Navigating Clean, Legal Terminations in Malta

From an employer’s perspective, legal terminations are part and parcel of business operations. However, ending an employment relationship requires solid internal HR procedures and legal expertise to cleanly navigate the process. In fact, legal terminations in Malta must be legally defensible and correctly documented.

This article serves as a guide to explain what legal terminations in Malta involve, what HR frameworks firms can adopt to avoid risks, and how an experienced HR partner can help businesses manage the process with legal and procedural ease, while protecting compliance, continuity, and reputation.

Legal terminations in Malta: HR Insights

Legal terminations in Malta depend on the type of employment contract, the reason for termination, as well as the employer’s compliance with statutory procedures. Under Maltese employment rules, an employer generally cannot terminate an indefinite contract without good and sufficient cause, genuine redundancy of the role, or the employee reaching retirement age. Moreover, a dismissal without an appropriate legal basis may be challenged before the Industrial Tribunal within four months.

Consequently, employers could face legal repercussions if they treat an employee’s termination as a single conversation or a simple transaction letter. Rather, terminations ought to be part of a much border HR process supported by evidence and both consistent and transparent decision making. 

Termination for cause

Whenever an employer relies on misconduct, incapacity, or another performance-related reason for a legal termination in Malta, they should be able to demonstrate a fair and consistent process. In turn, their HR file should contain relevant documentation, such as performance reviews, warnings, investigation notes, meeting records, and all correspondence with the employee.

Immediate dismissal is generally associated with “good and sufficient cause”. However, the law does not provide a universal checklist for every legal termination in Malta. The circumstances must therefore be assessed carefully, keeping in mind that weak documentation increases the risk of an unfair dismissal claim.

Justifiably, a termination decision should also be proportionate. Employers should consider whether the issue could be addressed through coaching, a performance improvement plan, reassignment, or disciplinary action; short of dismissal. This approach engages people with procedural fairness, and ultimately provides the organisation with a clearer audit trail.

Notice periods and final pay

For indefinite contracts that have passed probation, the statutory notice period is based on continuous service. The notice period ranges from one week for service exceeding one month and up to six months, to twelve weeks for service exceeding ten years. Longer periods may apply to certain technical, administrative, executive and managerial roles where legally permitted and agreed. 

During notice, the employee may continue working or, in certain circumstances, stop working and receive half the wages due for the unexpired notice period. If the employer does not provide the employee with the opportunity to work the notice, full wages for the notice period may become payable.

The final settlement should include all amounts due on a proportional basis, including unpaid salary, overtime, statutory bonuses, notice period pay, and payment for untaken leave. Furthermore, all legal terminations in Malta require outstanding wages to be settled by the next pay date following termination. The employer must also submit the termination form to Jobsplus no later than four working days from the effective termination date.

Redundancy and Collective Termination

Legal terminations in Malta arising from redundancy require a different HR approach from dismissals based on conduct or performance. Concretely, redundancy relates to a reduction or cessation in the employer’s requirements for employees performing work of a particular kind, or to a business closure, or restructuring. Evidently, redundancies should be part of a genuine business decision, rather than a substitute for dismissing an employee whose performance is questioned. 

Applying redundancy fairly

Maltese practice recognises a “last in, first out” approach within the affected class of employment when considering a legal termination due to redundancy. Employers  should therefore define the relevant role category and apply selection criteria consistently. Any departure from the usual order should be supported by a defensible reason.

A redundancy decision should be supported by business evidence. This may include reduced revenue, loss of a contract, organisational restructuring, automation, a change in operating model or a sustained decline in demand. HR leaders should also document alternatives considered, such as reduced hours, redeployment, voluntary separation, or even a hiring freeze.

The consequences can continue after the termination. If the same post becomes available within one year, the employer may have an obligation to re-engage the employee previously made redundant. Employers in Malta need to be aware that a former employee alleging unfair dismissal, or a breach of the re-engagement obligation, may bring proceedings before the Industrial Tribunal within four months.

When collective redundancies apply

Collective redundancy rules apply when, over a 30-day period, an employer terminates:

• Ten or more employees in an establishment normally employing 20 to 99 people.
• At least 10% of employees in an establishment employing 100 to 299 people.
• At least 30 employees in an establishment employing 300 or more people.

The employer must notify employee representatives and the Director of the Department for Industrial and Employment Relations (DIER). Furthermore, consultations should be conducted to address ways to avoid or reduce redundancies and mitigate their effects. When legally terminating an employee, organizations must provide information on the reasons, numbers affected, selection criteria, redundancy payments and the expected timetable.

The process also entails timing implications. Employees affected by a notified collective redundancy generally cannot be terminated before 30 days have elapsed from notification, unless the relevant authority allows a shorter period. Breaches may result in significant fines for each employee affected.

Strengthening HR During Legal Terminations

Legal terminations in Malta are easier to manage when HR governance is proactive rather than reactive. A specialist HR agency can give directors access to HR experts, with the experience to implement critical structures and build a termination-ready HR framework. These include:

• Clear employment contracts and role descriptions.
• A consistent disciplinary and performance-management procedure.
• Up-to-date records of leave, pay, overtime and benefits.
• A documented redundancy and selection framework.
• A termination checklist covering meetings, notices, final pay, company property and system access.
• A secure process for retaining and deleting employee data.

Employers in Malta should also be aware that data protection is part of responsible termination management. In fact, the GDPR expressly recognises employment related processing connected with a termination of employment, while requiring organisations to handle personal data lawfully and appropriately.

Use HR expertise where it matters: Aeroates as a one-stop-shop HR partner

Outsourcing Administrative HR can help companies manage legal terminations in Malta with greater consistency and less operational risk. Businesses can access flexible workforce solutions and employment experts to assess the commercial context, employee relations, restructuring objectives, compliance and regulatory implications, as well as any potential reputational risks.

All organizations, at some point or another, will manage legal terminations. Aeroates acts as a one-stop-shop HR partner by supporting:

• Termination planning and documentation.
• Notice-period and final-pay administration.
• Payroll and statutory entitlements.
• Jobsplus termination submissions.
• Compliance reviews and employee records.
• Workforce planning following restructuring.

Conclusion: A Cleaner Way Forward

Legal terminations in Malta require defensible reasons, accurate records, correct notice periods, timely payments, appropriate employee consultation, and extremely careful data handling. Proactive HR governance makes legal terminations in Malta easier to manage and navigate; but organizations need an effective HR framework embedded in their overall business strategy to achieve this.

An experienced HR Business Partner provides the structure and specialist knowledge needed to manage this process confidently. Apart from giving organizations more time on their hands to consolidate their strategic goals, HR Experts reduce avoidable risk while treating departing employees fairly.

Early HR involvement allows employers to assess the proposed termination route, consider alternatives, prepare evidence, calculate financial exposure and plan a respectful employee meeting. Aeroates’ scalable model gives smaller firms access to specialist HR expertise without the cost of maintaining a large internal function, and oftentimes by leveraging risk.