Employment Law | Unfair and Constructive Dismissal in Malta: Key Legal Insights
Introduction
Losing your job can be one of the most stressful experiences in your working life – especially if you feel that the decision was unjust or that you were left with no real choice but to resign. In employment law, these situations often fall under two key concepts: unfair dismissal and constructive dismissal.
Although the terms are often used interchangeably, they describe very different circumstances. Unfair dismissal typically involves an employer ending someone’s employment without a fair reason or proper procedure. Constructive dismissal, on the other hand, happens when an employee resigns because their employer’s behaviour has made their position untenable.
Unfair Dismissal
An employer has the right to terminate an employment contract, whether it is definite or indefinite, provided there is a good and sufficient cause. Although Maltese law does not define this term, it specifies certain reasons that do not qualify. Under Article 36(14) of the EIRA termination on grounds such as union membership, pregnancy or maternity leave, marriage, absence due to force majeure, whistleblowing, or initiating legal proceedings over employment rights violations does not constitute a good and sufficient cause.
Accordingly, if an employer dismisses an employee for any of these reasons—and not due to a valid cause, redundancy, or retirement at pensionable age – the dismissal is deemed unfair. The EIRA defines unfair dismissal as the termination of employment, after the probationary period, that is neither based solely on redundancy nor justified by good and sufficient cause. It also includes dismissals that, while appearing to be for valid reasons, are in fact discriminatory or connected to trade union activity or participation in a trade dispute.
Constructive Dismissal
Constructive dismissal occurs when an employee is effectively forced to resign because the employer’s actions make continued employment impossible or unreasonable. Although the resignation may appear voluntary on paper, the employee has no real alternative but to leave. In such cases, the resignation is treated as resulting from a unilateral and unlawful act by the employer, effectively amounting to a termination.
Common actions which may lead to constructive dismissal may include demotion, unilateral contract changes, harassment or bullying and the failure to address workplace issues.
Maltese law does not define constructive dismissal despite this being recognised by the Industrial Tribunal and the Maltese Courts. In fact, in Philip Camilleri vs Bortex Clothing Co. Ltd., decided on the 4th February 2014, whereby the Industrial Tribunal stated “li ghalkemm mad-daqqa t’ghajn l-impjegat ikun telaq u irrizenja, hu fil-fatt dan il-pass ikun rizultat tal-fatt li min ihaddem ikun, irragonevolment, pogga lill-haddiem daru mall-hajt sal-punt li dan ma kellux triq ohra hlief dik li jitlaq. Ma jkunux kwistjonijiet frivoli izda serji sew.”
According to the Industrial Tribunal, determining whether an employee was forced to resign involves a dual test. The first is the contractual test, which examines whether the employer seriously breached the terms of employment. The breach must be so grave that the employee is left with no choice but to resign, as the employment relationship has been irreparably damaged. The second is the reasonableness test, which considers whether there has been a fundamental breach of trust between employer and employee. A clear absence of reason or any conduct by the employer that undermines mutual respect may amount to constructive dismissal.
Moreover, for a successful case of constructive dismissal, as reiterated in various caselaw, including Christopher Bonello vs OZO Services Limited decided on the 28th of September 2023, the burden of proof rests on the employee who must additionally prove that:
- The employer’s actions fundamentally breached one of the employee’s contract’s express or implied terms; and
- The employee is forced to resigned directly due to the serious breach of terms; and
- The employee resigned immediately, almost instantly following the employer’s alleged breach in contract terms, as opposed to waiting too long prior to resigning.
Of course, these have to be assessed on a case-by-case basis, since not every act of the employer is serious enough to merit constructive dismissal.
Legal Remedies Available
In both cases of unfair and constructive dismissal, a complaint has to be filed with the Industrial Tribunal by the aggrieved employee within 4 months from the date of the alleged violation. When it comes to unfair dismissals, the burden of proof rests on the employer who must demonstrate that the dismissal was justified and based on a good and sufficient cause. This becomes even more difficult to prove in cases were there are no prior disciplinary warnings, either verbal or written, issued by the employer to the employee leading up to the dismissal. Conversely, when it comes to constructive dismissals, it is for the employee to bring forward enough evidence that his/her resignation was forced.
If the employee succeeds in a claim, the Tribunal may order reinstatement or re-engagement. If this is not requested or deemed appropriate, the Tribunal instead awards monetary compensation, payable directly by the employer to the dismissed employee. When determining compensation, the Tribunal considers the actual damages and losses suffered, as well as factors such as the employee’s age, skills, and future employment prospects. It also takes into account the duration of unemployment following the dismissal, the length of the employment relationship, and any reduction in earnings from subsequent employment.
Conclusion
While both unfair dismissal and constructive dismissal deal with the end of an employment relationship, they arise from very different circumstances. Unfair dismissal occurs when an employer directly and unjustly terminates an employee’s contract, whereas constructive dismissal arises when the employer’s conduct effectively forces the employee to resign In both cases, the law aims to protect employees from abusive or unreasonable treatment, upholding fairness, mutual trust, and respect in the workplace. Employers must therefore act prudently, ensuring that all disciplinary and termination procedures are lawful, transparent, and supported by good and sufficient cause. Employees, in turn, should remain informed of their rights and the legal remedies available should they face unfair or coercive treatment.
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].
