work, overtime arrangements and shift work;
14. If work pattern is unpredictable – employer to also inform worker of three (3) points:
    i) That work schedule is variable (including number of guaranteed paid hours and the pay for the work performed for these hours worked);
    ii) Reference hours and days that worker may be required to work;
    iii) Minimum notice period that worker is entitled before start of work assignment and any deadline for the cancellation of the work assignment ;
15. Existence of collective agreements affecting worker’s conditions of work, if any ;
16. Identity of social security institutions that are receiving the social contributions attached to the contract of employment and any protection provided by employer regarding this;
17. Any other relevant condition of employment.

This list is non-exhaustive – any other condition that the employer feels is relevant to be notified to the employee, should be duly listed in the notification being sent to the employee.

If the information was not previously mentioned in the existing contract of employment, then it has to be provided individually to the worker in the form of one or more documents, during a period beginning from the first working day and ending not later than the seventh (7^th) calendar day.

All other information, given to the employee, shall be provided individually by the employer in the form of a document within one (1) month of the first working day.

Contracts of employment may be entered into for a fixed term or for an indefinite term. The conditions in a fixed term contract cannot be less favourable than those which would have been applicable had the same contract of employment at the same place of work been for an indefinite time. This is unless different treatment is justified on objective grounds.

A fixed term contract can be successively renewed up to a maximum period of four (4) years after which the employee shall be considered to be under a contract of indefinite duration. The exception occurs when the employer has justifiable reasons for retaining the employee on a fixed term contract. An employee whose fixed term contract has expired and is retained in employment will also be considered to be under an indefinite contract if the employer does not produce a new contract of service within twelve (12) days following the expiry of the previous contract.

A caveat worth making in the context of contracts of employment for a fixed term is that if the parties would like to terminate the contract prior to the expiry of the established term, the terminating party has to pay to the other a penalty which is established by law which is a sum equal to half the wages that the employee would have earned in the remaining period of employment.

The probation period may be seen as the trial or test stage of employment of an employee by the employer.

“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.”[1]

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 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 month.

The general rule holds that when any employment relationship is subject to a probationary period, the length is of six (6) months or twelve months as explained in more detail below. However, this rule been elaborated through Act no. XX of 2022, to create a more proportional probationary period for those employee relationships which are of a fixed term nature.

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 (6) 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 that of six (6) months.

The law further holds that those workers 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.

The probationary period is suspended, or held in abeyance, where there is any two (2) weeks or more of approved leave. Overall, it is unlawful for an employer to dismiss a worker during this suspension of probation – hence the probation must be over before an employer legally dismisses a worker during probation.

During the probation period employment can be terminated by either party without assigning any reason, provided that at least one (1) week’s notice of termination is given by the terminating party to the other party where the employment relationship has exceeded one (1) month.

[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 Para.27