How to Terminate Employment in Malta Legally
For employers asking how to terminate employment Malta legally, the central issue is rarely the termination letter alone. The legal risk is created earlier: when the reason is unclear, evidence is incomplete, a disciplinary process is rushed, or a redundancy selection appears commercially convenient rather than objectively justified.
Maltese employment law protects employees against unjust dismissal while recognising that employers must be able to manage performance, misconduct, restructuring and genuine business change. A legally sound termination requires the right ground, a fair process and accurate administration. For regulated businesses, it should also sit within a wider framework of governance, confidentiality, data protection and record-keeping.
How to terminate employment in Malta legally
The Employment and Industrial Relations Act is a principal source of employment protection in Malta, but it is not the only document that matters. The employment contract, any collective agreement, workplace policies and the facts of the individual case can all affect the result.
Before taking action, establish four points: the employee’s contractual status, the proposed reason for termination, the procedure required, and the payments or notifications due. A dismissal may be challengeable even where there is a commercial reason for ending the relationship if the employer has used an unfair process or selected the wrong employee.
Start with the employee’s status and contract
Confirm whether the employee is on an indefinite or definite contract, still within probation, subject to a collective agreement, or employed in a role with regulated-sector obligations. Review clauses on notice, disciplinary action, confidentiality, restrictive covenants, return of company property and any agreed termination procedure.
A fixed-term contract should not be treated as freely terminable merely because the business wishes to reduce costs or change plans. Ending it before its agreed expiry can create contractual exposure unless there is a valid contractual mechanism, mutual agreement, or circumstances amounting to a legally defensible dismissal. Conversely, allowing a fixed-term contract to reach its agreed end may be different from dismissal, although the full context should still be assessed.
Probation also requires care. Maltese law generally permits either party to terminate during a probationary period, but the applicable duration and notice obligations depend on the role, remuneration and contractual arrangements. In particular, more senior technical, executive, administrative or managerial roles can have different probation arrangements where the statutory conditions are met. Do not assume that a probation clause removes every procedural obligation or prevents a discrimination claim.
Choose a lawful and supportable ground
The most common grounds are misconduct, poor performance, incapacity, redundancy and, in limited circumstances, another substantial reason connected with the employment relationship. The label is not decisive. What matters is whether the underlying facts support it and whether the employer has acted fairly.
Misconduct and disciplinary dismissal
Serious misconduct can justify dismissal without notice where it amounts to a just cause. Examples may include theft, violence, serious dishonesty, material breaches of trust, or grave breaches of security or compliance rules. Yet an allegation alone is not proof. Even where the facts appear compelling, the employer should investigate proportionately and give the employee a genuine opportunity to respond.
For less serious misconduct, a staged disciplinary approach will often be more appropriate. The employer should identify the allegation, provide relevant particulars, hold a meeting, consider the employee’s explanation and document the decision. Previous warnings should be relevant, current and consistent with the organisation’s written policy. A sudden dismissal for conduct that has previously been tolerated or handled informally is more difficult to defend.
In financial services, gaming, technology and other controlled environments, policy breaches may have significant regulatory implications. Nevertheless, a regulatory concern does not remove the need for procedural fairness. The investigation should preserve relevant records, limit access to sensitive information and distinguish between established facts and untested suspicion.
Poor performance and incapacity
Poor performance is usually not a one-meeting issue. A fair process normally identifies the required standard, explains where the employee falls short, gives a realistic period for improvement and offers appropriate support. The appropriate length of an improvement plan depends on the role and the seriousness of the shortfall. A sales target may be assessed differently from a recurring failure to follow a critical compliance control.
Long-term illness, disability or repeated absence need an especially careful approach. Absence does not automatically amount to a fair reason for dismissal. Employers should consider the medical position, operational impact, possible adjustments and whether continued employment remains reasonably practicable. Decisions connected to pregnancy, maternity, disability or other protected characteristics carry heightened discrimination risk.
Redundancy and organisational change
A redundancy must be genuine. The employer should be able to show that the need for employees has diminished because of restructuring, reduced work, closure, automation, relocation or another real business change. Replacing the dismissed employee with someone performing substantially the same role soon afterwards can undermine the stated rationale.
Selection must be objective and capable of explanation. Malta applies a statutory “last in, first out” principle within the relevant category of employees, subject to important qualifications. Employers should not define a category artificially to reach a pre-selected outcome. Skills, performance, qualifications and legitimate operational needs may matter, but selection criteria should be applied consistently and supported by evidence.
There may also be a statutory re-engagement obligation where an employer needs to fill the same post again within the relevant period after a redundancy. This is one reason why restructuring should be planned rather than treated as a short-term dismissal exercise.
Observe notice, pay and final entitlements
Unless dismissal is for just cause or a valid probationary arrangement applies, statutory notice is normally required. The minimum notice period rises with continuous service. It begins at one week for service exceeding one month and can rise to 12 weeks after more than 10 years’ service. Contractual or collective arrangements may provide more favourable terms, so the applicable documents should always be checked.
The parties may agree to payment in lieu of notice where appropriate. Employers should calculate final wages, accrued but untaken leave, commissions or other contractual sums carefully. A final payslip should be transparent, and any deductions must have a lawful basis. Recovering training costs, equipment value or other sums without clear authority can create a separate dispute.
Post-termination obligations should be addressed before the employee leaves. Secure company devices, systems access, keys, tokens, files and client information. Remind the employee of continuing confidentiality duties and, where valid and proportionate, contractual restrictions. For roles with access to personal data, trade secrets, source code or regulated information, access controls should be removed promptly and the offboarding record retained.
Document the process and complete statutory formalities
A termination decision should be documented as if it may later be reviewed by an independent tribunal. Keep the contract, policies, investigation notes, correspondence, meeting notes, warning records, evidence considered, redundancy rationale, notice calculations and proof of final payment. The written communication should state the decision clearly, avoid inflammatory language and remain consistent with the reason actually relied upon.
Employers must also make the relevant employment termination notification to Jobsplus within the applicable statutory timeframe. Payroll, social security and tax reporting should be reconciled, particularly where notice payments, bonuses or leave balances are involved. For senior or regulated employees, the business may additionally need to consider regulator notifications, handover duties and client communications.
Avoid discussing the reasons for departure more widely than necessary. Internal announcements should be factual and respectful. Sharing disciplinary allegations or health information can create avoidable privacy and reputational exposure.
Recognise protected and high-risk situations
Some cases require early legal review rather than a standard HR workflow. These include employees who are pregnant or on maternity-related leave, employees on sick leave or with a possible disability, whistleblowers, trade union representatives, employees who have raised a grievance, and workers alleging discrimination or harassment. Retaliation, or the appearance of retaliation, can materially increase risk.
Employees may challenge dismissal before the Industrial Tribunal, and employment claims are subject to strict time limits. A defensible employer position depends heavily on contemporaneous documents and a consistent explanation. Rewriting the reason after termination is rarely persuasive.
Where the relationship has deteriorated but the legal ground is uncertain, a negotiated separation may sometimes be the more controlled option. It should be genuinely voluntary, properly documented and based on informed agreement. It is not a substitute for fair treatment, but it can reduce uncertainty where both parties want a practical resolution.
A well-managed termination protects more than the organisation’s legal position. It protects operational continuity, employee relations and the confidence of regulators, investors and clients. Cuschieri Advocates can assist employers in assessing the facts, structuring a fair process and resolving disputes before they become more disruptive.
