Dismissing employees on an indefinite contract

The unilateral termination of an indefinite employment relationship by an employer is subject to strict regulations and obligations under Maltese law. Once the probationary period has lapsed, an indefinite contract can only be terminated by the employer in the case were/of:

1. the employee reaches retirement age;
2. redundancy;
3. ‘good and sufficient cause’.

Whilst the first two reasons have clear parameters, the latter point is not clearly defined in the law and is open to interpretation. The law does provide guidance as to what shall not constitute ‘good and sufficient cause’ and which would definitely constitute unfair dismissal – such as for example, in the case of an employee being dismissed solely on the grounds of being pregnant or the employee disclosing information to a designated public regulating body regarding alleged illegal or corrupt activities being committed by one’s employer.

Employees who believe that they have been unjustly dismissed may institute proceedings before the Industrial Tribunal within 4 months from the effective date of the alleged breach. The tribunal would then weigh the merits of each case on a case-by-case basis and issue a final decision accordingly.

Therefore, the obligation to prove that a dismissal was based on ‘good and sufficient cause’ rests on the employer. The rulings of the Industrial Tribunal across the years have since offered Employment lawyers and HR professionals a reference point as to what may be regarded as sufficient justification for the dismissal. However, a level of ambiguity still remains for employers when navigating issues related to discipline or poor performance.

Whilst the merits of each case are unique and need to be advised upon individually, legal and HR professionals in this field often recommend that employers;

1. establish at the outset what the company expects in terms of conduct, discipline, performance and other such critical policies;
2. ‘build a case’ in the event of recurrent breaches to policies or in cases of poor performance.

In relation to point (i) above, detailed internal policies that are communicated to all employees upon joining and the provision of a well-structured internal framework for how one expects to be managed are crucial elements. The overall culture of the workplace and well-defined objectives, timelines, targets and performance indicators also serve to set clear expectations of performance and deliverables.

With the implementation of such policies and metrics, both the employer and the employee may easily identify their duties and responsibilities towards each other. This also means that taking action on breaches of such policies becomes easier if there is a reference point as to what is acceptable or otherwise. For example, an Employer can make it clear that harassment in the workplace is not only unlawful but that it would be met with the strictest of consequences, including dismissal. Such statements would clearly indicate what level of tolerance the employer shall accept in certain cases of policy breaches and shall also serve as a clear indication of what likely consequences may arise from such breaches.

In addition to having clear policies and procedures in place, employers may also take note of disciplinary or performance relevant matters that may not warrant immediate dismissal, but that could constitute as ‘good and sufficient cause’ when seen aggregated over a period of time. This is what is often referred to as ‘building a case’. The issuing of regular official warnings, by the employer, may constitute a solid base for the rebutting of any ‘unfair dismissal’ claims instituted by an employee before the Industrial Tribunal.

Where relevant, such warnings may also be accompanied by proof of how the employee was supported to improve. For example, if an employee was warned of a poor attitude with clients resulting in complaints from the latter, it would be ideal to identify how the employee is expected to improve, including the consideration to provide any mentoring or training that would be necessary and a timeline within which any progress is reviewed and feedback provided.

About the Authors

This article has been co-authored by Dr Elaine Dutton, Head of HR and Employment Advisory Services and Dr Bjorn Camilleri, Junior Advisor at CSB Group. Should you require any advice on dismissal of employees, disciplinary procedures and establishing clear internal HR policies, you are invited to contact Dr Dutton at [email protected].