Understanding Employment Law in Malta: Termination and Notice Period
Introduction
Ending an employment relationship can be one of the most challenging moments for both employees and employers. Whether it’s due to redundancy, misconduct, or other reasons, understanding the rules and rights around termination is essential. In Malta, employment law provides protections to ensure that dismissals are fair, justified, and carried out with respect for both parties. In this article, we break down the key types of termination, employee rights, and what employers need to know to handle the process lawfully.
How can an Employment Contract be Terminated?
Termination can be initiated by either the employer or the employee, for various reasons. In all cases, the law requires compliance with specific procedures and minimum notice periods.
-
Termination During Probation
During the probation period – whether under a fixed-term or indefinite-term contract – either party may end the employment without giving a reason. Nonetheless, if the employee has worked for more than one month, the terminating party must provide at least one week’s notice. On the other hand, if the termination occurs within the first month of probation, there is no notice requirement, and the employer is also not obliged to pay severance or salary for the remaining period.
-
Termination of Definite Contracts
In fixed-term contracts, the parties agree on the start date and end date, and when the date comes, the agreement simply terminates.
As per the general rule, once the agreed period in a fixed-term contract expires, the employment relationship ends automatically. No notice is required from either side because both parties already know the exact end date from the very beginning.
That said, ending a fixed-term contract before its expiry is a different story. In such cases, the party seeking early termination may need to show valid legal grounds or risk liability for breach of contract – sometimes even having to pay compensation.
If the employer terminates such a contract before it expires without a justified reason, it’s considered unfair dismissal. In that case, the employer must pay the employee half the wages they would have earned for the remaining contract period.
Similarly, if the employee abandons the contract early without a valid reason, they owe the employer the same compensation – half of the wages for the unworked remainder. However, if there’s a “good and sufficient cause” (such as serious misconduct or other valid reasons), either party can terminate early without owing compensation.
Accordingly, since the law sees these arrangements as “pre-agreed,” the notice period rules that apply to indefinite contracts don’t kick in, unless, of course, the early termination scenario arises.
-
Termination of Indefinite Contracts
When it comes to ending an indefinite employment contract, the rules are pretty clear for both employees and employers. Employees can resign without giving a reason, but they must respect the legal notice period. If they do not provide the required notice, they could owe their employer compensation equal to half the wages that would have accrued in the notice period.
On the other hand, employers can only terminate an indefinite contract for specific reasons – either due to redundancy or because there is a “good and sufficient cause.” This term is not defined by law and is assessed on a case-by-case basis. It would, most likely, include misconduct and poor performance. However, there are certain reasons, as provided for by legislation, which clearly do not qualify as a good and sufficient cause. For example, an employee cannot be dismissed just because they are part of a trade union, expectant mothers are protected, and dismissal cannot be based on the employee’s marriage or whistleblowing activities. Another excluded reason is the transfer of ownership in the business, whereby the termination is not necessary for any technical or economical reason.
In such case, no advance notice is required and if the reason for termination is proved to be compelling, this can lead to the immediate dismissal of the employee. However, if no disciplinary warnings, whether verbal or written, have been provided to the employee, this may more likely be considered an unfair dismissal.
-
Notice Periods
Notice periods for termination indicate the intention of termination of employment and vary depending on how long the employee has worked continuously for the employer. The notice periods are as follows:
- For not more than one month – No notice
- For more than one month and up to six months – One week
- For more than six months and up to two years – Two weeks
- For more than two years and up to four years – Four weeks
- For more than four years and up to seven years – Eight weeks
- For more than seven years – Add 1 week for each subsequent year up to a maximum of 12 weeks.
In some senior or managerial roles, longer notice periods can be agreed upon, owing to the responsibilities involved, but otherwise, these limits can’t be extended.
The notice period starts running from the next working day following the day on which the notice was given to the other party. During the notice period, the employer can either have the employee continue working, whilst receiving full wage, or place them on “garden leave,” where the employee is paid but does not work.
Both parties face consequences if they fail to provide proper notice. Employers who do not give notice owe the employee full wages for the entire notice period, while employees who fail to give notice owe half the wages to the employer.
Notice also affects the employee’s work obligations. If the employee decides unilaterally to cease performing work after receiving notice from the employer, the employer is solely responsible for half the wage that would be payable in respect of the unexpired period of the notice. But if the employee wants to keep working and the employer refuses, then the employer must pay full wages for the unworked notice.
-
Retirement as a Reason for Termination
Reaching retirement age is the final, and perhaps most predictable, reason an employment contract comes to an end – whether it’s a fixed-term agreement or an open-ended one.
In Malta, the statutory retirement age is generally set at 65 years, as provided by the Social Security Act (Chapter 318 of the Laws of Malta). But the law includes some important exceptions based on year of birth:
- Born on or before 31 December 1951 → Retirement age: 61 years
- Born 1952–1955 → Retirement age: 62 years
- Born 1956–1958 → Retirement age: 63 years
- Born 1959–1961 → Retirement age: 64 years
Special protection also applies to certain female employees: If a woman was born on or before 31 December 1951, her employer cannot end her employment before she reaches the age of 61.
It’s worth noting that retirement does not always mean goodbye. The law allows the employer and employee to mutually agree for work to continue beyond the statutory retirement age. In such cases, the employment relationship essentially enters a post-retirement phase, often with updated terms that suit both sides.
-
Termination by Mutual Agreement
Sometimes, both employer and employee agree it’s best to part ways – this is known as termination by mutual consent. When this happens, it’s highly recommended to put everything in writing through a settlement agreement that clearly spells out the terms and conditions of the separation.
Post-Termination Obligations: What happens after an employment ends?
When an employment relationship terminates, both parties have certain obligations to wrap up things smoothly.
- Termination Certificate: If the employee has worked for more than one month, they can request a termination certificate from the employer, which may be important for future job applications or claiming benefits.
- Declaration of Termination to Jobsplus: Employers must notify Jobsplus whenever a termination occurs;
- Settling Outstanding Payments: All owed wages should be paid by the next scheduled payday after termination. If payment is delayed or withheld, the employee should first raise the issue with their employer. If unresolved, they can file a complaint with the Department of Industrial and Employment Relations (DIER).
Additionally, former employees might be eligible for unemployment benefits, depending on their circumstances.
Conclusion
Termination of employment can be complex and stressful but understanding your rights – and your obligations if you’re an employer – makes the process fairer and more transparent. Maltese law is designed to protect employees from unfair treatment while giving employers clear guidelines to follow. By knowing the rules, both parties can navigate employment endings with confidence, fairness, and respect.
This article is for information purposes only and should not be construed as legal advice. The information provided reflects the law as it stands on the blog’s publishing date. For the most updated version or advice tailored to your specific circumstances, you are strongly encouraged to consult a lawyer.
_______________________________________________________________________________________________________________
Article and research done by Ms Caitlin Turner, LL.B. (Hons) (Melit.), currently reading a Master of Advocacy at University of Malta.
Sciberras Advocates founded by Dr Adrian Sciberras, is a law firm based in Malta. The firm prides itself to be multi-disciplinary, innovative and flexible in order to meet the changing times and any challenges in the local and international legal scenario. No matter what private or corporate complex demands are called for, Sciberras Advocates offers practical and cost-effective legal solutions to achieve your desired results. You may reach Sciberras Advocates by phone on +35627795222 or via email on [email protected].
