Collective redundancies

In short. The rules apply when enough redundancies fall within thirty days. Once they do, consultation has to start while the proposal is still open, the Director responsible for employment and industrial relations must be told, and no redundancy can take effect until thirty days after that notification. The rules apply in full when the decision was taken by a parent company abroad.

When the rules apply

The Collective Redundancies (Protection of Employment) Regulations (S.L. 452.80) apply to terminations by the employer on grounds of redundancy, over a period of thirty days, in these numbers:

Other terminations at the employer's initiative, for reasons not related to the individual employees, count towards the number, provided there are at least five redundancies. Fixed-term and specific-task contracts are left out, unless they are ended early because of the redundancy.

In practice. The count depends on what the establishment is, and that is not settled for every group structure. Spreading dismissals across periods or entities to stay below a threshold invites the question whether the duties were avoided. Near a threshold, it is usually safer to plan as if the rules apply.

Who you consult

The duties are owed to the employees' representatives. The law sets them out in order: the recognised union representative; where there is no recognised union, the representative of the union representing the employees; and, for non-unionised staff, a representative elected from among them by secret ballot, which the employer calls.

In practice. Where there is no union, organising the ballot takes time and belongs at the very start of the timetable. Consulting the wrong people, or no one, can make the whole process defective. Where a union is recognised, a collective agreement may add procedures of its own.

The steps, in order

1. Notify the representatives in writing of the redundancies you are contemplating.
2. Inform them within seven days, in writing: the reasons, the number to be made redundant, the number normally employed, the proposed selection criteria, any redundancy payments, and the period over which the redundancies will take place.
3. Consult, starting within seven working days of the notification, on ways to avoid the redundancies, reduce their number and soften their consequences.
4. Copy the Director with the notification and the statement on the same day.
5. Wait: the redundancies take effect only thirty days after that notification. The Director may shorten the period in exceptional cases or extend it by a further thirty days. Individual notice may run from the start of consultation.

The duties apply whether the decision was taken by the employer or by a company that controls it, and the employer cannot excuse a failure by saying the parent did not supply the information. A breach is a criminal offence, with a fine of at least €1,164.69 for every employee declared redundant.

In practice. Consultation most often fails on timing: a group announcement fixed abroad, a proposal presented as final, or information given late. Notifying the authority late does not make dismissals already given effective thirty days later: see the case note on Tomann. Preparing the documents and the representatives before the first notification stops the statutory clock from dictating the business timetable.

Selection and alternatives

Within the class of employment affected, Maltese law expects the person engaged last to be the first to go. The class follows any collective agreement or, where there is none, the work people actually do, not their job titles. No one may be selected for a reason the law excludes, such as union activity, acting as a representative or a complaint against the employer.

A person made redundant is entitled to be re-employed if the post becomes available again within one year, on conditions no less favourable: see right to re-employment.

In practice. The selection rule can remove the very people the business most wants to keep. Drawing the class correctly, offering genuine alternatives and agreeing voluntary departures are the usual ways to reconcile the law with the business need. Each has to be handled and recorded with care.

Where it goes wrong

• counting too narrowly, by splitting dismissals across periods, sites or companies;
• consulting after the decision has, in practice, been made;
• a written statement that leaves out information the representatives are entitled to, which can found individual claims as well: see Degiorgio v Air Malta;
• assuming that no representatives means no duty: see EI v Brink's;
• selecting outside the right class of employment, or leaving out people doing the same work;
• treating a sale or outsourcing as a redundancy when it is a transfer of business.

Each of these leads to claims, fines or an injunction that stops the programme, and costs goodwill with the staff who stay.