Termination
Termination during Probation
During probation of any contract, either the employee or the employer may wish to terminate the other party’s contract, and no reason by that party needs to be provided. The party terminating the contract will simply require to provide a one (1) week notice of termination to the other party, if the employee worked continuously with the employer for more than one (1) month.
Fixed Term Contracts
In fixed term contracts, the general rule is that once the defined period stipulated in the contract expires, the contract of employment of the employee automatically terminates.
Penalty for Abrupt Termination or Abandonment of the Contract
Should the employer terminate the fixed contract of employment of an employee before the expiration of the time defined in that contract, then the employer has the obligation to pay a penalty to the employee. This penalty is equal to one half (1/2) of the full wages that would have added up for the remained of the time of the definite contract. Full wages means the wage payable to the employee, and excludes remuneration for overtime, bonuses, allowances, remuneration in kind and commissions.
Similarly, should the employee abandon the service of his employer before the time specified in the fixed contract of employment, then the employee must pay this same penalty for the remainder of the time agreed upon in the contract.
Good and Sufficient Cause
The law also permits an employee to abandon their contract, or an employer to terminate the employment contract, if there is a good and sufficient cause for the dismissal or abandonment. If the good and sufficient reason is validly proven, the party terminating is not liable to pay any penalty to the other party.
The Act provides for no statutory definition of what a good and sufficient reason is, and thus constitutes the interpretational basis for each case of unfair dismissal brought before the Industrial Tribunal. However, legislation lists some examples of what is not considered a good and sufficient cause, such as:
- The employee forming part of a trade union or acting in the capacity of an employees’ representative;
- The employee no longer enjoying the employer’s confidence;
- The employee getting married;
- The employee being pregnant, or absent from work due to maternity leave;
- The employee disclosing any type of information to a designated public regulating body on alleged illegal or corrupt activities being carried out by the 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 workforce.
Redundancy
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 (thus implying the “Last In, First Out” rule). If 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 contract of the person next in turn.
Any employee whose employment is terminated due to redundancy has a right to re-employment if the post which he/she occupied is again made available within one (1) year from the termination date. Such employee must be re-employed at conditions not less favourable than those to which he would have been entitled if the contract of employment relating to him/her had not been terminated. Notwithstanding the short period of redundancy, the employee is deemed to have continued in his/her employment.
Moreover, the employee is free to terminate employment of employment of an indefinite term without assigning any reason, and irrespective to the contract of employment stating otherwise.
Notice Period in Indefinite Contracts
Where the employer terminates an indefinite term contract of employment on grounds of redundancy or the employee terminates the 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 month < 2 years
2 week
> 2 years < 4 years
4 week
> 4 years < 7 years
8 week
> 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. Notice periods begin to run from the next working day following the day on which notice is given to the other party.
In a case where one period of employment in an indefinite contract is less than six (6) months, but it is followed by another period of employment, in the same class, commencing within the next following six (6) months, from the last day of employment, these two periods are deemed to be one continuous period for the provision on redundancy.
In this scenario, the employer has the option to allow the employee to continue to perform work until notice expires, and pay him his/her normal wage, or else offer the employee garden leave to search for other work. At any time during the currency of the period of notice of the employee on garden leave, the employer will pay the employee a sum equal to the wages that would have been payable for the unexpired period of notice.
If either the employer or the employee, as the case may be, fails to provide notice to the other party, a penalty incurs. Whereas the failing employee is only liable to pay a sum equal to half the wages during that notice period, the employer who fails to provide notice is liable to pay the employee a sum equal to the full wages during that notice period.
Retirement Age
The employee attaining retirement or pension age is a final reason for the employment contract to be terminated, whether for a fixed term or else for an indefinite term contract The concept of retirement is tackled in the Social Security Act (Cap.318 of the Laws of Malta) which overall states that pension age is normally of sixty-five (65) years of age, but in the cases of
- a person born on or before the 31st of December 1951, pension age shall be sixty-one (61) years;
- a person born during the calendar years 1952 to 1955, pension age shall be sixty-two (62) years;
- a person born during the calendar years 1956 to 1958, pension age shall be sixty-three (63) years;
- a person born during the calendar years 1959 to 1961, pension age shall be sixty-four (64) years.
In this discussion, an employer may not terminate the employment of a female employee born on or before the 31st December 1951 before she reaches the age of sixty one (61) years.
Termination by Settlement
Lastly, 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.
Termination during Probation
Party terminating contract
Either the employer terminating or the employee abandoning the employment contract.
Fixed term contracts of Employment
No reason needs to be provided by one party to the other.
Party terminating to provide employee with a one (1) week notice if the employee worked continuously for more than one (1) month.
Indefinite term Contracts of employment
No reason needs to be provided by one party to the other.
Party terminating to provide employee with a one (1) week notice if the employee worked continuously for more than one (1) month.
Termination before expiration of time stipulated in the employment contract
Party terminating contract
Either the employer terminating or the employee abandoning the employment contract.
Fixed term contracts of Employment
Party terminating abruptly must pay penalty of ½ of the full wages for the remaining time of the contract, to the other party.
Indefinite term Contracts of employment
N/A
Good and sufficient cause
Party terminating contract
Either the employer terminating or the employee abandoning the employment contract.
Fixed term contracts of Employment
No definition of what constitutes a good and sufficient cause – case by case determination.
No requirement of notice to be given by either party.
If successful, no party incurs penalty and employee is dismissed.
If unsuccessful, party who terminated contract must pay fine.
Indefinite term Contracts of employment
No definition of what constitutes a good and sufficient cause – case by case determination.
No requirement of notice to be given by either party.
If successful, no party incurs penalty and employee is dismissed.
If unsuccessful, party who terminated contract must pay fine.
Redundancy
Party terminating contract
Employer terminating contract of employment.
Fixed term contracts of Employment
Apply the Last in, First Out rule, however the penalty of half the remaining term would need to be paid.
Employee has right to re-employment if the post which he/she occupied is again made available within one (1) year from the termination date
Indefinite term Contracts of employment
Apply the Last In, First Out rule;
Employee has right to re-employment if the post which he/she occupied is again made available within one (1) year from the termination date
Notice
Party terminating contract
Either the employer terminating or the employee abandoning the employment contract.
Fixed term contracts of Employment
The penalty of half the remaining term would need to be paid.
Indefinite term Contracts of employment
Notice Periods are calculated as per explanation above.
Employee can work notice or be given garden leave.
Employer failing to give notice is liable to pay employee sum equal to full wages of notice period.
Employee failing to give notice is liable to pay sum equal to ½ wages of notice period.
Retirement or Pension Age
Party terminating contract
Mutual knowledge of employee reaching retirement
Fixed term contracts of Employment
Generally 65 years, but subject to 4 age categories.
Indefinite term Contracts of employment
Generally 65 years, but subject to 4 age categories.
Termination by Settlement
Party terminating contract
Mutual agreement of both parties
Fixed term contracts of Employment
Settlement Agreement drawn up
Indefinite term Contracts of employment
Settlement Agreement drawn up
