Reinstatement and compensation following a senior dismissal: Fenech v MFSA

The termination of a senior appointment can expose an employer to remedies extending well beyond contractual notice. In Fenech, the Tribunal ordered reinstatement in an officer category equivalent to Chief Operations Officer, restoration of seniority and a substantial monetary payment. The Court of Appeal declared the employer’s appeal inadmissible, leaving that outcome intact.

Performance concerns and the applicable procedure

Fenech joined the MFSA as COO in February 2018 and completed probation. Following the appointment of a new CEO, he received performance feedback identifying areas for improvement. In September 2019, the CEO informed him that his employment was ending immediately.

The Tribunal examined both the asserted performance grounds and the Staff Handbook, which formed an integral part of the employment contract. That handbook prescribed an investigation and disciplinary process, including notice of the allegations, time to prepare a defence, assistance and an appeal mechanism.

The Tribunal found that the required procedure had not been followed. It also found that the reasons advanced did not sufficiently justify dismissal. Its assessment went beyond a procedural omission: it examined the working relationship and accepted that Fenech’s insistence on proper approvals and established governance procedures had placed him in conflict with the CEO. The dismissal was held unfair.

The remedy and its financial components

The Tribunal considered the consequences of dismissal from a prominent role at the financial regulator. His professional opportunities lay in a sector whose operators had close statutory and institutional relationships with the former employer. It also considered changes in the organisation’s leadership by the time of its decision.

Reinstatement was ordered in a category equivalent to the previous COO position, together with restoration of seniority and correction of the employment record. The monetary calculation compared €649,629 in income projected under continued employment with €285,941 earned from other work, producing a difference of €363,688. It then added €50,000 described as moral damages. The total was €413,688.

That distinction matters: the entire award cannot accurately be described as unpaid salary or lost earnings alone.

The employer’s appeal

The MFSA argued that reinstatement was unavailable because the role involved special trust and that the monetary remedy was excessive or unlawful.

The Court held that the special-trust argument depended on the factual case established before the Tribunal. It was for the employer to produce the necessary evidence and argument; the Tribunal was not required to construct that case for it. The employer could not use an appeal on law to introduce the fuller factual analysis it had failed to establish below.

The Court also discussed the Tribunal’s reasons for the financial remedy, the particular employment consequences and the objective of continuity accompanying reinstatement. Its formal order nevertheless declared the appeal inadmissible under the statutory restriction to appeals on law. The outcome should therefore be reported with that procedural qualification.

Significance for executive exits

The case is particularly relevant where a senior officer challenges the removal of responsibilities, the fairness of a performance process or a departure decision already taken before consultation has run its course. A senior title does not replace the need to establish the facts supporting a particular dismissal or remedy defence.

For settlement valuation, the decision also requires separate consideration of reinstatement, past earnings, alternative income, seniority and the particular professional impact. It does not establish that all executives are entitled to reinstatement, or that the same moral-damages calculation applies in other cases. Nor was it a decision about withdrawal of regulatory approval or fitness and propriety: the MFSA was the employer in this dispute.

Related: Good and sufficient cause · Exit review · Camilleri v Allied Newspapers