One of the pillars of Maltese society and a fundamental human right is in fact the right to work. Based on this premise, employers everywhere and the Government are taking as many measures as possible to avert redundancy.
Jumping straight to what is important, in terms of our employment laws, the current COVID-19 crisis does not give rise to an automatic suspension of the employment obligations and therefore, the rights and obligations remain in force. As things stand today, we can easily agree that these are exceptional circumstances and that we are living in unprecedented times. Most businesses today do not keep a large amount of savings in their bank accounts, often reinvesting some in the business. The actuality of various containment and social distancing measures taken by the Government, including the closure of establishments, has resulted in a situation where many businesses are not generating any revenues. This notwithstanding, amidst the investment made over the years in training their staff and in hope of being in the position to resume their business activity once the effects of the pandemic are over, businesses wish to avoid the painful decision to lay off any employees.
Consequently, businesses are reaching out and questioning what they can and should do in such circumstances.
One must start off with stating that in terms of law, it is possible for the employer to decide to resort to “forcing” the employees to utilise their leave entitlement as long as the employer furnishes the employee/s with a written justification explaining why such measure is being taken. The written statement has to be given to the employee before the forced leave starts to run. In this respect one must note that the utilization of forced leave does not give rise to a civil debt in favour of the employer should the leave taken exceeds the annual leave entitlement of the employee, the employer cannot make any wage deductions in this regard.
Derogation from Conditions of Employment
Our law provides that in exceptional cases (the current crisis most definitely being one of them), the employer, in agreement with the employee or union representatives (where there is a recognised trade union for collective bargaining purposes) may agree on conditions of employment which differ from those in existence as long as such agreement is a temporary measure to avoid redundancies and as long as it is approved by the Director of Industrial and Employment Relations (DIER).
The law does not specify what measures may be agreed to and/or applied for. These may range from unpaid leave, working a reduced week, or possibly even a reduction in wages. These effectively shall be considered on a case by case basis and may even need to be reviewed in conjunction with any financial aid measures which the Government may announce from time to time.
It is safe to say that there is no right and wrong in these measures, the intention is to preserve as many employments as possible and to avoid redundancies. Moreover, due to the fact that the said measures are intended to be temporary, any approval by the DIER shall be limited for a period of 4 weeks, following which one is to apply for a renewal or possibly even request new measures to be considered.
Therefore, in summary, in order to apply for such exception, one needs to meet the following elements:
- There have to be exceptional circumstances (which we have);
- There has to be an agreement with the employee or union representatives (we would advise that the employer keeps evidence of such agreement and kept in file);
- The standard conditions of the employment as per contract are being derogated from (it would be the case);
- The measures are temporary (definitely the case);
- The measures are intended to avoid redundancies;
- The approval of the Director of Labour has to be sought;
- This approval has to be renewed every four weeks.
Financial Aid Measures
The Government has recently also introduced financial aid measures directly related to employment for those industries most affected by the pandemic:
- Full time employees employed with companies operating in sectors that suffered drastically due to the COVID-19 pandemic or had to temporarily suspend operations on the order of the Superintendent of Public Health will be entitled to up to five days’ salary based on a monthly wage of €800 in respect of each full time employee. Part-time employees will be eligible €500 per month. List of said companies by NACE Code as updated at 29th March 2020 may be found on the Malta Enterprise website here.
- Full time employees employed with companies operating in other adversely affected sectors will be entitled to one days’ salary per week equivalent to €160 per month, save in the case of those companies based in Gozo which shall be entitled to two days’ salary per week equivalent to €320 per month. Part-time employees will be eligible to one day’s salary per week, equivalent to €100 per month save in the case of those companies based in Gozo which shall be entitled to two days’ salary per week equivalent to €200 per month. List of said companies/self employed by NACE Code as updated at 29th March 2020 may be found on the Malta Enterprise website here.
Businesses severely impacted by the COVID-19 pandemic not listed in either of the aforementioned Annexes may still apply for the aforementioned financial aid and make their respective case nonetheless. Businesses listed in Annex B but which has suffered a complete disruption in business may attempt to apply for a wage supplement covering the whole week.
Applications for the said benefits are to be made with Malta Enterprise here.
From the conditions to which entitlement to the benefits have been subjected to as published by Malta Enterprise on the 30th March 2020, the following are the most noteworthy:
- The benefit shall be paid to the employer (net of the employee’s share of N.I.) under the express condition that this shall be passed on the employee. Any default shall be considered a criminal act and any payments effected shall be recovered with interest;
- COVID Wage Supplement must be recorded separately on the employees pay slip and FS3 as “Covid Wage Supplement”. The employer shall pay its share of N.I. on COVID Wage Supplements disbursed by the Corporation. All COVID Wage Supplements are non-taxable.
- Employers granted a COVID wage supplement covering a partial week should guarantee an income of at least Euro 720 (net) per month to supported employees, inclusive of any COVID wage supplement.
- Employees being supported through a COVID Wage Supplement cannot be made redundant by their employer.
- The provision of a COVID Wage Supplement does not exempt the Employer from its obligations towards its employees, as dictated by applicable laws and regulations. Despite this condition, one should note that an employer is not precluded from also making use of the provision at law to implement measures which vary the conditions of employment as mentioned earlier on. However in such cases, and particularly in view of conditions 4 and 5, one needs to handle the matter with caution, where the scheme devised by the employer in order to avert redundancies conditional on both a derogation from the conditions of employment and receipt of benefit from the aforementioned financial aid package.
Any assistance granted by the Government to an individual which covers the same period covered by a COVID Wage Supplement as supported under another scheme related to the pandemic, will be considered as double funding. Thus, funding for that period will be adjusted so that assistance by the Government will never exceed the amount of supplement being granted by the Government to cover a full five-day week. Employers must declare that they have verified with their employees that the employees rely on their employment as the main source of income and that they are not receiving any state pensions of other benefits related to the pandemic in this respect.
Other Social Measures
- Parents/single parent who (both) work in the private sector and after the 8th March 2020 one of the parents/such single parent is required to stay at home to take care of their/his/her child/ren aged under 16 and who cannot carry out their/his/her functions through teleworking arrangements, will receive a direct payment of €166.15 per week if working fulltime or €103.85 per week if working part-time.
- Persons with Disability (duly so registered with Jobsplus) who work in the private sector and who after the 8th March 2020 are medically advised to stay at home for health and safety reasons will, insofar as he/she cannot carry out his/her functions through teleworking arrangements, receive a direct payment of €166.15 per week if working fulltime or €103.85 per week if working part-time.
- Persons (who have not reached retirement age) employed in the private sector, who after 27th March 2020, due to the impact of COVID-19 are not going to work because they are ordered by the Superintendent of Public Health not to leave their home, are not able to work from home and are not being paid by their employer during their absence from work, will receive a direct payment of €166.15 per week if working fulltime or €103.85 per week if working part-time.
The aforementioned benefits are to be applied for by the employees with the Department of Social Security here. Employees will be paid the said benefit directly from the Government.
The above is not to be construed as legal advice and only sets out our general views which may change when assessing specific circumstances.