Employment Law

Employment Law

Article 7 of the Constitution of Malta holds that “The State recognises the right of all citizens to work and shall promote such conditions as will make this right effective”. Although this right is not enforceable within a court of law, it demonstrates the efforts being made by the State in order to ensure the promotion of proper working conditions as well as the protection of employment rights. Malta mainly legislates this sector through the Employment and Industrial Relations Act, however it has also ratified with the European Social Charter, the Employment Package (a European Union Initiative), the Europe 2020 strategy and is also a member of the International Labour Organisation.

Maltese Employment Law:

The Employment and Industrial Relations Act and subsidiary laws are aimed at providing the necessary framework for employees and employers to know their relevant rights and obligations. This act mainly tackles issues related to wages, conditions of employment, discrimination in employment and other protective measures. One of its main focuses is on the regulation of employment contracts to serve as a security device between the employer and the employee, and clarifying the method in which disputes are to be settled or under what conditions the contract will be terminated.  Employment contracts in Malta can be divided into two types:

  • Contracts of service, which refers to when one party undertakes to carry out a service/work in favour of another party (the employer), or
  • Contracts of work, where a wage is provided for the work carried out

The aforementioned Act presents the differences between such contracts, their relevant rights and obligations for both the employer and the person carrying out the work or service. With regards to those benefitting from a contract of service, the employment agreement can take the form of a written or oral agreement, as long as within the first 8 days from the commencement of employment, details of such employment are clarified and presented in a written deed. The contractual agreement agreed upon can be for a definite or indefinite period of time, however, both types of employment are subject to a probation period. Whilst in the case of an indefinite contract there is no mentioned of a termination event, in a definitive contract one of the following must be indicated in order for it to be valid: a date, completion of a specific task, or the occurrence of a specific event. Contracts of service are highly regulated when it comes to the methods of termination, as they ensure that employer and employee rights are protected. Therefore, premature termination of employment which was not carried out for a good and sufficient cause can result in the imposition of penalties accordingly. This does not apply for employment contracts of an indefinite nature, where an employee may terminate the agreement on any grounds, as long a notice period is provided. Contracts of service provide that employees are able to benefit from various rights which specifically protect them, whilst the employer must ensure the fulfilment of certain obligations, including being registered as an employer with the Malta Inland Revenue Department, registering the employee with the national department of employment (ETC), and collecting the social security contributions and tax owed from the employee’s gross salary and remit them to the IRD.

Contracts of work  are less regulated, as the process normally requires the person providing the service to propose a fee, and if it is accepted by the employer, the services are performed. The fee can consequently be paid in advance, on a piecemeal basis or in arrears. The person providing a service is not considered an employee of the beneficiary, and therefore doesn’t have certain rights, and subsequently, the employer doesn’t have certain obligations to carry out. The contract therefore serves as a means to regulate their relationship. The subject of termination is also less strict in this type of contract, where the person providing the service can immediately terminate the service without notice. Termination can be carried out for a valid reason, where the beneficiary would be inclined to pay the expenses incurred for the services carried out. If however the termination was not carried out for valid reasons, the worker would have to pay the fee proposed by the worker and accepted by the beneficiary at the start of the contract. With the introduction of Legal Notice 44 of 2012, a retroactive presumption was introduced where workers are assumed to have indefinite and full-time employment when the engagement satisfies five out of eight conditions which are characteristic of employment.

Maltese law holds that all contracts should contain at least the following conditions: the terms of employment, remuneration and benefits, the method used to change the terms of the contract, social conditions (which include sick pay, parental leave and notice periods), the payment for overtime work, the programme of work, where the work will take place,  the system of time off used, manners in which a breach of contract can be dealt with. With regards to dismissal, no notice is required if the employee worked less than a month, however, if the time worked is longer, the appropriate period of notice is required. If it is the case that the contract ends before the agreed time, the party ending it must pay half of the gaining the employee would have received had he would have made it in the time remaining until the end of the contract. Some fields of employment are regulated by Wage Regulation Orders, where the law specifies conditions such as the maximum number of hours, the appropriate minimum wage and sick leave for areas such as construction, printing or publishing and public transport.

A relatively recent effort is being made by promoting the role of youths in the Maltese economy. Their importance within the industry has been recognised partially due to the declining working age population of Malta, but also because of the creativity they can bring to the workforce. Various schemes and initiatives have been adopted to introduce youths into the workplace and subsequently to extend the number of years spent in employment by older persons.

Employment Law on a European Level

The European Social Charter, a treaty of the Council of Europe is intended as a means of guaranteeing fundamental social and economic rights, in accordance with the European Convention on Human Rights related to employment, housing, health, education, social protection and welfare. Anti-discrimination measures are an important aspect of this charter, where emphasis is given to preventing gender discrimination, discrimination against people with disabilities, and measures directly facilitating part-time employees, those with parental leave, and ensuring that health and safety requirements are met.

The employment package is a measure adopted by the European Commission’s Employment, Social Affairs and Inclusion Directorate-General, which specifically supports job creation in the economy through various practices. Its main aims includes creating jobs within potentially job-rich industries and providing EU funds for job creation. It can be understood that such measures are used in promoting European employment, social affairs and equal opportunities for all to bring about sustainable growth within the industry.

The Europe 2020 strategy is the EU’s agenda to bring about job growth for the current decade. This will ensure the development of the competition, productivity and sustainability of the social market economy. The main target is for 75% of the people aged between 20 and 64 to be employed. Malta’s national target is to achieve 70% employment rate in within its population. In 2017, it was recorded that Malta reached the employment rate of 65.8%.

 Our Employment Law Practice

Employment lawyers at Chetchuti Cauchi provide assistance to clients in the case of identifying, managing and reducing business risks in areas related to labour issues, human resources and health & safety.  Our services are directed at public or private companies, sole traders, employees or employee associations, where our team is well versed to:

  • draft and negotiate employment contracts for individual and recruitment agencies, collective agreements and service agreements in the case of self-employed clients
  • delineate human resources policies, including those related to discrimination, wrongful discharge and equality in the workplace
  • assist and consult on recruitment issues
  • obtain work permits
  • train client managerial staff on HR matters, including the legal aspects
  • litigate in the Industrial Tribunal and Civil Courts
  • dispute settlements
  • draft termination agreements and settlements
  • register employers with local authorities and subsequent applications for authorisation to engaged persons on an employment basis
  • implement a payment system of employee wages which complies with the Malta Final Settlement System
  • transfer employment contracts for mergers and acquisitions
  • draft data protection policies and procedures
  • design and test health and safety policies
  • provide clients with updates in employment law
  • assist in the procurement of an Employment Practice Liability Insurance to cover any awards laid down by the courts and the Industrial Tribunal related to claims by employees
  • register and apply for residence permits, PE number and social security 

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