News

Amendments to EIRA Provide Clarity for Fixed Term Contracts

The Employment and Industrial Relations Act (EIRA) has been amended with the aim of shedding further clarity into aspects relating to contracts of employment and contracts of services.

The scope of ‘unfair dismissal’ as provided for under the EIRA has been broadened so as to account for those instances in which an employer unrightfully terminates an employee on a fixed term contract of employment. It shall also be clearly stipulated that the expiration of a fixed term contract of employment shall not equate to the termination of the fixed term contract of employment.

The EIRA previously referred to the fact that where an employer dismisses an employee on a contract of service before the expiration of the time definitely specified by such contract he was required to pay the employee a sum equal to one-half of the full wages that would have accrued to the employee in respect of the remainder of the time specifically agreed upon. This Article in the EIRA has now been amended and the term “dismisses” has been replaced by “terminates”.

The amendments have also further clarified that an employer may dismiss the employee on a contract of service for an indefinite time and the employee on a contract of service for an indefinite time may abandon the  service  of  the  employer,  without  giving  notice  and without any liability to make payment if there is good and sufficient cause for such dismissal  or  abandonment  of  service. Previously this Articles did not specify a particular type of contract of service.

A further proviso has also been added to clarify that where either a) an employee abandons a fixed term contract of service prior to its expiry, or b) where an employer terminates a fixed term contract prior to its expiry, neither party is to be held liable for payment if there is good and sufficient cause for such dismissal or abandonment. The definition of “good and sufficient cause” in the EIRA has remained unchanged.

Usually, where a “good and sufficient cause” does not exist, an employee who abandons the service of his employer before the time definitely specified by the contract of service, is to pay to his employer a sum equal to one-half of the full wages to which he would have become entitled to had continued in the service for the remainder of the time. An employer would similarly be liable to pay the unfairly dismissed employee a sum equal to one-half of the wages that would have been due to the latter had the service continued.

Moreover, through these Amendments, the Industrial Tribunal now enjoys a wider jurisdiction. The Tribunal now has the competence to hear and decide on cases relating to sums which may become due to an employee, or to an employer, following the termination of a contract of service for a fixed term before the expiration of the term definitely specified in the contract. Previously, the Tribunal could only consider and decide on cases relating to alleged unfair dismissals and any other cases which fell within the scope of the EIRA and its complementary regulations.

This article was written by Legal Trainee Ms Emma-Marie Sammut and Dr Cherise Abela Grech.

For more information on Employment Matters kindly contact Dr Robert Tufigno and Dr Cherise Abela Grech.

This article is not intended to impart legal advice and readers are asked to seek verification of statements made before acting on them.