Is it redundancy or unfair dismissal?

A role is declared redundant. The letter is polite, the payment is in order, and the reason looks lawful. Months later, the same work is being done by someone else. Was it a redundancy, or an unfair dismissal?

The question matters to both sides. For the employer, the answer decides whether a lawful restructuring becomes a claim before the Industrial Tribunal. For the employee, it decides whether there is anything to challenge at all.

The legal position

Maltese law allows an employer to end an indefinite contract only on grounds of redundancy or for a good and sufficient cause (Employment and Industrial Relations Act, Cap. 452, article 36). The Act does not, however, define redundancy. The Industrial Tribunal and the courts have filled the gap case by case, often drawing on English law for guidance.

Three points come out of that case law and the Act.

The role must go. A redundancy is about the position, not the person. If the work continues, carried out by another employee, a contractor or an outsourced provider, the Tribunal will ask whether the role really disappeared. The decision in Dorianne Bartolo Vella vs Web International Services Limited (Industrial Tribunal, 12 June 2020) is a clear example. A housekeeper was dismissed for redundancy at a company that faced no notable financial or operational difficulty. Her duties were then taken over by other staff and by outside companies. The Tribunal held that the role must disappear for a redundancy to be genuine, found the dismissal unfair, and awarded EUR 14,400 in compensation.

Selection follows a rule. Where the reason is redundancy, the Act requires the employer to dismiss the employee last engaged within the class of employment affected. Departing from that order, for example to keep someone thought to perform better, is a frequent source of claims.

The dismissed employee keeps a claim to the role. If the post becomes available again within one year, the person made redundant is entitled to be re-employed in it, on conditions no less favourable. See right to re-employment.

Where the number of dismissals reaches the thresholds in the Collective Redundancies (Protection of Employment) Regulations (S.L. 452.80), consultation with employees’ representatives and notification to the Director General for Industrial and Employment Relations also apply.

If an employee claims unfair dismissal, the Industrial Tribunal can order reinstatement or award compensation. The time limit to file is short.

What has changed since 2020

The principle in Bartolo Vella has not moved. What has changed is the setting in which it is applied. Many restructurings now involve outsourcing, group reorganisations or roles reshaped by new technology. Each raises the same question in a new form: has the work gone, or has it moved?

Records also matter more than they did. Directive (EU) 2023/970 on pay transparency, which Malta has transposed by the Equal Pay (Transparency and Reporting) Regulations, 2026 (Legal Notice 173 of 2026), requires employers to set pay on objective, gender-neutral criteria and to explain pay to workers on request. See equal pay and the 2026 pay transparency rules. A selection for redundancy that cannot be explained on objective criteria is harder to defend in that setting.

What employers should do

• Write down the business reason first. Before any letter, record why the role is no longer needed. Show the change in work, structure or cost, not just the wish to reduce headcount.
• Ask where the work will go. If the duties will be absorbed by others or outsourced, consider whether this is truly a redundancy or a reorganisation that needs a different approach.
• Apply the selection rule. Identify the class of employment affected and the order of engagement. If you think there is a reason to depart from it, take advice first.
• Check the collective thresholds. Several redundancies close together may trigger consultation and notification duties. See collective redundancy.
• Handle the meeting with care. The Tribunal in Bartolo Vella commented on the manner of dismissal as well as its grounds. A respectful, well-prepared process reduces the risk of a claim.

What employees should do

• Ask for the reason in writing. You are entitled to know why your role has been selected.
• Watch what happens next. If your duties continue under another name, by another person or through a contractor, keep a record.
• Check the order of selection. If people engaged after you in the same role have been kept, ask why.
• Do not let the deadline pass. If you think the dismissal was unfair, take advice promptly. The time to file a claim is limited.
• Read any settlement carefully. A payment offered in exchange for a waiver of claims may be fair. It may also be worth less than the claim it ends. A settlement of this kind is a compromise under the Civil Code, with the effect of a final judgment between the parties.

A genuine redundancy is lawful and, handled well, need not become a dispute. The difficulty lies at the margins, where a role is reshaped rather than removed. That is where advice before the decision is worth most.