Malta: Labour and Employment Comparative Guide

Last Updated: 24 September 2019
Article by Paul Gonzi
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1 Legal framework

1.1 Are there statutory sources of labour and employment law?

In Malta, employment in the private sector is primarily regulated in statute by the Employment and Industrial Relations Act (Chapter 452, Laws of Malta) and a series of 118 subsidiary regulations enacted pursuant to this act.

Several EU directives – such as those on posting of workers, transfer of business and collective redundancies – are transposed into the laws of Malta in the form of subsidiary law. Conversely, several EU regulations have direct effect as part of the laws of Malta and are relevant sources of employment law without the need for further transposition. These include EU Regulation 593/2008 and EU Regulation 1215/2012 on governing law and jurisdiction respectively, EU Regulations 883/2004 and 987/2009 on the coordination of social security systems and EU Regulation 2016/679 on data protection.

Other local statutory laws that are valid sources of labour and employment law include the comprehensive legislative frameworks regulating health and safety, equal treatment, disability and data protection.

The local Industrial Tribunal and courts are not bound by precedent. However, Maltese courts do generally tend to give weight to former judgments, particularly decisions delivered by the Court of Appeal and Constitutional Court. In fact, several important principles have been established over the years through decisions which continue to serve as worthy references – as is the case, for instance, when assessing the elements of a genuine redundancy or understanding the concept of constructive dismissal. On the other hand, certain aspects of employment remain shrouded in doubt in view of conflicting positions adopted by the judiciary over the years, as is the case with post-termination restrictions.

Conversely, judgments of the Court of Justice of the European Union (CJEU) which interpret EU regulations and EU directives are binding on local courts. Therefore, decisions of the CJEU are also an authoritative source of labour and employment law in Malta.

Rules on employment in the public sector and public service differ. Certain provisions in Chapter 452 and in the aforementioned subsidiary laws are given application to such sectors. However, other provisions (eg, those relating to dismissals and termination) are expressly excluded. Appointments and discipline of government employees in the public service are governed by the Public Service Commission (PSC), an independent constitutional body regulated by the Constitution of Malta and the Public Administration Act (Chapter 595 of the Laws of Malta) together with the Public Service Management Code, which regulates the conduct of public officers.

The PSC is empowered to issue regulations with the consent of the prime minister. Currently, there are three such regulations:

  • the PSC General Regulations, which govern the PSC's internal proceedings;
  • the PSC Appointments Regulations, which regulate appointments in the public service; and
  • the Disciplinary Procedure in the PSC Regulations, which regulate discipline in the public service.

Chapter 595 also establishes the function of the principal permanent secretary, having the authority to issue binding directives and non-binding guidelines applicable to state employees. The conditions of employment and rights and remedies applicable to state employees differ from those in the private sector.

1.2 Is there a contractual system that operates in parallel, or in addition to, the statutory sources?

The employment relationship in Malta assumes the existence of an agreement – written or oral – for the provision of services by an individual under the control and direction of an employer. Therefore, in Malta, there is a contractual system that operates in parallel to statutory sources.

Even though there is no express obligation for an employer and employee to sign a written contract of employment (this is without prejudice to the obligation of the employer to provide information in writing to the employee), the standard practice is that written contracts of employment are indeed signed between an employer and employee. Chapter 452 regulates the types of contracts that may be entered into, be it for an indefinite time, for a fixed period or for completion of a project. Each type of contract must satisfy certain conditions and is subject to different rules – mainly in relation to the mode of termination and the consequence of termination.

Maltese law also recognises and regulates collective agreements negotiated between unions representing employees and employers and which are deemed to establish the conditions of employment for the employees to whom they apply.

The contractual relationships arising in terms of an employment contract or collective agreement are governed by the general principles of contract law found in the Civil Code (Chapter 16), subject to any special rules contained in Chapter 452 and the subsidiary legislation enacted thereunder, such being the lex specialis.

Of key note is that under Maltese law, if an employment contract or a collective agreement provides for any conditions of employment, including conditions relating to the termination of the contract, which are less favourable to the employee than those specified at law, those less favourable conditions shall be deemed to be ineffective, allowing for the more beneficial conditions at law to prevail. This is an exception to the general principles of Maltese contract law whereby, generally, a contract between the parties is deemed to be the law (lex contractu).

1.3 Are employment contracts commonly used at all levels? If so, what types of contracts are used and how are they created? Must they be in writing must they include specific information? Are implied clauses allowed?

Employment contracts are commonly used at all levels. The details will typically vary, depending on the grade and nature of employment and on the nature of the industry in which the employer operates.

Contract type can vary. Typical contracts will be either for an indefinite term or for a fixed term, and full time or part time (or full time with reduced hours). The use of casual contracts (whereby an employee is engaged to work on demand) is increasing and new legislation is likely to be enacted to regulate these forms of contracts in view of the new EU Directive 2019/1152 on transparent and predictable working conditions adopted by the European Council on 14 June 2019.

For each contract type, different rules will apply – mainly in relation to the duration of employment, the conditions that must be satisfied to terminate such a contract and the consequences of termination. Specific legislation exists to regulate the conditions and limitations of use of fixed-term contracts (and their potential automatic conversion into an indefinite term contract), and the use of part-time employment.

Employment contracts need not necessarily be in writing. However, where no written contract is signed, a private sector employer must provide the employee with some minimum information in accordance with the Information to Employees Regulations (SL 452.83). A contract must also, at a minimum, contain details such as:

  • the date of commencement of employment;
  • the period of probation;
  • the normal rates of wages payable;
  • the overtime rates of wages payable;
  • the normal hours of work;
  • the periodicity of wage payments;
  • in the case of a fixed or definite contract of employment, the expected or agreed duration of the contract;
  • the paid holidays, and the vacation leave, sick leave and other leave to which the employee is entitled;
  • the conditions under which fines may be imposed by the employer;
  • the title, grade, nature or category of work for which the employee is employed;
  • any notice periods to be observed by the employer and the employee;
  • the collective agreement, if any, governing the employee's conditions of work; and
  • any other relevant or applicable condition of employment.

Additional rules apply if the employee is employed to work abroad or is an outworker.

These regulations, and the information which employers must give to employees, will be amended in the near future in view of the aforementioned new EU directive.

Of particular relevance is that Chapter 452 of the Laws of Malta includes a provision intended to ascertain a minimum level of protection for employees. In summary, if any contract (including a collective agreement) provides for any conditions of employment (including conditions relating to the termination of the contract) which are less favourable to the employee than those specified in the law, such conditions shall be deemed substituted by the minimum employment conditions provided at law. This is a special derogation from the general civil law principle that a contract is deemed to be the law between the parties.

Maltese law does not expressly regulate implied clauses in employment contracts. However, certain obligations are deemed to arise by implication, such as the obligation of an employee to act in the best interest of the employer – an implied obligation which has often been upheld by the Industrial Tribunal and courts despite the lack of any stipulated term.

Maltese law also caters for temporary agency worker arrangements, regulated by the Temporary Agency Workers Regulations (SL 452.106). This means that a worker who has entered into a contract of employment or an employment relationship with a temporary work agency will be assigned, whether on a regular or an irregular basis, to a user undertaking to work temporarily under its supervision and direction. Specific rules apply to this type of arrangement seeking to protect the worker during an assignment. No employment relationship is created with the user undertaking. Rather, even during an assignment, the worker remains an employee of the temporary agency – this being any natural or legal person that enters into contracts of employment or employment relationships with temporary agency workers and that assigns, whether on a regular or irregular basis, temporary agency workers to user undertakings to work there temporarily under their supervision and direction, whether or not such activity is the main or ancillary activity of the temporary work agency.

2 Employment rights and representations

2.1 What, if any, are the rights to parental leave, at either a national or local level?

The minimum parental leave entitlement for private and public sector employees is currently regulated by the Parental Leave Entitlement Regulations (SL 452.78), which is in addition to the entitlements to urgent family leave, maternity leave, paternity leave, adoption leave and IVF leave.

It is expected that these regulations will be amended in view of the new EU directive on work-life balance for parents and carers, adopted by the European Council on 13 June 2019. Member states have three years to transpose this directive into local legislation from the date of its entry into force. It envisages that an individual will have a right to four months of parental leave, of which two months are non-transferable between the parents and are to be paid. The level of payment and the age limit of the child are yet to be established, as the directive leaves this as a matter to be determined by EU member states. (The new directive also aims to introduce a minimum of 10 working days of paternity leave, a new form of carers' leave and an extended right for employees and carers to request flexible working arrangements.)

2.2 How long does it last and what benefits are given during this time?

Currently, subject to certain procedural requirements, in the private sector both male and female workers have the individual right to be granted unpaid parental leave in case of birth, adoption, fostering or legal custody of a child, to enable them to take care of that child for a period of four months until the child has reached the age of eight years.

Parental leave can be availed of in established periods of one month each. An employee must have at least 12 months' continuous service with the employer to be eligible to apply for parental leave, unless a shorter period is agreed to.

Unless otherwise prescribed in a collective agreement, the employer with the employee may decide whether to grant the parental leave on a full-time or part-time basis, in a piecemeal way or in the form of a time credit system. If the parental leave is not availed of or there is still an existing balance of parental leave, an employee shall remain entitled to such leave even if there is a change in employer or in the employment of the employee.

During parental leave, the employee remains entitled to all rights and benefits which may accrue to other employees of the same class or category of employment at that same place of work, including to apply for promotions.

An employee who exercises the right to avail of parental leave shall be entitled to return to the same job occupied prior to the granting of parental leave or, where this is no longer possible for any valid reason, to an equivalent or similar job consistent with the original contract of employment of the employee. On return, the employee may request changes to his or her working hours and patterns for a specific period; the employer is bound to consider and respond to such requests, taking into account both its needs and the employee's needs.

Notice of termination of employment may be given during parental leave; however, the reason for termination cannot be that the employee applied for, or enjoyed, parental leave.

2.3 Are trade unions recognised and what rights do they have?

Trade unions are regulated in Malta and will enjoy a certain degree of protection from liability during the course of their legitimate activities, mainly when acting in contemplation or furtherance of a trade dispute. The responsibilities, privileges and obligation of the unions are regulated in the Employment and Industrial Relations Act (Cap 452). This provides for exceptions to industrial disputes in relation to certain industries which are considered to be essential services.

The act also provides for the safeguarding of employees when they follow the directives of a union in contemplation or furtherance of a trade dispute. All employees have the option to be represented at work by a workers' union, this being recognised as a fundamental human right in terms of the Constitution of Malta.

The formation of trade unions is regulated by law, as is the process for an employer to recognise a union to bargain conditions on behalf of employees. Typically, only employers with large workforces and parastatal companies have a strong union or employee representative presence. Recognition of unions in the public and private sector is regulated by the Recognition of Trade Unions Regulations (SL 452.112).

Where there exists no recognised union within a place of work, the law grants rights to employee representatives elected from among the employees. In certain instances, the law provides that employee representatives are entitled to receive information and to be consulted by the employer. Employee representatives and unions do not (unless expressly provided for in an agreement with them) enjoy any voting or decision-making rights.

2.4 How are data protection rules applied in the workforce and how does this affect employees' privacy rights?

Data protection in Malta is regulated primarily by the EU General Data Protection Regulation (GDPR), together with the Data Protection Act (Chapter 586) and subsidiary legislation enacted thereunder. These are to be read with the Constitution of Malta, which recognises the fundamental right to privacy.

As a rule, employees enjoy a degree of privacy in the workplace and may apply for the various rights provided in the GDPR (eg, the rights to information, access, rectification and deletion). Such rights are conditional on the satisfaction of certain criteria and subject to certain derogations. In fact, employers are likely to be able to process personal data of their employees (including a degree of monitoring), in that data protection law recognises that personal data may have to be processed on several grounds, including in the case of performance of a contract, if required by law or if there is a legitimate interest that is not overridden by the rights of others. It is necessary to demonstrate compliance, which requires the ability to prove that:

  • there is a fair and proportionate balance of rights;
  • the processing is necessary to achieve legitimate purpose/s; and
  • it is all done transparently.

Data protection law is a complex and subjective area of law which employers must grapple with. Awareness of employee rights in the privacy context is on the increase and is likely to become a more relevant subject in disputes between employers and employees.

Other than such general laws, there are no employment-specific regulations which expressly regulate the processing of personal data in the employment context and/or which affect the privacy rights of employees.

2.5 Are contingent worker arrangements specifically regulated?

The engagement of contingent workers (eg, freelancers, independent contractors and consultants) is permissible and as such is not regulated, except for the general rules of contract law, tort and commercial law.

That said, the Employment Status National Standard Order (SL 452.108) is intended to regulate against abuse by bogus self-employment. The order provides that when an individual is engaged to provide services, if five out of eight defined conditions are satisfied, then the relationship between the client and the individual shall be deemed to be an employment relationship, notwithstanding any statement to the contrary.

Individuals may be afforded protection under the Employment and Industrial Relations Act if at least five of the following conditions are satisfied:

  • The individual depends on one party for which work is performed for at least 75% of his or her income over a one-year period.
  • The individual depends on such party to determine what work is to be done and how it should be carried out.
  • The individual performs the work using equipment, tools and machinery provided by such party.
  • The individual is subject to a working time schedule or minimum work periods established by such party.
  • The individual cannot sub-contract his or her work to other individuals or substitute himself or herself when carrying out the work.
  • The individual is integrated in the structure of the production process, the work organisation or the company's or other organisation's hierarchy.
  • The individual's activity is a core element in the organisation and pursuit of the objectives of such party.
  • The individual carries out similar tasks to existing employees or to those formerly undertaken by employees.

The order may have far-reaching implications, since the employer is obliged to grant such an employee the same wages as are paid to comparable employees or, if there are no such employees, the same wage which that employee received when self-employed. The employer will be obliged to grant the same conditions of employment enjoyed by comparable employees or, if there are no such employees, the applicable minimum conditions of employment. Where five conditions appear to be satisfied in practice, there is little one can do to escape the automatic presumption at law that an indefinite employment contract exists, irrespective of any declaration to the contrary.

The rules contained in the Employment Status National Standard Order do not apply to persons who provide services to the public service or public sector. However, such persons may be entitled to compensation in terms of this order if they prove to the Industrial Tribunal that, had it not been for the inapplicability of these rules to the public service or public sector, their relationship would have been one of employment due to five of the conditions being satisfied.

3 Employment benefits

3.1 Is there a national minimum wage that must be adhered to?

In Malta, there is a national minimum wage which must be adhered to, unless an industry-specific wage regulation order provides for a more favourable minimum wage.

For employees aged 18 and over, the weekly minimum wage is €175.84. The minimum wage is typically adjusted annually to reflect the cost of living. A part-time employee will be entitled to part of the cost of living increase in proportion to the hours worked. In 2019 the cost-of-living adjustment per week for full-time employees was €2.33, topped up by an additional €1 supplement.

Employers are also bound to pay statutory allowances and government bonuses twice yearly. The statutory allowance is payable every six months at the rate of €121.16 (payable end of March) and €121.16 (payable end of September). The statutory bonus is payable every six months at the rate of €135.10 (payable end of June) and €135.10 (payable from 15 to 23 December).

Employers must also take into account obligations under the tax and social security laws, and are generally obliged to deduct and remit income tax and to pay employer and employee social security contributions.

The rules on wages for public service and public sector employees differ.

3.2 Is there an entitlement to payment for overtime?

Certain industries in Malta are regulated by sector-specific wage regulation orders, which mandate the payment of overtime rates – for instance, where work is carried out on weekends or public holidays, or where a stipulated threshold of hours is exceeded over a specified period. Such entitlement is also likely to arise when there is a collective agreement regulating the conditions of employment at a workplace.

Employees whose overtime rate is not covered by a wage regulation order are covered by the Overtime Regulations (SL 452.110), which stipulate a rate of one and a half times the normal rate for work carried out in excess of a 40-hour week, averaged over a four-week period or over the shift cycle at the discretion of the employer.

In Malta, there is also a generally applied practice whereby the employer and employee may agree to a consolidated wage which covers payment for all hours of work, including overtime hours. Discussion remains as to whether this practice is permissible in light of the Overtime Regulations, which at face value do not expressly permit the use of consolidated wages. However, the practice remains common, particularly in relation to senior grade employees and C-level executives, whose wages exceed double the minimum wage. Any such agreements must be drafted with attention, to ensure compliance with the rules on provision of information to employees.

The rules on overtime for public service and public sector employees differ.

3.3 Is there an entitlement to annual leave? If so, what is the minimum that employees are entitled to receive?

As from 1 January 2019, employees working 40 hours per week are entitled to a total of 208 hours of paid annual leave (26 days). This minimum standard applies to both private and public sector employees.

This is calculated on the basis of a 40-hour working week and an eight-hour working day, so that if the average normal hours (excluding overtime) calculated over a period of 17 weeks is below or exceeds 40 hours per week, the entitlement in hours should be adjusted accordingly.

Part-time employees are entitled to paid vacation leave calculated on a pro rata basis. The entitlement is also calculated proportionally for employees who have not completed a full year of service.

The Organisation of Working Time Regulations (SL 452.87) establish the minimum leave entitlement and the rules relating to the carrying forward of leave and payments in lieu. The more recently enacted Annual Leave National Standard Order (SL 452.115) establishes further conditions relating to the application and authorisation of leave, limitations on forced leave and accrual of leave during sickness, injury or maternity leave.

3.4 Is there a requirement to provide sick leave? If so, what is the minimum that employees are entitled to receive?

Paid sick leave entitlement varies substantially, depending on whether a wage regulation order regulates the specific industry sector or whether a collective agreement is agreed between the union and the employer.

Where a sector is not regulated by any wage regulation order or collective agreement, the paid sick leave entitlement amounts to two working weeks per year (calculated in hours), as stipulated by the Minimum Special Leave Entitlement Regulations (SL 452.101) This sick leave entitlement is to be calculated on the basis of a 40-hour working week and an eight-hour working day.

‘Sick leave' is defined as leave granted to an employee who presents a medical certificate certifying incapacity for work. Payment on sick leave is an amount equal to the sum set for sickness benefit entitlement at the rate established under the Social Security Act, if applicable (although the first three days of sickness absence must be paid in full by the employer).

Part-time employees are entitled to paid sick leave calculated on a pro rata basis. The entitlement is also calculated proportionally for employees who have not completed a full year of service.

Unless otherwise provided in an applicable collective agreement, an employee who has been absent from work on sick leave must present a medical certificate issued by a registered medical practitioner attesting to the employee's incapacity for work during any such period of absence. Such medical certificate must be presented to the employer on the day of return to work or, if the period of absence is longer than seven days, within seven days of the onset of sick leave absence. The employer has the right, if it deems fit, to send a medical practitioner to visit and examine an employee who is on sick leave.

Sick leave entitlement in the public service sector is regulated by the Public Service Management Code.

3.5 Is there a statutory retirement age? If so, what is it?

The current retirement age is 62. However, the pensionable age varies:

  • For those born between 1952 and 1955, the pensionable age is 62;
  • For those born between 1956 and 1958, the pensionable age is 63;
  • For those born between 1959 and 1961, the pensionable age is 64; and
  • For those born on or after 1 January 1962, the pensionable age is 65.

Currently, an employer can terminate the employment of an employee when the employee reaches pensionable age without having to give prior notice or have any other valid cause.

4 Discrimination and harassment

4.1 What actions are classified as unlawfully discriminatory?

In Malta, various laws regulate equal treatment and thus classify potential unlawful discriminatory actions. In the employment context, the more far-reaching legislative provisions are those contemplated by the Employment and Industrial Relations Act, Chapter 452 of the Laws of Malta.

The Employment and Industrial Relations Act defines ‘discriminatory treatment' as any distinction, exclusion or restriction which is not justifiable in a democratic society. This includes, but is not limited to, discrimination on the basis of marital status, pregnancy or potential pregnancy, sex, colour, disability, religious conviction, political opinion or membership of a trade union or in an employers' association. The act protects employees from dismissals which – albeit made on prima facie legitimate grounds, such as redundancy, or for good and sufficient cause – would be discriminatory. It includes a comprehensive article which prohibits discriminatory treatment throughout the employment lifecycle: during any advertising or offering of employment, during the selection process, during employment regarding conditions of employment and on dismissal.

The act clarifies that discriminatory treatment includes:

  • the hiring or selection of a person who is less qualified than a person of the opposite sex, unless the employer can prove that the action was based on acceptable grounds relating to the nature of the work or on grounds relating to previous work performance and experience;
  • actions which apply to an employee, terms of payment or employment conditions that are less favourable than those applied to an employee undertaking the same work or work of equal value, based on discriminatory treatment; and
  • actions whereby the employer knowingly manages the work, distributes tasks or otherwise arranges the working conditions so that an employee is assigned a clearly less favourable status than others based on discriminatory treatment.

The act recognises that in certain instances, preferences or exclusions may be permitted where they are reasonably justified considering the nature of the vacancy to be filled or the employment offered, where a required characteristic constitutes a genuine and determining occupational requirement or where required by law.

Equal treatment in employment is further regulated at length by the Equal Treatment in Employment Regulations (SL 452.95), which give effect to the relevant provisions of EU Directives 76/207/EEC, 2000/78/EC, 2000/43/EC, 2002/73/EC and 2006/54/EC. These too have far-reaching implications relevant to the employment lifecycle. These regulations also refer to the Equal Opportunities (Persons with Disabilities) Act (Chapter 413, Laws of Malta) which introduce rules against discrimination of persons with disability and which mandate accommodation of persons with disabilities.

SL 452.95 imposes prohibitions against discriminatory treatment, including harassment and sexual harassment, whether direct or indirect, on the grounds of religion or religious belief, disability, age, sex, sexual orientation, and racial or ethnic origin. Indirect discriminatory treatment is taken to occur where an apparently neutral provision, criterion or practice would put persons of a particular race or ethnic origin or having a particular religion or religious belief, disability, age, sex, or sexual orientation at a disadvantage when compared with other persons, unless objective justification apply.

Other laws that protect employees against unlawful discriminatory treatment include the Equality for Men and Women Act (Chapter 586, Laws of Malta), which focuses on discrimination based on sex, family responsibilities, sexual orientation, age, religion or belief, racial or ethnic origin, or gender identity, gender expression or sex characteristics. It also covers the treatment of a person in a less favourable manner than another person is being, has been or would be treated on these grounds. In general terms, the scope of this act includes direct and indirect discrimination in the workplace at all stages of employment, including advertising for recruitment, the recruitment process itself, who is offered employment, the terms on which employment are offered, the way work tasks are divided, salary and benefits, training opportunities, promotions and dismissal. ‘Discrimination' is defined in Chapter 456 as:

  • directly or indirectly treating men or women less favourably on the basis of sex, family responsibilities, sexual orientation, age, religion or belief, racial or ethnic origin, or gender identity;
  • treating a woman less favourably for reasons of actual or potential pregnancy or childbirth;
  • treating men and women less favourably on the basis of parenthood, family responsibility or for some other reason relating to sex, sexual orientation, age, religion or belief, racial or ethnic origin, or gender identity; and
  • implementing provisions, criteria or practices which would put persons at a particular disadvantage compared with persons of another sex (or the same sex), sexual orientation, age, religion or belief, racial or ethnic origin, or gender identity, gender expression or sex characteristic, unless that provision, criterion or practice is appropriate and necessary and can be justified by objective factors unrelated to sex.

It is expected that in 2019 a new Equality Act (currently in bill form) will be enacted with the aim of further prohibiting discrimination and promoting equality in various spheres of life, including in the employment context. Once enacted, this act will serve to repeal (and replace) the Equality for Men and Women Act and all subsidiary legislation promulgated thereunder. The act will seek to protect against discrimination, direct or indirect, of the following pre-defined protected characteristics: age; belief, creed or religion; colour, ethnic or national origin, or race; disability; family responsibilities or pregnancy; family or civil status; gender expression or gender identity; genetic features; health status; language; nationality; political opinion; property; sex or sex characteristics; sexual orientation; and social origin.

The act will introduce new rules against harassment, sexual harassment, victimisation and use of words to stir up hatred. Breach of the act may constitute a criminal offence punishable in terms of the Criminal Code (Chapter 9, Laws of Malta). Liability may also arise for any person who aids, abets or instigates the discrimination. Discrimination in employment will be defined to include less favourable treatment in relation to the following:

  • access to employment;
  • assessment of work applications;
  • conduct of interviews, including asking job seekers about their private life or family plans;
  • determination of selection criteria;
  • recruitment conditions;
  • provision of promotions;
  • granting of access to vocational guidance or training, including practical work experience;
  • conditions of employment;
  • pay;
  • management of work, including distribution of tasks;
  • membership of, and involvement in, any association of employees and employers, or any association whose members carry on a particular profession, including the benefits provided for by such associations;
  • redundancy; and
  • dismissal.

The prohibition of discrimination in employment shall apply to all types of employees, at all levels of the professional hierarchy, including job applicants, trainees, temporary workers and self-employed workers.

The bill envisages the introduction of a right to information from an employer (and from employment agencies). Prior to an interview, prospective employers must provide job applicants with adequate information on the selection criteria to be examined. A job applicant who is rejected shall have the right to request and receive from the prospective employer information in writing regarding the criteria on which the applicant was rejected.

Furthermore, an employee who is denied access to promotion or training opportunities shall have the right to request and receive from the employer information in writing regarding the criteria on which the employee was rejected.

As regards the principle of equal pay for equal work, the bill envisages that employees in the same class of employment are entitled to the same rate of pay for work of equal value (similar to the principle already established under Chapter 452). Employers may agree (with a worker or a union) on different salary scales, annual increments and other conditions of employment that are different for workers who are employed at different times, where such salary scales have a maximum that may be achieved within a specified period of time, as a result of negotiations for a collective agreement.

The bill emphasises the duty of employers:

  • to take, within their capacity, effective measures to prevent all forms of discrimination;
  • to inform employees of the protections established by this new law;
  • to adopt preventive measures, which must be fully implemented and monitored effectively; and
  • to ensure that remedial measures are in place if discrimination takes place.

Lastly, any person who alleges that any other person, association, organisation or legal entity has committed, with regard to that person, any act which is deemed to be unlawful under this new law may, by application filed before the Civil Court, request the court to order the defendant to desist from such unlawful acts or to order the payment of damages (including dissuasive and proportionate non-pecuniary damages up to €10,000) suffered as a direct result of such unlawful acts.

The bill (read in conjunction with another bill) envisages the creation of a new Human Rights and Equality Commission, with the power to request a newly established Equality Board to investigate complaints. Any action instituted before the court or the commission must be filed within two years of when the alleged unlawful act occurred or became known to the victim; or, if the alleged unlawful act is of a continuous nature, from when the act stopped occurring or stopped having a discriminatory effect on the victim, whichever is the earlier. It shall suffice for the plaintiff to establish before the court or before the board those facts from which it may be reasonably presumed that the alleged victim has been discriminated against on the basis of one or more of the protected characteristics. It will then be incumbent on the defendant to prove that there has been no breach of the principle of equal treatment, or that such less favourable treatment was justified in accordance with the provisions of this new act. The court or the board shall uphold the complaint if the defendant fails to prove that the unlawful act was not committed.

4.2 Are there specified groups or classifications entitled to protection?

Maltese law does protect specific groups or classifications; however, protection against unlawful discrimination is not constrained to those specific groups only.

Specific subsidiary legislation gives rise to additional protection for groups such as:

  • pregnant employees and employees who have given birth;
  • parents;
  • persons seeking medically assisted procreation;
  • adoptive parents;
  • temporary agency workers;
  • posted workers;
  • part-time employees; and
  • employees on reduced hours.

4.3 What protections are employed against discrimination in the workforce?

Aside from the protection already described herein, SL 452.95 expressly provides for the duty of the employer to take effective measures to prevent all forms of discrimination on the grounds of sex – in particular, harassment and sexual harassment in the workplace, in access to employment, in vocational training and in promotion.

Furthermore, any provisions contrary to the principle of equal treatment in any law, individual or collective contracts or agreements, internal rules of undertakings or rules governing any registered organisation in terms of the act will be considered null and void in terms of these regulations.

4.4 How is a discrimination claim processed?

Chapter 452 of the Laws of Malta provides that any person who alleges that the employer is in breach of (or that the conditions of employment are in breach of) the rules on discrimination may, within four months of the alleged breach, lodge a complaint with the Industrial Tribunal. The Industrial Tribunal shall hear such complaint and carry out any investigations as it deems fit. The Industrial Tribunal will be composed of one chairperson alone, who must be an advocate with at least seven years' experience.

The act also provides that an employer who contravenes or fails to comply with any provision of the act or any regulations made thereunder shall, on conviction, be liable to a fine of not less than €232.94 and not exceeding €2,329.37. Therefore, discrimination claims may give rise to criminal prosecution, which may be directed against anyone who, at the time the offence was committed, was a director, manager, secretary or other similar officer of such partnership, company, association or other body of persons, or was purporting to act in any such capacity. Such person in turn, shall be deemed to be guilty of that offence unless he or she proves that the offence was committed without his or her knowledge, and that he exercised all due diligence to prevent the commission of the offence. Proceedings for an offence may be commenced at any time within one year of the commission of the offence.

Action taken by a complainant in accordance with the act is without prejudice to any further action that such complainant may be entitled to take under any other applicable law, and shall also be without prejudice to any other action to which the respondent may be subject in accordance with any other applicable law.

In terms of claims made under SL 452.95, the person making the allegation of a breach has the right to send written notification to the employer, giving any relevant details and requesting a reply. The respondent must submit a written reply within 10 working days of receipt of such notification, giving its version of events and any grounds for disputing the allegations, as well an explanation of any relevant procedures adopted to prevent discriminatory treatment. SL 452.95 also allows for complaints to be filed before the Industrial Tribunal in terms of Chapter 452 (claims must be filed within four months of the alleged breach), and may concurrently file a claim before the civil courts requesting that the defendant desist from such unlawful act and, where applicable, order payment of compensation for damage suffered.

Employees may also have options for redress if there is a breach in terms of Chapter 456. Victims of unlawful acts defined under this law have a right to complain to the commissioner for the promotion of equality, who has the power to investigate and who, upon finding that a complaint is proved, may file a report with the commissioner of police for criminal action to commence.

The claimant also enjoys a right of action before the competent court of civil jurisdiction, to request it to order the defendant to desist from such unlawful acts and, where applicable, order payment of compensation for such damage suffered. For the purposes of these proceedings, it will suffice for the claimant to establish facts from which it may be presumed that he or she has been treated less favourably – directly or indirectly – on the basis of sex or because of family responsibilities. It will then be incumbent on the defendant or on the person against whom such proceedings are brought to prove that there has been no breach of the principle of equal treatment, or that such less favourable treatment was justified in accordance with the provisions of the act. The court must uphold the complaint if the defendant fails to prove that no illegal act has been committed.

4.5 What remedies are available?

If the Industrial Tribunal is satisfied that the complaint is justified, it may impose such measures as it may deem fit, including the cancellation of any discriminatory clause in a contract or in a collective agreement, and payment of compensation for loss or damage sustained by the aggrieved party as a consequence of the breach.

4.6 What protections and remedies are available against harassment, bullying and retaliation/victimisation?

Chapter 452 expressly provides that it is unlawful for an employer or employee to harass another employee or the employer by subjecting such person to any unwelcome act, request or conduct. This includes spoken words, gestures and the production, display or circulation of written words, pictures or other material which, in respect of that person, is based on sexual discrimination and which could reasonably be regarded as offensive, humiliating or intimidating to such person. The act gives examples of unlawful sexual harassment.

Chapter 452 also provides that it is not lawful to victimise any person for:

  • making a complaint to the relevant authorities;
  • initiating or participating in proceedings for redress on grounds of alleged breach of the act; or
  • disclosing information – confidential or otherwise – to a designated public regulatory body regarding alleged illegal or corrupt activities being committed by his or her employer, or by persons acting in the employer's name and interests.

Chapter 452 provides that any person who contravenes the provisions against victimisation and harassment shall be guilty of an offence, and shall be liable on conviction to imprisonment for between six months and two years, a fine of not between €5,000 and €10,000 or both. Breaches of SL 452.95 may give rise to fines not exceeding €2,329.37, imprisonment for up to six months or both.

In terms of Chapter 456, harassment and sexual harassment are also deemed to constitute discrimination, and a person's rejection or submission to harassment or sexual harassment may not be used as a basis for any decisions affecting that person. ‘Harassment' is defined as "unwanted conduct related to the sex of a person occurs with the purpose or effect of violating the dignity of a person and of creating an intimidating, hostile, degrading, humiliating or offensive environment". ‘Sexual harassment' is defined as "any form of unwanted physical, verbal, non-verbal or physical conduct of a sexual nature occurs, with the purpose or effect of violating the dignity of a person, in particular when creating an intimidating, hostile, degrading, humiliating or offensive environment".

It is unlawful for any person to sexually harass other persons by:

  • subjecting them to an act of physical intimacy;
  • requesting sexual favours from them;
  • subjecting them to any act or conduct with sexual connotations, including spoken words, gestures, or the production, display or circulation of any written words, pictures or other material which are unwelcome to them and can be reasonably regarded as offensive, humiliating or intimidating; or
  • treating them less favourably because of their rejection or submission to a sexual request.

If a person is victimised for making a complaint or initiating or participating in proceedings for redress to the relevant authorities, discrimination is also considered to have occurred.

Chapter 456 provides that any person who sexually harasses another person shall be guilty of an offence and, without prejudice to any greater liability at law, will be liable on conviction to a fine of up to twice €2,329.37, imprisonment for up to six months or both. Liability also arises for other contraventions of the act.

5 Dismissals and terminations

5.1 Must a valid reason be given to lawfully terminate an employment contract?

Indefinite and fixed-term employment contracts may be terminated by either party if there is ‘good and sufficient cause'. This term is not defined, but the law gives several examples of what does not constitute good and sufficient cause (eg, union membership, pregnancy or maternity leave, whistleblowing or the commencement of proceedings against the employer for breach of employment rights).

Employees are protected from termination by the employer during any period of incapacity for work caused by personal injury from an accident arising out of and in the course of employment, or by any of the occupational diseases specified in the Social Security Act, for a maximum period of 12 months. Similarly, an employee may not be dismissed while on maternity leave, and in the five weeks thereafter if she is incapable of working due to a pathological condition arising from pregnancy.

For both definite and indefinite contracts, the law imposes a probationary period, which the parties may contract out of. As a rule, during the probationary period the employment may be terminated at will by either party without any reason. One week's prior notice of termination must be given if an employee has been in the employment of the same employer for a continuous period of more than one month. Special rules apply to employees who are pregnant or on maternity leave.

After the expiry of the probationary period, in the absence of good and sufficient cause, the employer may terminate the employment of the employee only in the event of redundancy. This term is not defined at law, and over the years there have been conflicting interpretations by the local tribunals and courts. The prevailing position is that a genuine redundancy is one where the employee's job is abolished because it has become superfluous to the employer. On the other hand, the employee may terminate an indefinite-term contract by resigning at any time. In case of termination by the employer for redundancy and in case of the employee's resignation, prior notice must be given.

As regards fixed-term contracts, if the terminating party does not have good and sufficient cause, early termination of the contract will give rise to a statutory obligation to pay the other party a sum equal to one-half of the full wages that would have accrued to the employee in respect of the unexpired period of the contract.

Under Maltese law, an employer is also entitled to terminate employment once the employee reaches pensionable age, as defined in the Social Security Act (Chapter 318, Laws of Malta)

Different rules on termination apply to public service employees.

5.2 Is a minimum notice period required?

In case of termination of an indefinite-term contract, either by the employer for redundancy or by the employee through resignation, the terminating party must give prior notice to the other party. The minimum statutory notice period is based on the length of continuous employment with the employer:

  • For employees who have been employed for between one and six months, the notice period is one week;
  • For employees who have been employed for between six months and two years, the notice period is two weeks;
  • For employees who have been employed for between two and four years, the notice period is four weeks;
  • For employees who have been employed for between four and seven years, the notice period is eight weeks; and
  • Thereafter, an additional week must be added for every subsequent year of service or part thereof, up to a maximum of 12 weeks.

The parties may agree to longer notice periods in the case of employees in technical, administrative, executive or managerial posts.

If an employee under an indefinite-term contract fails to give notice, he or she will be liable to pay the employer a sum equal to half the wages that would have been payable in respect of the notice period. If the employer fails to give notice in case of redundancy, it will be liable to pay the employer a sum equal to the wages that would have been payable in respect of the notice period.

Different rules on notice and termination apply to public service employees.

5.3 What rights do employees have when arguing unfair dismissal?

For the purposes of Maltese law, ‘unfair dismissal' is a termination by the employer:

  • of an indefinite-term contract (other than during the probationary period) which is not effected solely on the grounds of redundancy or for good and sufficient cause, in accordance with the law on termination;
  • which is made in contravention of the provisions of the law that protect employees who carry out acts in contemplation or furtherance of a trade dispute and in pursuance of a directive issued by a trade union, whether he or she belongs to it or not; or
  • which, though made on the grounds of redundancy or for good and sufficient cause, is discriminatory.

Although ‘constructive dismissal' is not referred to in Maltese law, the concept has been adopted by the Industrial Tribunal and the courts. Briefly, constructive dismissal is a form of dismissal whereby an employer has committed a serious breach of contract, entitling the employee to resign in response to its conduct. As a result, the employee is entitled to treat himself or herself as having been ‘constructively dismissed' by the employer, and the employers conduct is seen as a ‘repudiatory breach'

An employee has four months in which to file a complaint before the Industrial Tribunal, which has exclusive jurisdiction to determine matters relating to unfair dismissal. However, this does not mean that an employee may not also file complaints with other competent authorities if a related matter falls outside the scope of the unfair dismissal claim.

The Industrial Tribunal may award compensation in case of unfair dismissal, and in limited cases may also order reinstatement. In determining the amount of compensation, the tribunal will consider the real damages and losses incurred by the worker who was unjustly dismissed, as well as other circumstances, including his or her age and skills, as this may affect his or her employment potential.

Both parties have the right to be represented during the proceedings and to present evidence and witnesses. A decision of the tribunal may be appealed on a point of law only.

Different rules apply to public service employees.

5.4 What rights, if any, are there to statutory severance pay?

For indefinite-term contracts, if notice was due to be given by the employer in the event of redundancy, the employee has a right to work that notice, or may choose not to work all or a part of it. In the latter case, the employer must pay the employee a sum equal to half the wages that would have been payable in respect of the unexpired period of notice. If the employer fails to give notice, it will be liable to pay the employee a sum equal to the wages that would have been payable in respect of the notice period.

No additional statutory severance pay applies.

6 Employment tribunals

6.1 How are employment-related complaints dealt with?

Depending on the nature of their claim, employees may raise complaints with various competent authorities. For instance, complaints regarding unlawful deductions from wages or fines imposed on employees may be raised with the Department of Employment and Industrial Relations. Complaints regarding harassment and discrimination may be raised with the commissioner for the promotion of equality.

The Industrial Tribunal is competent to hear claims of unfair dismissal, discrimination, harassment and victimisation, as defined in Chapter 452 of the Laws of Malta. It generally hears disputes in public, although it has discretion to hear them behind closed doors. The parties must initially provide statements of case; they are then given the opportunity to support their cases with evidence and oral or written pleadings.

Different rules may apply to public service employees.

6.2 What are the procedures and timeframes for employment-related tribunals actions?

In terms of law, the Industrial Tribunal is free to regulate its own procedures, but it is expected to observe the rules of natural justice and to decide on the substantive merits of the case. It enjoys powers which are granted to the courts in terms of Maltese procedural law, primarily in respect of summoning witnesses. In practice, proceedings are often very similar to standard adversarial court proceedings – albeit that, as a formality, the tribunal will always ask whether the parties have sought to resolve the matter amicably before commencing the proceedings.

The law provides that the tribunal must decide any issue referred to it within one month of the date of referral, unless in the opinion of the chairperson a longer period is necessary for a valid reason, which must be stated and registered in the proceedings of the tribunal.

Unfortunately, the reality is that no matters are decided within one month of referral; typically, notification of the proceedings and the timeframe given to the defendant to response alone will typically take one to three months. Another month or so will then lapse before the first sitting takes place. As a result, tribunal cases can last for between one and five years or more. If an appeal is filed with the Court of Appeal, another year at minimum can be added to this.

As these timeframes are not favourable for either of the parties, it is often sensible to seek an amiable compromise between the parties. The government of Malta is currently assessing the viability of the Industrial Tribunal and considering proposals put forward by the Malta Employment Lawyers Association for an overhaul of the procedural laws regulating the tribunal. These proposals include a proposition to allow the parties to raise claims in private and confidential arbitration in lieu of the exclusive jurisdiction of the tribunal.

7 Trends and predictions

7.1 How would you describe the current employment landscape and prevailing trends in your jurisdiction? Are any new developments anticipated in the next 12 months, including any proposed legislative reforms?

The 2019 unemployment figures for Malta are at the lower end of the scale. The island is reportedly seeking to approximately 28,000 additional foreign workers over the next three years to fill new vacancies and maintain levels of growth.

This reality – together with the new types of employment structures emerging on the market and the implementation of new technologies and methodologies by employers – is putting the Maltese employment law framework to the test.

The use of on-demand contracts (eg, casual work) is clearly increasing, as is the use of temporary agency workers. Flexibility and more favourable working arrangements are also becoming more popular, thus testing areas of law which hitherto were seldom the subject of decisions by the competent authorities and courts. The Industrial Tribunal is struggling to keep abreast with these new realities, particularly given that the chairperson has little legal background or training in the law, especially EU law. The tribunal is increasingly faced with complex disputes that go beyond the basis of labour law and are frequently influenced by cross-border issues, involve the intricate legal structures that underpin the multinational companies with a presence in Malta or centre on new forms of employment in specialist fields that laypersons would find it difficult to comprehend, such as banking, financial services and technology.

The government is thus coming under pressure to overhaul the Industrial Tribunal – not only to enhance its ability to address multifarious legal issues such as transfer of business, collective redundancies and employee representation; but also to allow employees and employers to opt for private and specialised arbitration should they feel the need. There is also growing pressure, underscored by several Court of Appeal judgments, for the laws on compensation to be amended. Currently, the law provides very little in respect of what the Industrial Tribunal must consider to quantify compensation, which often results in unpredictable, unreasoned and contradictory awards.

Employment law is not a closed book; it rather comprises a multi-layered framework of statutes and case law, which in turn interact with other specialised areas of law, such as tax, social security and data protection.

Significant yet piecemeal amendments to the law were enacted in 2018 and others are expected during 2019. Recent amendments include changes to the rules on transfers of business, temporary work agencies, vacation leave management and payslips.

The entry into force of the General Data Protection Regulation in 2018 increased the burden on all employers, which now cannot afford to disregard privacy concerns. Employers must invest more time and money in mapping out their processes, understanding the purposes and grounds which allow them to process personal data, and establishing retention periods and privacy policies which cover their information obligations. Employers must understand the practical implications of data protection ‘rights' and, more importantly, the risks of such rights (eg, the right to access in particular).

The Employment Relations Board – a consultative body whose members represent various stakeholders in Malta, including the state, employers and unions – is discussing additional changes to the law, including to the provisions regulating probationary periods and redundancies. The new EU Directive 2019/1152 on transparent and predictable working conditions, adopted by the European Council on 14 June 2019, will also see further amendments to Maltese law over the next three years.

Employees are becoming more aware of their increasing rights – both rights arising in terms of employment law proper and ancillary rights such as those arising under data protection law. Staff turnover has increased significantly, with employees prioritising career progression, job satisfaction and a comfortable working environment over job security. Employers are struggling to keep abreast of the ever-changing body of laws, on top of having to manage their workforces from a people management, attrition and retention and branding perspectives. It has become essential, today more than ever, for employers to invest in training HR personnel who understand the legal framework and can observe and discern when sensitive issues should be escalated to management and to legal advisers.

8 Tips and traps

8.1 What are your top tips for navigating the employment regime and what potential sticking points would you highlight?

  • Do not underestimate the multi-layered framework of laws. It is not just one law carved in stone.
  • EU law and case law must not be forgotten. Local case law carries weight – but Maltese courts are not bound by precedent.
  • In employment matters, be it on the side of employer or employee, the situation is seldom black or white. Applying discretion and taking decisions or giving advice often require an assessment of both objective and subjective considerations. Decisions should not be rushed and a second or third opinion is often key. Compromise is often the best solution.
  • Employees are deemed to be the weaker party until proven otherwise. Contracts must be worded carefully. Employee handbooks and policies must be designed to allow for flexibility and discretion.
  • Breach of employment laws may give rise to compensation awards which in Malta, by comparison, are not excessive, but are on the increase. That said, an employer's concern goes beyond financial risk. Certain offences give rise to criminal liability, for which officers of a company can be held personally liable. Being unaware is not in itself a defence and officers must be able to demonstrate that they carried out what would reasonably have been expected of them in their capacity. Professional legal advice should be sought in advance. Prevention is better than cure.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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