Unjustified Dismissal in Malta: What Employers and Employees Should Know

Dismissal is one of the most sensitive areas of Maltese employment law. For employers, a dismissal decision must be legally justified, properly documented and procedurally fair. For employees, the law provides protection against termination which is not based on redundancy, good and sufficient cause, or proper procedure.

In Malta, disputes concerning unjustified or unfair dismissal are generally heard before the Industrial Tribunal, which has exclusive jurisdiction over alleged unfair dismissal cases. Under Article 75 of the Employment and Industrial Relations Act, the complaint must be referred to the Tribunal by means of a written declaration stating the facts of the case, and this must generally be filed within four months from the effective date of the alleged breach.



What amounts to unjustified dismissal?

A dismissal may be challenged where the employer terminates employment without a valid legal basis. In broad terms, an employer must normally be able to show one of the following:

• redundancy;
• good and sufficient cause;
• termination during probation, where applicable and lawfully handled;
• expiry of a fixed-term contract;
• another lawful contractual or statutory basis.

Article 36 of the Employment and Industrial Relations Act recognises that an employer may dismiss an employee without notice where there is good and sufficient cause. However, the Act also lists grounds which cannot be relied upon as good and sufficient cause, including trade union membership or representation, marriage, pregnancy or maternity leave, protected disclosures, complaints against the employer, and transfer of business ownership unless justified by economic, technical or organisational reasons.

The key point is that the employer must not only have a reason. The reason must be legally valid, sufficiently serious where disciplinary dismissal is involved, and supported by a fair process.

The importance of fair procedure

Recent Maltese cases continue to show that procedure matters.

A dismissal may be found unfair even where the employer believes there were performance or disciplinary concerns, if the employee was not given a fair opportunity to understand the allegations, answer them, and participate in a proper disciplinary process.

In Rueben Fenech vs L-Awtorità għas-Servizzi Finanzjarji ta’ Malta, the Court of Appeal confirmed an Industrial Tribunal decision concerning unfair dismissal. The case involved a senior MFSA employee whose dismissal was based on alleged poor performance. The Tribunal emphasised that disciplinary procedures contained in a collective agreement or staff handbook may form an important part of the employment relationship, and that principles of natural justice must be respected. These include the right to be heard, impartiality, proper investigation and avoidance of conflicts between investigator, witness and decision-maker.

The Tribunal also considered whether the reasons relied upon by the employer were legally sufficient. It was observed that vague warning letters, generic accusations or concerns not properly discussed with the employee may not be enough to support dismissal.

Remedies: compensation, reinstatement and re-engagement

If the Industrial Tribunal finds that a dismissal was unfair, it may order reinstatement, re-engagement or compensation.

Article 81 of the Employment and Industrial Relations Act provides that, where the Tribunal finds a complaint of unfair dismissal well-founded and considers reinstatement or re-engagement practicable and equitable, it may order such reinstatement or re-engagement. However, where the employee held a managerial or executive post requiring special trust, the Tribunal is restricted from ordering reinstatement or re-engagement in that role.

Where reinstatement or re-engagement is not ordered, the Tribunal must award compensation. In assessing compensation, the Tribunal must consider the real damages and losses suffered by the unjustly dismissed worker, together with other circumstances such as age, skills and employment potential.

The recent Fenech vs MFSA decision is particularly notable because the Court of Appeal confirmed a decision involving both reinstatement and compensation, in circumstances where the employee’s dismissal from a senior, sector-specific role had serious consequences for his career and earning potential.

Compensation is not automatic mathematics

Compensation in unfair dismissal cases is not calculated by a single fixed formula. The Tribunal will generally consider the employee’s actual losses, the period of unemployment, the employee’s efforts to mitigate loss, age, skills, prospects of alternative employment and the circumstances of the dismissal.

In a 2024 case discussed in local employment law commentary, the Court of Appeal considered the reasoning behind compensation awarded following an unfair dismissal finding. The Tribunal had separated compensation for the unfair dismissal itself from real damages linked to one month of unemployment. The case highlights the need for the Tribunal to explain the basis on which compensation is calculated, particularly where the employer challenges the amount awarded.

For employers, this means that a dismissal decision may expose the business not only to a finding of unfair dismissal, but also to an award reflecting actual financial consequences and wider employment-related factors. For employees, it means that evidence of loss, attempts to find new employment and the impact of the dismissal can be important.

Fair hearing and disciplinary safeguards

Another recent case involved OZO Services Limited, where the Court of Appeal upheld an Industrial Tribunal decision in favour of an employee. The employee had been dismissed following allegations connected to his role as a security guard. The earlier Tribunal decision concluded that the employee had not been granted a fair hearing and that the dismissal was unjust. The company’s appeal was rejected and the Tribunal’s decision was upheld.

This reinforces a practical lesson: where dismissal is based on allegations of misconduct, the employer should ensure that the disciplinary process is properly conducted. The employee should know the allegations, have an opportunity to respond, and be treated in accordance with any applicable handbook, collective agreement or internal disciplinary procedure.

Constructive dismissal and jurisdiction

Unjustified dismissal is not limited to cases where the employer expressly dismisses the employee. In some cases, an employee may resign because the employer’s conduct has made continued employment intolerable. This is commonly referred to as constructive dismissal.

Recent commentary on Arabella Tonna vs Malta Stock Exchange et, decided by the Court of Appeal in July 2025, highlights an important distinction. Generally, unfair dismissal remedies fall within the Industrial Tribunal’s jurisdiction. However, the Court considered the nature of the specific claims being brought and distinguished between dismissal-related remedies and other civil claims for alleged abusive conduct or damages.

For practical purposes, this means that the way a claim is framed matters. A claim seeking reinstatement, re-engagement or compensation for dismissal will normally point towards the Industrial Tribunal. Other claims based on separate civil wrongs may raise different jurisdictional questions.

Appeals from the Industrial Tribunal

Industrial Tribunal decisions are binding. However, in unfair dismissal cases there is a right of appeal on a point of law to the Court of Appeal. Such appeal must be filed within the applicable statutory time limit, which Article 82 states is not later than twelve days from the date of the Tribunal’s decision.

This is a narrow form of appeal. It is not simply a second hearing on the facts. Parties should therefore treat the Tribunal proceedings seriously from the outset and ensure that all relevant evidence, documents and arguments are properly presented.

Practical guidance for employers

Employers should avoid treating dismissal as a purely administrative decision. Before terminating employment, it is important to review the contract, the employee handbook, any collective agreement, internal disciplinary rules and the factual basis for the decision.

In disciplinary cases, employers should normally ensure that allegations are clear, evidence is properly gathered, the employee is allowed to respond, and the final decision is taken by an appropriate and impartial decision-maker. In redundancy cases, employers should ensure that the redundancy is genuine and properly documented.

A poorly handled dismissal can expose the employer to proceedings before the Industrial Tribunal, compensation, reputational risk and, in some cases, reinstatement or re-engagement orders.

Practical guidance for employees

Employees who believe they have been unjustly dismissed should act promptly. The four-month time limit for filing before the Industrial Tribunal is strict. Delay can prejudice the claim.

Employees should preserve the dismissal letter, contract of employment, payslips, warning letters, correspondence, internal policies, disciplinary records, WhatsApp messages, emails and any evidence relating to the circumstances of the dismissal. Where the issue involves constructive dismissal, it is particularly important to document the conduct relied upon before resigning.

Conclusion

Unjustified dismissal in Malta is highly fact-sensitive. The Industrial Tribunal will look at the reason for dismissal, the procedure followed, the evidence available to the employer, the employee’s role, and the consequences of termination.

Recent cases show three recurring themes. First, employers must respect fair procedure. Secondly, compensation must be reasoned and linked to the circumstances of the case. Thirdly, the remedies available in unfair dismissal disputes may be wider and more flexible than employers sometimes assume.

For both employers and employees, early legal advice is often decisive. A dismissal dispute is rarely won or lost only at the final hearing. It is usually shaped by the documents, procedure and strategy adopted from the beginning.