Redundancy in Malta
Redundancy in the Maltese context is generally regularised by the Employment and Industrial Relations Act (EIRA). This framework establishes the conditions under which redundancy can validly apply, along with an array of other protections afforded to employees, and a number of obligations that employers must abide by.
With reference to redundancy, the EIRA also provides for long sick leave, maternity leave, parental leave, and the process for reinstatement. However, since the EIRA and the Maltese Employment Framework do not provide a clear definition of what constitutes as redundancy, or the instances which lead to a valid redundancy under Maltese law, this specific 'topic' is quite an ambiguous area and one which needs further clarification.
To do so, one may refer to legal scholars and case law for guidance. Generally, the Industrial Tribunal and Maltese Courts refer to English Jurisprudence to cater for such lacunas within the Maltese Framework.
Defining Redundancy
Selwyn defines redundancy as the termination of employment due to the employer's need to reduce the workforce because of business closures, workplace closures, or a reduced need for employees. This must be a genuine and fair process to avoid legal repercussions.
A company can make an employee redundant in several circumstances whether for economic reasons, technological advancements, reorganisation/restructuring or closure/downsizing.
For instance, a company going through financial difficulties could be forced to reduce its workforce. Similarly, the introduction of new technologies would automate tasks previously performed by employees.
Moreover, changes being affected to the company's structure or strategy could render certain roles unnecessary.
Naturally, the closing down of a business' operations or the scaling down of its activities would render the company in a position of letting people go.
The 2 key elements for Redundancy to subsist
There are 2 key elements that must subsist for a legal redundancy, namely;
- genuine redundancy and
- a fair process.
In a nutshell, these key elements require that redundancy arises from actual changes in the business' operational requirements and that employers follow a fair process in choosing employees for redundancy. This shall include a proper consultation and consideration of alternative employment opportunities.
Selwyn emphasises that redundancy should not be used as a pretext for dismissing employees for other reasons, such as poor performance or misconduct. It highlights the importance of ensuring that the redundancy process is transparent, fair, and compliant with statutory requirements to avoid claims of unfair dismissal.
In the 2018 case of 'Kiss Aviation Limited vs. Eleno Desira', while the employer claimed to have abided by the required consultation process and even went so far as to present the employee with alternative employment within the company, the employee still did not accept. In consideration of the latter, the Industrial Tribunal ruled that the redundancy was justified due to genuine restructuring and not a pretext for unfair dismissal.
Proving Genuine Redundancy in Particular instances
The manner in which redundancy cases are justified as genuine cases, in specific circumstances, varies.
For instance, employees on long-term sick leave have specific protections under Maltese law since the redundancy must be based on the work position's redundancy and shall by no means be influenced by the employee's health status.
In the 2017 case of 'Doreen Sciberras vs. Powerplan Limited', the employer could not justify that the position was genuinely made redundant and failed to provide adequate evidence that the redundancy process administered was fair. Thus, the Industrial Tribunal established the employee's redundancy on long sick leave as unfair.
In the 2016 case of, 'Lorraine Farrugia vs. B. Tagliaferro & Sons Ltd', the employer failed to prove that the redundancy was not related to the employee's maternity leave and thus failed to follow the proper legal procedures. In turn, the Industrial Tribunal held that dismissing an employee on maternity leave was unlawful.
Similarly, while an employee is on parental leave, they would be protected from redundancy in relation to their leave status.
In fact, in the 2015 case of 'Maria Mifsud vs. Maltapost plc', the employer failed to demonstrate that the redundancy was necessary and unrelated to the employee's parental leave. Conversely, the Industrial Tribunal decided that the dismissal of an employee on parental leave was unfair.
Reinstatement following Redundancy
When a company declares an employee redundant, the Maltese legal framework requires that if the position becomes available again within a year, the employer must first offer the job to the redundant employee before hiring a new candidate.
Firstly, the employer must make a reasonable effort to notify the redundant employee that the position is available again, with an offer for the same position or an equivalent role with similar terms and conditions. In said instance, the redundant employee has the right to either accept or decline such an offer.
Following the offer, there shall then be an 'acceptance period' whereby the employee will typically have a reasonable period to respond to the reinstatement offer.If the employer fails to notify the redundant employee of the position's availability, legal claims for unfair dismissal or breach of employment rights may ensue against said employer.
In fact, in the 2019 case of,'John Camilleri vs. Portelli & Borg Ltd', the Industrial Tribunal established that the employer failed to notify the redundant employee about the new availability of his previous position within the stipulated one-year period. Upon this reasoning, the employee was awarded compensation for unfair dismissal as the employer did not comply with the obligation for reinstatement.
Whilst this article should not be construed as an exhaustive representation of all the applicable scenarios in relation to redundancy, it may provide employers with a few guidelines on adhering to these legal frameworks and learning from past case law, to ensure compliance with employment law, which in turn will protect both their interests and those of their employees during redundancy processes.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.