Dismissal and the rights and obligations of the respective parties are matters which are subject to very strict regulation under Maltese law.
The Employer may only terminate a contract of employment on the basis of:
- a good and sufficient cause – a term which has no statutory definition and which constitutes the interpretational basis for each case of unfair dismissal brought before the Industrial Tribunal.
- redundancy, or
- the employee reaching retirement age.
Where an employer intends to terminate the employment of an employee on grounds of redundancy, he is required to terminate the employment of that person who was engaged last in the class of employment affected by such redundancy (“Last In First Out”), provided that, where the employer and the last employed employee are related by consanguinity or affinity up to the third degree, the employer may, instead of terminating the employment of such person, terminate that of the person next in turn.
The employee, on the other hand, is free to terminate employment of employment of an indefinite term without assigning any reason.
Where the employer terminates an indefinite term contract of employment on grounds of redundancy or the employee terminates the same indefinite term contract of employment, the advance notice to be given by the terminating party to the other party is calculated according to the period for which the employee has been in the employment of the same employer continuously, which can be set out in the following table:
|>1 month < 6 months||1 week|
|>6 months < 2 years||2 weeks|
|>2 years < 4 years||4 weeks|
|>4 years < 7 years||8 weeks|
|> 7 years||add 1 week for each subsequent year up to a maximum of 12 weeks|
Longer notice periods may be agreed upon in the case of technical, administrative, executive or managerial posts due to the nature or responsibilities involved in such roles and the hand-over usually required in such cases.
By way of exception to what is set out above, in cases where employment is terminated for good and sufficient cause, the employer is not required to give advance notice of termination and/or pay the employee for any wages relating to such notice period or the unexpired period of a definite term agreed upon. Typically, the employer would be expected to provide a very compelling reason for the dismissal of any employee on this ground, particularly more so when the dismissal is not preceded by any verbal or written disciplinary warnings given by the employer to the employee over a period before the dismissal. Two written warnings given by the employer over a reasonable period of time prior to the final warning and contemporaneous dismissal should serve to demonstrate a degree of prudence on the part of the employer if such dismissal is challenged by the employee as unfair.
If both parties agree to the termination, it is possible to terminate the employment contract by mutual consent. The terms and conditions of the termination may be, and usually are, incorporated in a settlement agreement signed by both parties.