This article highlights recent amendments to employment law, including with regard to:
- increases to the cost of living;
- amendments to the minimum wage;
- confirmation of public holidays and vacation leave in 2021; and
- clarification of the Industrial Tribunal's jurisdiction, particularly with respect to fixed-term contracts.
Legal Notice 468/2021 establishes the cost of living increase for 2021, previously announced by the government in the financial estimates. Subsequently, as of 1 January 2021, the wages of full-time employees have been increased by €1.75 per week (or pro rata for part-time employees).
Legal Notice 469/2020 amends the minimum wages stipulated in the sector-specific Wage Regulation Orders as from 1 January 2021, reflecting the cost of living increase.
Public holidays and vacation leave
During the last Budget speech, employees were given the impression that in 2021 the government would be adding an additional day of paid vacation leave, as it had done in the past three years, to make up for 'lost' public holidays that fall on weekends. This would have increased the entitlement to 28 days. However, after much confusion, it has been confirmed that the leave entitlement for 2021 will remain 27 days as no additional day will be added.
The government has announced that the National Holidays and Other Public Holidays Act (Chapter 252 of the Laws of Malta) will be amended, so that the paid vacation leave entitlement will fluctuate each calendar year according to the number of 'lost' public holidays falling on weekends. For instance, in 2022 the entitlement will be increased to 28 days, but in 2023 the entitlement will be reduced to 26 days. Employers will have to monitor the fluctuations on a yearly basis.
These amendments to the act are yet to be published, so the final enactment is awaited. There will likely be a reversal of the changes that were introduced to the Organisation of Working Regulations (SL452.87) over the past three years, with each year having added an additional eight hours of vacation leave per year. The reversal is expected in order to exclude any entitlement duplication.
Industrial Tribunal jurisdiction and fixed-term contracts
Act LVIII/2020 amends Chapter 452 of the Laws of Malta, clarifying what has been a long-disputed matter concerning the Industrial Tribunal's jurisdiction to determine cases which relate to fixed-term contracts. It is now clear that the Industrial Tribunal has the jurisdiction to determine unfair dismissal cases in respect of employees employed on fixed-term contracts. This is the result of an amendment of the definition of 'unfair dismissal' in Chapter 452, which now includes the termination of fixed-term contracts by employers (excluding termination by the mere expiry of a contract term).
The rules on the termination of fixed-term contracts remain generally the same. Employers which terminate a fixed-term contract before its expiration must pay the employee a sum equal to 50% of the full wages that they would have accrued in respect of the remainder of the time specifically agreed on. Similarly, if employees abandon a fixed-term contract pre-term, they must pay their employer a sum equal to 50% of the full wages that would have accrued. However, employees may abandon a fixed-term contract of service prior to its expiry and employers may terminate a fixed-term contract prior to its expiry without any liability to make payment if there is "good and sufficient cause" for such dismissal or abandonment.
The Industrial Tribunal now has jurisdiction to determine claims for sums which may be due in terms of the above rules following a pre-term termination of a fixed-term contract. Therefore, the tribunal will determine whether the abandonment or dismissal, as applicable, was for a good and sufficient cause and, if it was not, will confirm that payment is due. The tribunal has been specifically empowered to determine such matter by virtue of an amendment to Article 75 of the act, which determines the tribunal's exclusive jurisdiction.
Before this amendment was introduced, there was a clear understanding that the only consequence for a pre-term termination of a fixed term-contract by either party would have been the 50% payment, unless the contract had been terminated for a good and sufficient cause. The definition of 'unfair dismissal' in the act was previously tied to indefinite term contracts – such that in the case of an unfair dismissal, the tribunal had the jurisdiction to determine whether to reinstate or pay compensation to an employee who had been unfairly dismissed. It was strongly argued that in the case of fixed-term contracts, the tribunal would not have had jurisdiction to award compensation (on top of the 50% payment), even if the pre-term termination of the fixed-term contract had been for materially abusive reasons.
However, the definition of 'unfair dismissal' has now been amended to include fixed-term contracts. Therefore, the tribunal may hear unfair dismissal cases relating to fixed-term contracts. The amendments do not expressly provide that the competence of the tribunal to award compensation in the case of unfair dismissal of a fixed-term contract is limited only to the determination of the 50% payment. Therefore, the question arises as to whether these amendments have opened a window, presumably unintentionally, allowing the tribunal to reinstate fixed-term employees or award compensation on top of the 50% payment if it finds that the fixed-term contract had been abusively terminated to the detriment of the employee. This is unlikely, but remains subject to tests before the tribunal and the courts.
