Planning workforce restructuring in Malta

Who this is for: boards, owners, HR directors, in-house lawyers and overseas counsel responsible for a reorganisation that affects employees in Malta.

Short answer. Before announcing a programme, establish the business rationale and its evidence, map the employing entities and the people affected, decide whether the change involves redundancy, a transfer or both, check the collective redundancy thresholds, consider alternatives, and build a timetable around the statutory periods rather than the group’s announcement date. Several Maltese duties attach to proposals, not just to final decisions.

This is a best-practice guide. Real programmes rarely run to it, and the gaps are where the cost lies.

Best practice, and the reality

The guide sets out how a restructuring should be planned when everything is in order: the records are complete, the reasons are documented, the timetable allows for consultation, and each person affected fits neatly into one legal route.

That is rarely the position. In most programmes, some of the following get in the way:

A group announcement date fixed abroad before anyone has looked at the Maltese periods.
Contracts, job descriptions and collective agreements that do not match the work people actually do, so the class of employment is unclear.
Headcounts spread across several entities or sites, which makes the collective thresholds hard to count.
Work moving to a contractor or another group company, where it is not obvious whether a transfer applies.
Employees on maternity leave, absent after an injury at work, or serving as employee representatives.
Key people the business needs to keep, who joined recently and would therefore be the first selected under the statutory rule.
A union that disputes the rationale, or no representatives in place when consultation has to begin.
Senior departures with incentive plans, restrictive covenants or regulatory notifications attached.

Each of these can be dealt with, but not by following a checklist. They call for judgement about which risks to remove, which to manage and in what order. Getting it wrong is expensive: unfair dismissal awards, re-employment claims, criminal penalties under the collective redundancy rules, injunctions that stop a programme, and the management time and reputational cost that follow.

The sections below set out the standard. Each ends with a note on where it tends to break down.

Contents

Define the change and its reason
Map the workforce
Choose the legal route
Check the collective thresholds
Information and consultation
Selection and alternatives
Build a conditional timetable
Implementation
After the change
A planning table

1. Define the change and its reason

Write a short internal note answering three questions:

What will change? Which work will stop, be reduced, be done differently, be moved, or be done by someone else.
Why? The commercial, technical or organisational reason, in plain language.
What is the evidence? Financial information, workload data, system changes, client losses, a group decision.

This note becomes the basis of later consultation documents and, if there is a dispute, of the employer’s explanation to the Industrial Tribunal. A rationale reconstructed after the event is harder to defend than one recorded at the time.

In practice. The rationale is often a cost target set at group level, with little local evidence behind it. The work lies in turning that target into a reason that explains why these roles, in this entity, are no longer needed.

2. Map the workforce

For each employing entity in Malta, record:

The roles affected and the people currently in them.
The type of contract each person holds: indefinite, fixed-term, or still on probation.
The work each person actually performs. Job titles are not decisive. Where there is no collective agreement defining groups of employees, the Act’s “class” of employment refers to the work performed or expected to be performed, independently of title (Cap. 452, article 2).
Any collective agreement and any recognised union.
Anyone with additional protection or considerations, such as an employee on maternity leave, a person absent through an injury at work, or an employee representative (article 36).
How many people the establishment normally employs, for the collective thresholds.

In practice. Records are rarely complete. Titles drift away from duties, side letters change terms, and people move between group entities without new contracts. Gaps found at this stage are cheap to fix. Gaps found by the Tribunal are not.

3. Choose the legal route

The route decides the rules. The main possibilities are:

Redundancy. The work is no longer needed, or is needed in a reduced form. Under Maltese law, an employer may end an indefinite contract on grounds of redundancy (article 36(3)). Selection follows the statutory rule in article 36(4).
A reason relating to the individual. Conduct or capability. This is a separate route requiring a good and sufficient cause (article 36(14)) and its own fair process. It should not be mixed with a redundancy programme.
Transfer of business or service provision change. Where an undertaking, or part of one, situated in Malta moves to a new employer and retains its identity, or activities are outsourced, re-tendered or brought back in-house, employees transfer automatically with their rights (S.L. 452.85, regulations 2, 3 and 3A). The transfer is not in itself a ground for dismissal, although dismissals for economic, technical or organisational reasons entailing changes in the workforce are not excluded (regulation 5(2)).
Changes to terms. Some reorganisations change roles or conditions without terminating employment. These need their own contractual analysis.
Fixed-term contracts. Expiry, early termination and conversion to indefinite employment each have separate rules (article 36(11); S.L. 452.81, regulation 7).

A programme may combine routes. Each person affected should end up on one clear route that fits their facts.

In practice. The routes overlap. Outsourcing a function may be a transfer rather than a redundancy, and a reorganisation that changes roles can produce claims if employees refuse the new terms. Choosing the route is where most exposure is either created or avoided.

4. Check the collective thresholds

Under the Collective Redundancies (Protection of Employment) Regulations (S.L. 452.80), a collective redundancy is a termination of employment by the employer on grounds of redundancy, over a period of thirty days, of:

ten or more employees in establishments normally employing more than twenty and fewer than one hundred employees;
10% or more of the employees in establishments employing one hundred to two hundred and ninety-nine; or
thirty or more in establishments employing three hundred or more.

Terminations at the employer’s initiative for reasons unrelated to the individual employees are counted as well, provided there are at least five redundancies (regulation 2). Fixed-term and specific-task contracts are excluded unless they are ended early because of redundancy (regulation 3).

Count carefully and count across the whole programme. Phasing a programme to stay below the thresholds invites the question whether the duties were avoided, and the regulations are backed by criminal penalties of at least €1,164.69 for every employee declared redundant (regulation 11).

In practice. The count depends on what the establishment is, and that question is not settled for every structure. Where a programme sits near a threshold, it is usually safer to plan as if the duties apply.

5. Information and consultation

Collective redundancies. Where the thresholds are reached:

Notify the employees’ representatives in writing of the contemplated terminations (regulation 4).
Within seven days, give them a written statement with all relevant information, including the reasons, the number of employees to be made redundant, the number normally employed, the proposed selection criteria, any redundancy payments due, and the period over which the redundancies will take place (regulation 6).
Begin consultation within seven working days of the notification. Consultation covers ways of avoiding the redundancies or reducing their number, and mitigating their consequences (regulation 5).
Send copies of the notification and statement to the Director responsible for employment and industrial relations on the same day (regulation 8).
The redundancies may take effect only thirty days after that notification. The Director may shorten the period in exceptional circumstances or extend it by a further thirty days (regulation 9). Individual notice may begin to run from the start of consultation (regulation 9(3)).

“Employees’ representatives” means the recognised union representative or, where there is no recognised union, the representative of the union representing the employees or, for non-unionised employees, a representative elected by secret ballot called by the employer (Cap. 452, article 2).

Transfers. The transferor and the transferee must each give the employees’ representatives a written statement of the date or proposed date, the reasons, the legal, economic and social implications, and the measures envisaged, at least fifteen working days before the transfer or before employees are directly affected, whichever is earlier (Cap. 452, article 38(2); S.L. 452.85, regulation 6). That duty applies to undertakings or parts employing more than twenty employees (regulation 4). Consultation must begin within seven working days of notification where measures affecting conditions of employment are envisaged (regulation 8).

General information and consultation. Undertakings in Malta with fifty or more employees are also subject to the Employee (Information and Consultation) Regulations (S.L. 452.96), which cover information and consultation on decisions likely to lead to substantial changes in work organisation or contractual relations.

A group decision does not change the local duty. Both sets of regulations apply whether the decision is taken by the employer or by an undertaking controlling it, and the employer cannot rely on the parent’s failure to provide information (S.L. 452.80, regulation 7; S.L. 452.85, regulation 6).

In practice. Consultation most often fails on timing: information given late, a proposal presented as final, or no representatives in place. Preparing the documents and the representatives before the first notification stops the statutory clock from dictating the business timetable.

6. Selection and alternatives

Selection. Where redundancy is the ground, Maltese law requires the employer to terminate the employment of the person engaged last in the class of employment affected (Cap. 452, article 36(4)). Scoring matrices common in other countries are not the Maltese starting point. Identifying the correct class, by reference to any collective agreement or to the work actually performed, is therefore the key analytical step.

Protected reasons and characteristics. No selection or dismissal may rest on a reason the Act excludes, such as union membership or activity, a disclosure to a regulator, or a complaint against the employer (article 36(14)), or discriminate on a protected ground (Cap. 452 and S.L. 452.95).

Re-employment. A person made redundant is entitled to re-employment if the former post becomes available within one year, on conditions no less favourable (article 36(3)). Where employees were made redundant before a transfer that would otherwise have moved them, the transferee must re-employ them if their posts become available within a year (S.L. 452.85, regulation 3A).

Alternatives. Record what was considered: redeployment, changes to roles, reduced hours by agreement, a hiring freeze, voluntary departures. Exceptionally, the employer and employees or their union may agree temporary conditions below the statutory standard to avoid redundancies, with the Director’s approval reviewed every four weeks (article 42).

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

7. Build a conditional timetable

A global announcement date is not a Maltese legal timetable. Work backwards from the earliest lawful effective date and forwards from the latest point at which the proposal is still open to consultation. Keep every date conditional on the outcome of consultation.

Stage	What happens	Statutory anchor
Planning	Rationale, mapping, route, thresholds	None; prudent preparation
Notification	Written notice to representatives; copy to the Director	S.L. 452.80, regs 4 and 8
Information	Written statement of required information	S.L. 452.80, reg 6
Consultation	Begins within seven working days	S.L. 452.80, reg 5
Waiting period	At least thirty days from notification to the Director, subject to variation	S.L. 452.80, reg 9
Individual notice	Contractual or statutory notice	Cap. 452, art 36(5)
Transfer information	At least fifteen working days before the transfer	S.L. 452.85, reg 6

In practice. Group timetables are seldom written with Maltese periods in mind. Agreeing early which dates are fixed and which depend on consultation avoids a public change of plan later.

8. Implementation

Individual letters that state the route and the reason accurately.
Notice and payment calculations checked against each contract.
Meetings handled consistently and recorded.
Senior departures agreed in writing, with attention to any regulatory notification and to company law steps for directors.
Communications that do not present a proposal as final while consultation is open.

9. After the change

Keep the planning file, consultation record and selection analysis.
Track any vacancy in a former post for one year (article 36(3)).
Note the four-month time limit for unfair dismissal complaints (article 75(3)).
Review pay structures under the Equal Pay (Transparency and Reporting) Regulations, 2026 (L.N. 173 of 2026) if roles or grades changed.

10. A planning table

Use one row per workstream. Do not enter employee names in shared planning documents unless necessary; use role references.

Workstream	Decision owner	Key documents	Open question	Depends on
Rationale	Board / CEO	Business case, data	Is the reduced need evidenced?	Finance input
Workforce map	HR	Contracts, org chart, CA	Which class does each role fall in?	Collective agreement review
Route	Legal	Map, rationale	Redundancy, transfer or both?	Transaction documents
Thresholds	HR / Legal	Headcount by establishment	Collective duties triggered?	Counting method
Consultation	HR / Legal	Notification, statement	Who are the representatives?	Union recognition
Timetable	Programme lead	Group plan	Earliest lawful effective date?	Notification date
Senior exits	Board	Service contracts, plan rules	Regulator to be notified?	Regulatory advice

A fictional example

Invented to illustrate the questions. It does not describe a real employer and does not predict an outcome.

A gaming group headquartered abroad decides to close a customer support function in Malta employing forty people and move the work to a contractor. The group plans to announce on a fixed date.

The Maltese employer’s planning file asks: is moving the work to a contractor a service provision change, so that staff would transfer to the contractor; if not, does a redundancy of forty people in an establishment normally employing sixty people reach the collective thresholds; who are the employees’ representatives; and what is the earliest date on which any termination could lawfully take effect. The global announcement is re-drafted as a proposal subject to consultation in Malta.

How I can help

A guide can set out the standard. It cannot tell you which of the obstacles above apply to your programme, or how to deal with them at the lowest cost. That is the work of a restructuring adviser.

I advise employers before a restructuring is announced and while it runs. Typically, that means:

testing the business rationale and the workforce map against the Maltese rules;
deciding the legal route for each group of employees, including whether a transfer applies;
checking the collective thresholds and building a timetable the group plan can live with;
preparing the notification, the information statement and the consultation documents;
working through selection, alternatives and voluntary departures, where the largest risks usually sit;
engaging with the union, where staff are represented;
handling senior exits within the programme, including settlement terms and regulatory notifications.

The aim is a programme that achieves the business result with the least exposure: fewer claims, no avoidable penalties and no surprises in the timetable. The earlier I am involved, the more options remain open. Large in-person consultation programmes are run with your HR team or partner advisers.

This guide is general information about Maltese law, not advice on any particular programme.

Next step: Discuss a planned change. Read also: Workforce restructuring · Collective redundancies · Transfers of business · Redundancy or dismissal · Restructuring in Malta’s iGaming sector.

The law changes, so please check the current position with an advocate before acting.