Terminating Employment in Malta: What Should Employers Know? 

Termination of employment is one of the most legally sensitive decisions an employer may take. Although an employer may have genuine commercial or disciplinary reasons for ending an employment relationship, the manner in which the decision is reached can be as important as the reason itself. Maltese law distinguishes between termination during probation, redundancy, dismissal for good and sufficient cause and the premature termination of fixed-term contracts. Each situation gives rise to different obligations and potential liabilities. 

The principal legislative framework is the Employment and Industrial Relations Act (Chapter 452 of the Laws of Malta) (the “Act”), supplemented by subsidiary legislation, applicable wage regulation orders, collective agreements and the terms of the employment contract. The following considerations are particularly relevant to employers contemplating dismissal. 

1. Is there a lawful basis for termination? 

Under Article 36 of the Act, an indefinite employment relationship may be terminated in accordance with the statutory framework, including on grounds of redundancy or for good and sufficient cause. The latter is not simply a label an employer may attach to dissatisfaction with an employee. An allegation of misconduct, poor performance or loss of trust must be assessed against the facts, the employee’s duties, the gravity of the conduct and the proportionality of dismissal as a response. 

In disciplinary cases, employers should distinguish a genuinely serious breach warranting immediate dismissal from shortcomings that might reasonably be addressed by warnings, performance management or lesser disciplinary measures. Evidence, consistency of treatment and the opportunity afforded to an employee to answer allegations will often be central in subsequent proceedings. 

2. Procedural fairness: the importance of hearing the employee 

A significant recent illustration is Manuel Caruana v Leadership Consultancy & Training Services Ltd, decided by the Court of Appeal (Inferior Jurisdiction) on the 16th of September, 2026. As reported in contemporary legal commentary, the Court upheld a finding of unfair dismissal where allegations had not been properly substantiated, and the employee was not afforded a fair opportunity to respond before his employment was terminated. The Court rejected the proposition that the possibility of contesting dismissal before the Industrial Tribunal could substitute for appropriate fairness at the disciplinary stage. 

The practical lesson is that even where the employer believes there are serious grounds for dismissal, it should identify the specific allegations, disclose their substance, allow the employee a meaningful opportunity to explain and consider that explanation before deciding. The requirements of a fair process must be adapted to the particular workplace and circumstances; they should not be treated as a mere formality. 

3. Probation is not an unrestricted right to dismiss 

Probation ordinarily lasts six months in indefinite contracts, although particular arrangements apply, including in respect of certain higher-paid technical, executive, administrative or managerial employees. Fixed-term probationary periods must be proportionate to the contract’s duration under the applicable rules. During probation, either party may generally terminate without assigning a reason, subject to one week’s notice once continuous service exceeds one month. This does not displace protections against unlawful discrimination or other statutory safeguards. Special rules also apply, for example, when terminating the employment of a pregnant employee. 

4. Redundancy must be genuine and properly implemented 

Redundancy arises from the employer’s operational requirements rather than employee misconduct. Employers contemplating restructuring should identify and document the business rationale, assess which positions are affected and examine applicable selection obligations. The statutory last-in, first-out principles, including their application within the relevant category of employment, require particular attention. 

Notice is generally due when an indefinite contract ends through redundancy. In addition, where a post previously occupied by an employee dismissed for redundancy becomes available within one year, the employer may be obliged to re-engage that employee. A purported redundancy followed immediately by replacement in materially the same role may raise serious questions about the genuineness of the stated reason. 

5. Notice periods and payments in lieu 

For indefinite employment beyond probation, the statutory notice entitlement is tied to continuous service. Broadly, it ranges from one week for service exceeding one month but not exceeding six months, to twelve weeks where service exceeds ten years. Longer notice periods may be agreed for certain technical, administrative, executive or managerial posts. Employers should calculate the period accurately and consider whether the employee will work it. 

The financial consequences depend on who gives notice and who elects not to work it. For example, where an employer gives notice on redundancy grounds and then prevents the employee from working the balance, the employer is generally liable for the full wages attributable to that unworked period. Where the employee elects not to work notice given by the employer, a different statutory calculation applies. Immediate termination for good and sufficient cause operates under a separate legal basis and should not be confused with a redundancy dismissal accompanied by payment in lieu. 

6. Fixed-term contracts: an important distinction 

A fixed-term contract cannot be approached in the same manner as an indefinite contract. Under Article 36 of the Act, where a party prematurely terminates a definite contract after probation without justified reason, that party may be liable to pay the other an amount equal to half the full wages which would otherwise have accrued over the unexpired contractual period. Accordingly, a seemingly straightforward termination may generate a substantial contractual claim, particularly where much of the agreed term remains outstanding. 

Before acting, employers should review the precise duration of the contract, the applicable probationary period, the asserted reason for termination, and any legislative or contractual considerations relevant to liability. The ordinary indefinite-contract notice scale should not simply be imported into a fixed-term termination. 

7. Unfair dismissal proceedings and compensation 

An employee alleging unfair dismissal may refer the matter to the Industrial Tribunal, generally within four months of termination. Pursuant to the statutory framework, including Articles 75 and 81 of the Act, the Tribunal may examine the lawfulness of dismissal and, where appropriate, award compensation or order reinstatement. The amount of compensation is not necessarily predetermined by the employee’s notice entitlement. 

In the Caruana litigation, the Court of Appeal also addressed the assessment of compensation under Article 81(2)(a), directing reconsideration of the employee’s actual loss, including a period of unemployment and reduced earnings in subsequent employment. This underscores the potential consequences of failing to demonstrate not only a defensible ground for dismissal but also a procedurally fair decision-making process. 

The Tribunal’s published decisions also illustrate the fact-specific nature of the exercise. In Marc Day v Evolution Malta Limited (Industrial Tribunal Decision No. 2826, 2022), the Tribunal addressed both the lawfulness of dismissal and contributory employee conduct when considering compensation, referring to earlier local jurisprudence and relevant principles of employment law. Employers should therefore be cautious about assuming that identifying employee misconduct necessarily resolves either liability or quantum. 

8. Final entitlements and an evidential record 

Termination does not extinguish accrued employment rights. Employers must account for outstanding wages, overtime, accrued leave and applicable statutory bonuses or allowances, as well as sums properly due in respect of notice or contractual termination. Relevant Jobsplus filings and termination documentation should also be completed correctly. 

Contemporaneous records can be decisive: job descriptions, appraisals, warnings, correspondence, investigation materials, meeting minutes, redundancy assessments and calculations of final dues should be properly maintained. A termination letter should accurately state the decision and be consistent with the underlying record. Employers should be especially careful not to substitute post hoc justifications for reasons that were not genuinely considered at the time. 

Conclusion 

Employment termination in Malta requires more than a commercially sensible decision. The applicable contract, the precise statutory ground, appropriate procedural safeguards and financial consequences must be considered together. Early legal assessment and a clear documentary trail can materially reduce the risk of disputes and help employers implement difficult decisions lawfully and proportionately.