First Floor, Victoria Buildings, 8, Triq l-Għenieq,Naxxar NXR3622, Malta

Unfair Dismissal – The Basics

by Dr Graziella Cricchiola – Junior Associate

Originally, an employment contract was viewed as being equivalent to any other contract whereby parties would be able to agree to any terms, a contract akin to the contract of works found in the Civil Code.

Today, and for some time, employment contracts are considered as being somewhat of a “special” type of contract. The reason is to protect the employee, which is generally viewed to be the weaker part in contract. This is why certain condition of employment are strictly regulated by law (e.g. working hours), while only few other conditions are left to the parties to agree upon.

Employment Law in Malta is principally regulated by Chapter 452 of the Laws of Malta – the Employment and Industrial Relations Act. This piece of legislation outlines several principles, among which the concept of “unfair dismissal”.

The recognition of unfair dismissal has been long established and recognised under Maltese law. An employee serving a definite contract cannot be dismissed before the expiration of the term of contract unless there exists what is considered as being “a just cause”. In such cases, the employer would be liable to pay compensation for equivalent to half of the wages in respect of the remainder of the time specifically agreed upon. Employees on an indefinite period, dismissed without there being “a just cause”, can institute proceedings before the Industrial Tribunal, requesting the said adjudicating body to order their re-employment or award compensation.

What is “just cause”?

The law does not specifically define what constitutes a good and sufficient cause for dismissal. What is does, it lists instances which do not constitute a good and sufficient cause for dismissal namely – “that the employee at the time of the dismissal was a member of a trade union, or is seeking office as, or acting or has acted in the capacity of an employees’ representative; or except in the case of a private domestic employee, that the employee no longer enjoys the employer’s confidence; or that the employee contracts marriage; or that an employee is pregnant with child or is absent from work during maternity leave; or that the employee discloses information, whether confidential or otherwise, to a designated public regulating body, regarding alleged illegal or corrupt activities being committed by his employer or by persons acting on the employer’s name and interests”.

Therefore, an employee may not be terminated for the reasons listed in the law, but may as well being considered to have been unfairly terminated should the reasons – despite not being those listed in the law – be others which are not considered to be “just”.

In order for the Industrial Tribunal to establish whether there existed a justified termination or otherwise, the Tribunal must delve into the particular circumstances of each case brought before it. A good and sufficient cause must be rigorously proven.

The Court of Appeal in the case of Michael Spiteri vs Valletta Gateway Terminals Limited decided on 6 October 2010, held that there must be “significant breach going to the root of the contract. There must be a breach of contract by the employer not simply a failure to act reasonably (Cop. Cit. pp 407).

In another case, John Fauzza vs Controller of Castille Hotel, decided on 28 April 2003, the Civil Court, First Hall held that, “ir-raguni tajba ghal licenzjament qabel iz-zmien trid tigi ppruvata mill-padrun li jallegaha” (“Spizjar George Mallia vs Joseph Azzopardi et”, Qorti tal-Kummerc, 5 ta’ Gunju 1951). Li jfisser li wiehed irid jezamina jekk l-addebiti promossi kontra l-attur jirrizultawx u jekk gewx fuq kollox pruvati. Sussegwentement, jekk l-ezitu jkun fl-affermattiv, il-piena tat-tkeccija kienetx kommensurata ma’ l-att jew atti attribwibbli lilu, dejjem tenut qies tac-cirkostanzi kollha tal-kaz.”

It has been said that a one-off mistake committed by the employee, does not generally lead to a justified dismissal. Nevertheless, “mhux eskluz li anke raguni gravi wahdenija, taht ic-cirkostanzi ta’ certi kazi, anke mhux reiterata jew kawzali, tista’ tigi kunsidrata gravi u gustifikativa ta’ recess immedjat, nonostante li tkun timplika provvediment hekk qawwi u ahrax.” (Emilio Colombo vs Carmelo Wismayer nomine, Commercial Court decided on 26 September 1953 and Carmel Mercieca vs Simonds Farsons Cisk plcs gia Simonds Farsons Cisk Ltd decided by the Court of Appell on 25 April 2008).

If the Tribunal does indeed find that the dismissal was unfounded, it can order three things: (i) employee’s reinstatement; (ii) employee’s re-engagement; or (iii) compensation for such unfair dismissal.

Unlike in English Law, the employee must, upon referring the complaint of unfair dismissal to the Industrial Tribunal, specifically request what is the remedy he is seeking – whether he is seeking to be reinstated or re-engaged, or whether he was content with compensation. The Industrial Tribunal must then consider whether it would be reasonable for the complainant to be reinstated or re-engaged, depending on the circumstances of the case, including the role the employee had in his work place prior to being dismissed. When there is no specific request for reinstatement or re-engagement or when the Tribunal decides not to make an order for reinstatement or re-engagement as aforesaid, the Tribunal shall make an award of compensation, to be paid by the employer to the complainant.

If the Tribunal opts to make an award for compensation, then it must determine the amount to liquidate. The law does not provide a formula of any sort, but merely says in article 81(2)(a) of Chapter 452 of the Laws of Malta that when the Tribunal determines the amount of compensation, it must take into consideration the real damages and losses incurred by the worker who was unjustly dismissed, as well as other circumstances, including the worker’s age and skills as may affect the employment potential of the said worker.

Of course, the absence of a specific mechanism of compensation has given rise to varying numbers, making it difficult to predict (and indeed, to analyse) the spectrum of compensation being awarded at Maltese Law.

Disclaimer: This article is not to be considered as legal advice, and is not to be acted on as such. Should you require further information or legal assistance, please do not hesitate to contact Dr Graziella Cricchiola on graziella@abalegal.eu.