Comparative Guides

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4. Results: Answers
Labour and Employment
Trends and predictions
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?

Answer ... 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.

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