Terminating Employment in Malta: Notice, Cause and Redundancy

An employer in Malta can end an indefinite contract freely during probation, and only for a good and sufficient cause after it. That single rule, found in the Employment and Industrial Relations Act (Cap. 452), is the biggest difference from at-will systems such as most US states.

During probation, either side may end the relationship without giving a reason. Probation is 6 months by default, or 1 year for technical, executive, administrative or managerial roles paid at least twice the national minimum wage. If the employee has worked more than one month, one week’s notice is due. Probation exits are the one point where no justification is needed, so it pays to review a new hire properly before the period ends.

After probation, a dismissal needs a good and sufficient cause. The law does not list every acceptable reason, but in practice the main categories are:

• Serious misconduct, such as theft, violence or a grave breach of trust.
• Repeated or persistent poor performance or conduct, after warnings and a fair chance to improve.
• Redundancy, where the role is no longer needed for genuine business reasons.
• The expiry of a fixed-term contract on its agreed date.

An employee can resign at any time, giving the same statutory notice that an employer would. Employment can also end by mutual agreement, which should always be recorded in writing.

Notice periods in Malta depend on the employee’s continuous service, and the same minimums apply whichever side ends the contract. Article 36 of Cap. 452 sets them as follows:

• More than 1 month and up to 6 months of service: 1 week.
• More than 6 months and up to 2 years: 2 weeks.
• More than 2 years and up to 4 years: 4 weeks.
• More than 4 years and up to 7 years: 8 weeks.
• More than 7 years: 8 weeks plus 1 extra week for each further year of service, up to a maximum of 12 weeks.

These are statutory minimums. Contracts for technical, administrative, executive and managerial posts may agree a longer period, and senior contracts often do. Where a contract sets a longer notice period, the contract applies, so check the offer letter before assuming the table is the full answer.

No notice is needed where the employment ends for a good and sufficient cause such as gross misconduct. Every other termination, including redundancy, requires notice or payment in its place. During the notice period the employee continues to earn their normal wage and accrue leave until it ends.

If an employer in Malta ends employment without giving the required notice, it must pay the employee the full wages for the notice period that was not given. The same logic works in reverse at a lower rate. An employee who walks out without notice owes the employer half the wages for the unexpired notice.

There is one more rule that catches employers out. Once an employer has given notice, the employee may choose to leave before the notice ends. In that case the employee is entitled to half the wages for the remaining part of the notice period.

A worked example makes the amounts concrete. Assume an employee on a gross salary of €70,000 a year, inclusive of statutory bonuses and COLA, with five years’ continuous service and no longer contractual notice. The weekly wage is €70,000 ÷ 52 = €1,346.15, and the statutory notice is 8 weeks.

• Employer dismisses for redundancy and wants the employee to leave straight away: pay in lieu of the full 8 weeks, €10,769.23.
• Employee resigns and leaves the same day: the employee owes half the wages for 8 weeks, €5,384.62.
• Employer gives 8 weeks’ notice and the employee leaves after 4: half the wages for the remaining 4 weeks, €2,692.31.

Those figures cover notice only. Final pay also includes wages up to the last day, pro-rata statutory bonus (€0.74 per calendar day since the last payment) and weekly allowance (€4.66 per week worked), and any unused annual leave, which may be paid in lieu only on termination. Nothing else is owed by statute, because Malta has no severance or redundancy payment formula.

Redundancy in Malta is a recognised good and sufficient cause for dismissal, but the employer must follow a set order of selection. Within the class of employees affected, the rule is last in, first out: the most recently engaged person in that class is released first.

A dismissed employee also keeps a right to be re-employed. If the post becomes available again within one year of the redundancy, the employer must offer it back to that person first. This is the part that trips up businesses which restructure and then rehire under a new job title, since a genuine change in the role matters more than a new name for it.

Larger reductions trigger the collective redundancy rules, with thresholds tied to headcount:

• 10 or more dismissals in a business with 20 to 100 employees.
• 10% of staff in a business with 100 to 300 employees.
• 30 or more dismissals in a business with 300 or more employees.

A collective redundancy requires consultation with employee representatives and notification before any dismissal takes effect, followed by a 30-day waiting period. Statutory notice still applies to each person on top of that. None of these steps comes with a statutory redundancy payment, although many employers offer an ex gratia sum in exchange for a signed settlement.

A fixed-term contract in Malta ends automatically on its agreed date, and no notice is needed for that. The complication is ending one early, after probation, for a reason other than good and sufficient cause.

In that case, the party that ends the contract early must pay the other half the wages that would have been earned for the remaining term. An employer that cuts a two-year contract short with twelve months left therefore owes six months’ wages. An employee who leaves early faces the same liability in reverse.

Fixed-term contracts also have a total limit. Successive fixed-term contracts with the same employer can run for a maximum of 4 years, after which the employment is deemed indefinite unless there are objective reasons for keeping it fixed-term. At that point the ordinary rules on cause and notice apply. Our guide to Malta employment contracts covers how to set these up properly from the start.

An employee who believes they were unfairly dismissed in Malta must file a claim with the Industrial Tribunal within four months of the termination, under article 75(1) of Cap. 452. Claims filed after that date are generally time-barred, which gives employers a clear point at which the main dismissal risk closes.

The Tribunal can find that there was no good and sufficient cause, or that the process was unfair, and award compensation. There is no fixed formula. The award reflects the circumstances of the case, including the employee’s loss, length of service and the way the dismissal was handled. Discrimination claims also go to the Industrial Tribunal.

The best protection is a paper trail: written warnings for conduct and performance, a documented business case for redundancy, and a termination letter that states the reason, the notice and the final pay. Separately, the employer must file the Jobsplus termination form within 4 days of the employment ending, and the employee receives an FS3 for the year’s earnings and deductions.

An Employer of Record handles terminations in Malta as the legal employer, so the notice, final pay and filings are its responsibility. With Employer of Record Malta, your employee is on the payroll of our own Maltese company, and we work through the exit with you before anything is said to the employee.

In practice that means we check the reason against the good and sufficient cause standard, confirm the notice period from the contract and service dates, calculate pay in lieu and pro-rata bonuses, issue the termination letter, submit the Jobsplus termination form and close the FSS record. If the person holds a Single Permit, we also handle the permit side with Identità, since their permit is tied to the employer.

Exits are part of our standard Malta EOR services, with no separate offboarding charge on top of the flat monthly fee. If you are weighing up a restructure, talk to our team before notice is given.