Comparative Guides

Welcome to Mondaq Comparative Guides - your comparative global Q&A guide.

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4. Results: Answers
Labour and Employment
Legal framework
Are there statutory sources of labour and employment law?

Answer ... 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.

For more information about this answer please contact: Paul Gonzi from Fenech & Fenech Advocates
Is there a contractual system that operates in parallel, or in addition to, the statutory sources?

Answer ... 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).

For more information about this answer please contact: Paul Gonzi from Fenech & Fenech Advocates
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?

Answer ... 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.

For more information about this answer please contact: Paul Gonzi from Fenech & Fenech Advocates
Labour and Employment