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Termination of Employment

Submitted By Firm: CSB Advocates

Contact(s): Andrew J. Zammit, Ann Bugeja

Author(s):

Date Published: 10/8/2013

Article Type: Legal Article

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Termination of Employment

Do employees have to be given notice of termination of their employment? How is the notice period determined?

Employment contracts are split into two categories, definite and indefinite.

Definite contracts should not be terminated before the term has expired. In the case of termination by the employer of a definite term contract of service, the employer is liable to pay to the employee ½ of the wages that would have accrued to the employee in respect of the remainder of the time specifically agreed upon and the same would apply in the case of termination by the employee - the employee is liable to pay to his employer a sum equal to ½ of the wages to which he would have become entitled if he had continued in the service for the remainder of the time specifically agreed upon. For the quantification of any of the payments, no account shall be had of any overtime, any forms of bonus, any allowances, and remuneration in kind and commissions.

Indefinite term contracts may only be terminated by the employer upon (i) good and sufficient cause or (ii) redundancy or (iii) when retirement age is reached. Indefinite term contracts may be terminated by the employee (without providing a reason), provided that the employee provides the employer with a notice period in terms of law.

In the case of termination by the employer on the ground of redundancy of an indefinite term contract the employee shall have the option of (i) continuing to perform work until the period of notice expires or, (ii) stop performing his/her work at any time during the period of notice, and require the employer to pay him/her a sum equal to ½ the wages due for the unexpired period of notice. In cases where employment is terminated for good and sufficient cause, the employer is not required to give advance notice of termination and/or pay the employee for any wages relating to such notice period

If the employer fails to give statutory notice of termination to the employee, he/she shall be liable to pay to the employee a sum equal to the full amount of wages that would be payable in respect of the period of notice.

In the case of termination by the employee of an indefinite term contract the employer shall have the option of (i) allowing the employee to continue to perform work until the period of notice expires or, (ii) require him/her to stop performing his/her work at any time during the period of notice, and pay the employee a sum equal to the full wages due for the unexpired period of notice.

If an employee under an indefinite term contract fails to give statutory notice of termination, he/she shall be liable to pay to the employer a sum equal to ½ of the wages that would be payable in respect of the period of notice.

Termination during the probationary period does not render either party liable to pay severance payments or any portion of the wages for the unlapsed period.

The notice of the termination of employment by the employee is calculated in terms of the time that the employee has been working with the employer, in terms of the table below:

Period of Employment Notice Period

More than 1 month less than 6 months > 1 week

More than 6 months less than 2 years > 2 weeks

More than 2 years less than 4 years > 4 weeks

More than 4 years less than 7 years > 8 weeks

More than 7 years > Add 1 week for each subsequent year up to a maximum of 12 weeks.

Longer notice periods may be agreed upon in the case of technical, administrative, executive or managerial posts due to the nature or responsibilities involved in such roles and the hand-over usually required in such cases.

Can employers require employees to serve a period of "garden leave" during their notice period when the employee remains employed but does not have to attend for work?

As such, ‘gardening leave’ has not as yet been incorporated into our law however it is common practice for foreign owned companies to impose it by way of forced leave.  

What protection do employees have against dismissal? In what circumstances is an employee treated as being dismissed? Is consent from a third party required before an employer can dismiss?

An indefinite term contract of employment may be terminated by the employer only on the grounds of:

  1. good and sufficient cause;
  2. redundancy; or
  3. reaching retirement age.

In case of termination for good and sufficient cause, the employer shall not be required to give advance notice of termination and/ or pay the employee for any wages relating to such notice period. The law does not establish what good and sufficient cause is, but provides what it is not.

Some of the reasons which may not be deemed to be a good and sufficient cause are the following:

  1. that the employee at the time of the dismissal was a member of a trade union, or is seeking office as, or acting or has acted in the capacity of an employees’ representative; or
  2. that the employee contracts marriage; or
  3. that an employee is pregnant with child or is absent from work during maternity leave.

Where an employer intends to terminate the employment of an employee on grounds of redundancy, he shall terminate the employment of that person who was engaged last in the class of employment affected by such redundancy. Should the post formerly occupied by the redundant person be available again within a period of one year, that person shall be entitled to that post.

In all cases of collective redundancies, the employer shall not terminate the employment of such employees before he has notified in writing the employees’ representatives and the Director of Labour thereafter. Collective redundancy is defined as the termination of the employment by an employer on grounds of redundancy, over a period of thirty days, of:

  1. 10 or more employees in establishments normally employing more than 20 employees but less than 100 employees;
  2. 10% or more of the number of employees in establishments employing 100 or more but less than 300 employees; and
  3. 30 employees or more in establishments employing 300 employees or more.

Are there any categories of employees who enjoy special protection against dismissal?

It is not lawful for an employer to dismiss a pregnant employee, an employee who has recently given birth or a breastfeeding employee, from the date in which such employee formally notifies the employer of her pregnancy to the end of her maternity leave, or during any period of special maternity leave, because of her condition or because she avails herself of any rights in accordance with her entitlements at law.  An employer may however dismiss such an employee during her probationary period, on grounds of redundancy or if there is good and sufficient cause for such dismissal.  In cases where there is good and sufficient cause to dismiss the employee, the employer must cite duly substantiated grounds for her dismissal in writing in her notice of termination and send a copy of such notice to the Director responsible for Employment and Industrial Relations.

Employees on maternity leave may not be given notice and therefore their employment may not be terminated during that period.

When will an employer be entitled to dismiss for: 1) reasons related to the individual employee; or 2) business related reasons? Are employees entitled to compensation on dismissal and if so how is compensation calculated?

The employer may dismiss for individual reasons for a ‘good and sufficient’ cause. Unless there is just cause for immediate dismissal, the general practice prior to dismissal is for the employer to give the employee three written warnings prior to dismissal.  

The employer may dismiss an employee for business reasons by making the employee redundant. This generally happens when an employer is downsizing and/ or restructuring the company. In terms of law, should the post be made available again within a period of one year the employee who was made redundant shall be automatically eligible for that post.  

If employees are dismissed for good and sufficient cause, the employer is not required to give advance notice of termination and/or pay the employee for any wages relating to such notice period. However, if the employees are being made redundant then the employees should be given a notice period (depending on the time that they have been in employment) as stated in 6.1 above and are also entitled to payment in terms of any accrued leave.  

Are there any specific procedures that an employer has to follow in relation to individual dismissals?

There are no specific procedures that an employer must follow enshrined in our law.  However the Industrial Tribunal has in various awards cited that three previous warnings must be given prior to dismissing an employee.  It is however common practice for employers to set out the specific procedures (such us disciplinary hearings and rights of appeal) which must be followed prior to dismissing an employee in a schedule to the employment agreement or in an employment manual which is circulated to all employees.

What claims can an employee bring if he or she is dismissed? What are the remedies for a successful claim?

In cases where the employee feels that his/ her employment has been terminated unjustly, an action for unfair dismissal may be brought in front of the Industrial Tribunal within four months from the date of termination.  

If the complaint is found to be well-founded by the Tribunal, the Tribunal may either order the re-instatement or re-engagement of the employee or will reward compensation.

If there is no specific request by the employee for reinstatement or re-engagement or the Tribunal decides not to make an order for reinstatement or re-engagement, the Tribunal shall make an award of compensation, to be paid by the employer to the complainant, in respect of the dismissal. In determining the amount of such compensation, the Tribunal shall take into consideration the real damages and losses incurred by the employee who was unjustly dismissed, as well as other circumstances, including the employee’s age and skills as may affect the employment potential of the said employee.

Can employers settle claims before or after they are initiated?

Yes, the employee and employer may come to an agreement and enter into a settlement agreement at any stage prior to or pending the claim in front of the Industrial Tribunal. In case where the employee would have already initiated the claim in front of the Tribunal the employee may withdraw the case.

Does an employer have any additional obligations if it is dismissing a number of employees at the same time?

A number of redundancies at one time is referred to as ‘collective redundancies’. Collective redundancy is defined as the termination of the employment by an employer on grounds of redundancy, over a period of thirty days, of:

  1. 10 or more employees in establishments normally employing more than 20 employees but less than 100 employees;
  2. 10% or more of the number of employees in establishments employing 100 or more but less than 300 employees; and
  3. 30 employees or more in establishments employing 300 employees or more.

In all cases of collective redundancies, the employer proposing to declare the redundancies, shall not terminate the employment of such employees before he has notified in writing the employees’ representatives, of the termination of employment contemplated by him and has provided the said representatives with an opportunity to consult with the employer.

The employer shall also forward to the Director responsible for Employment and Industrial Relations, a copy of the afore-mentioned written notification and written statement on the same day that these are notified to the employees’ representatives.

How do employees enforce their rights in relation to mass dismissals and what are the consequences if an employer fails to comply with its obligations?

The employee’s interest is safeguarded by the fact that their representative (whether union or otherwise) will be spearheading discussions with the employer in order to possibly diminish the number of redundancies and/ or avoid them completely.

Any person who does not abide by the procedure for collective redundancy in terms of the Collective Redundancy (Protection of Employment) Regulations shall be liable to a fine of minimum €1,164.69 for every employee that is declared redundant.

Terms and Conditions of Employment

Employee Representation and Industrial Relations

Discrimination

Maternity and Family Leave Rights

Business Sales

Protecting Business Interests Following Termination

Court Practice and Procedure

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Altra Industrial Motion Inc.

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Partner 

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