Employment Contracts and Legal Clauses in HR Management

Module 4: Legal matters in HR Management Mr. Christopher Cutajar 1 B.Sc.(Hons)(Melit.), Executive M.B.A.(Melit.)

Session 2 of 2 Learning Outcomes 2 Describe and identify different types of employment contracts. Describe what clauses an employment contract should have and their enforceability. Describe the different social security benefits that employees are entitled to. Different family based rights that are applicable such as parental leave entitlements, urgent family leave entitlements and other family entitlements. Identify the applicability of data protection provisions to different aspects of an employment relationship.

Types of Employment contracts 3 Employment agreement: - Fixed term contract - Indefinite term contract Service agreement Fee proposed by the person providing his service is accepted by the party requiring the service.

Types of Employment contracts 4 Service agreement Person carrying out the service is not considered an employee. Payment: in advance, in stages or arrears Contingencies may apply so that in certain circumstances payments are withheld. Certain benefits related to employment agreements do not apply (eg. Leave entitlement)

Clauses in Employment Contracts 5 Article 7. On engagement of any employee, the employer shall explain to the employee the provisions of any recognised conditions of employment as may be applicable and shall deliver to the employee a written statement about such conditions as may be prescribed. Contract may be oral or in writing.

Clauses in Employment Contracts 6 Conditions of employment, as defined in the Act entails: wages the period of employment the hours of work Leave entitlement manner of termination of any employment agreement the mode of settling any differences which may arise between the parties to the agreement

Clauses in Employment Contracts 7 Employer can provide food, dwelling place, allowances and other privileges, in addition to minimum wages. Act prohibits provision of intoxicating liquor and noxious drugs. Marriage or/and pregnancy of a female employee cannot be included as a good cause to terminate contract.

Clauses in Employment Contracts 8 A contract of service shall not, except with the consent of the employee, be terminated by the employer during any period of incapacity for work of the employee caused by personal injury by accident arising out of and in the course of employment or by any of the occupational diseases specified in the Social Security Act in each case occurring in the service of that employer.

Social Security benefits 9 Social Security Act 1978 Subject to other provisions of this Act, every person who has passed his sixteenth birthday, but not yet reached his retirement, shall become insured under this Act either as an employed person, or as a self employed person or as a self-occupied person. 7. (1) For every person who is employed in insurable employment, three contributions per week shall be payable, in accordance with the provisions of this Act, one by the employed person, one by his employer, and one out of the Consolidated Fund: Provided that for the purposes of this Act, a person who is employed in more than one insurable employment shall be deemed to be employed in that insurable employment which carries the higher or highest basic wage or salary.

Self employed / Self Occupied 10 Self Occupied Persons persons who earn income from Trade, Business, Profession, Vocation or any other economic activity that exceeds 910 per annum. Self Employed Persons persons who receive income from rents, investments, capital gains or any other income.

Social Security benefits 11 10. (1) Every self-employed or self-occupied person, unless otherwise exempted under the provisions of this Act, shall pay a contribution in accordance with the provisions of this Act. (2) For every contribution payable by a self-employed or self-occupied person under this Act, another contribution shall be payable out of the Consolidated Fund.

Pension age 12 Means 65 years of age. Provided that; In the case of a person born on or before the 31st December 1951, pension age shall be sixty-one years. 1952 to 1955 - Pension age 62 1956 to 1958 - Pension age 63 1959 to 1961 - Pension age 64 Woman born on or before the 31st December 1951, pension age shall be sixty years.

Pension Pillars 13 First pillar: publicly managed pension schemes with defined benefits and pay-as-you-go finance, usually based on a payroll tax. Second pillar: privately managed pension schemes which are provided as part of an employment contract. Third pillar: personal pension plans (PPP) in the form of saving and annuity schemes. Source: Yermo, 2002

Pensions 14 Eligibility - The eligibility is automatic. However, such persons will receive a notification requesting any missing data. Maximum Pensionable income established at EUR 21,749 (2015) for persons born after 1962. Those earning more would never receive 2/3 of their ongoing salaries. Government introduced Third Pillar contributions so that they are added onto the First Pillar ones. Calculations as per 13th Schedule of the Act.

Invalidity Pension 15 Person who is certified as being incapable for suitable fulltime or regular part-time employment due to a serious disease or bodily or mental impairment. Criteria apply: In FT/PT employment or seeking employment under Part I during the previous 12 months. Certified incapable by the Medical Panel. Applicant has 250 paid contributions and at least 20 contributions per annum since age 19.

Disability pension 16 Article 27 16 years proven disability; mental severe subnormality or to be a severely disabled person citizen and resident of Malta weekly means do not exceed an established threshold Highest rate of Disability Pension as established under Part III of the Sixth Schedule.

Widow pension 17 Contributory widow s pensions are awarded to widows A) spouse had paid not less than 156 contributions B) spouse died as a result of a personal injury during the course of their duties (employment). A widow's pension is also payable in full without any deductions if widow is carrying out a full-time gainful occupation and, where a widow re-marries, a flat rate widow's pension will be due.

Sickness Benefit 18 Sickness benefit is to be considered in line with a discussion on sick leave. Part III Article 18 Cap 318 Sick leave is provided for under Employment Legislation The Sickness benefit is paid by the State, the sick leave is paid by the Employer. The benefit is deducted from the leave payment as applicable. Benefit only applicable on working days.

Sickness Benefit 19 Sickness Benefit shall be paid for any day of incapacity for work but shall not exceed in the aggregate a maximum of 156 days in any calendar year George Muscat vs DSS (13/1/2004) DSS refused to pay sickness benefit for the period Muscat was abroad. Arbiter granted benefit, Court of Appeal confirmed that absence abroad (temporary) does not forfeit sickness benefit.

Link to Sick Leave 20 Where the type of activity of work is not regulated by any W.R.O., the sick leave entitlement of an employee amounts to two working weeks per year (calculated in hours) as stipulated by SL 452.101 The employer is only required to issue wages for the amount of sick leave entitlement provided by law. If an employee remains sick after having exhausted all the sick leave entitlement, s/he will only continue to receive the Sickness benefit from the Social Security to which s/he may be entitled.

Medical Assistance 21 19. Medical Assistance shall be of the following kinds: (a) Sickness Assistance (re dietary needs expenses); (b) Leprosy Assistance; (c) Tuberculosis Assistance; (d) Free Medical Aid Schedule II Pink Form - limited number of medicinal products (e) Milk Grant.

Injury Benefit 22 Personal injury caused by accident arising out of or in the course of his employment or self-occupation Or has developed a disease due to the nature of his work Injury Benefit is complemented by Injury Leave under Employment Law. The benefit deducted from the leave value.

Injury Benefit 23 Saviour Petroni Vs Joseph Rossignaud Ne (28/04/1961) - Ghall-finijiet tal-ligi dwar is-Sigurta` Nazzjonali, disgrazzja li tigri fil-kors tal-impieg ta` persuna assigurata ghandha titqies ukoll, f'nuqqas ta` prova kuntrarja, li grat minhabba dak l-impjieg; u hekk intitola lill-impjegat ghall-beneficcju tal-korriment. Din hija prezunzjoni "juris tantum ( taken to be true unless someone comes forward to contest it and prove otherwise), li ghalhekk tista` tigi mwaqqa` bil-provi kuntrarji; imma sakemm din il-prova kuntrarja ma ssirx dik il-prezunzjoni tibqa` ssehh, u l-impjegat ghandu jigi ammess biex jibbenefikka mill- beneficcju tal-korriment minhabba d-disgrazzja li gratlu.

Medical Aid 24 Drugs, spectacles, dentures, and other prosthetic aids as in the opinion of the Chief Government Medical Officer are indicated in his case and are available However under Welfare Legislation we must note that the State provides 2 approaches 1. Persons who qualify under a means test are afforded free medicines (general). Typically was known as il-karta r-roza. Government Formulary List 2. Persons who suffer from an illness listed in the schedule of the act are given specific free medicine. Typically known as il-karta s-safra. Fifth Schedule - Cap 318

Unemployment Benefit 25 Benefit is payable for a maximum of 6 months only and requiring that one paid contributions (normally 3 years of NI but able to be pro- rated) Benefit payable on a daily basis Note difference between Unemployment Benefit and Unemployment Assistance The latter is relief whilst the former is based on the contribution system.

Special Unemployment Benefit 26 Art 30 Means tested benefit given to the head of household, being an insured person, taking account of all the members of the household. The benefit is based on contributions of NI, the assistance is based on avoiding poverty (in fact includes a means test).

Unemployment Assistance (Special Assistance) 27 (Art 30) - and whether such head of household has been in insurable employment or not, he shall nonetheless be entitled to Social Assistance in accordance with the provisions of this article This is the relief element Subjected to means test (income and capital owned) Available even beyond the 6 months After exhausting the benefit, can move onto the assistance if one passes the means test

ETC Register 28 Part 1 Unemployed, redundant, New Employee etc Part 2 Resigned, Dismissed by Disciplinary Measure Part 3 In employment, seeking alternatives Part 3B Summer work applicants

Marriage Grant 29 Marriage grant provided automatically by the Department of Social Security. Department notifies the spouses individually by post. Then, payment is issued once details are confirmed (EUR 530.64 per couple). Provided that a person who legally contracts marriage on more than one occasion shall be entitled to a Marriage Grant in respect of each such marriage on condition that between one marriage and another he was an employed person or a self-employed or self- occupied person for at least six months.

Maternity Leave 30 18 weeks Maternity Leave 6 weeks After birth 4 weeks May be taken before due date. Other 8 weeks May be taken before or after birth. Employee is bound to inform employer at least 4 weeks before first day of maternity leave.

Childrens Allowance 31 76. (1) Subject to the provisions of this Act, it shall be the right of every child in any household to have an allowance paid out in his respect to the head of household who has the care and custody of such child, as long as such child is the son or daughter of the head of household or the spouse, Can be paid to the Custodian. Additional Allowance is applicable in case of a Disabled Child

Child Care Centres 32 Free childcare scheme Both parents in employment Tax rebate According to Article 14C of the Income Tax Act (Chapter 123 of the Laws of Malta), parents whose children attended Child Day Care Facilities can benefit from a deduction in the tax amount payable to the Inland Revenue Department. These childcare facilities have to be registered with the DSWS. The Department for Social Welfare Standards (DSWS) grants a provisional / temporary registration to confirm that a child day care facility is compliant with the established standards for Child Day Care Facilities.

Single Parent Assistance 33 Overview A single unmarried parent, who does not earn more than a certain amount of income, may be eligible for Social Assistance for Single Parents. Eligibility His/her total income earned together with the Social Assistance entitlement for 2 persons does not exceed the National Minimum wage.

Terminating Benefits 34 When DSS terminates the benefit or request reimbursement after an inspection, it may be challenged before the umpire and subsequently the Court of Appeal. Jesmond Muscat vs Direttur tas-Sigurta` Socjali, 6 ta' Ottubru, 2010 - Il-Qorti tistqarr li mhix konvinta illi s-sospett li l-appellanti kien qieghed jahdem jinsab sodisfacentement accertat. [omissis]. Din il-prova riedet tkun wahda effettiva, konklussiva u, fuq kollox, konkludenti, u din, f dan il-kaz, hi mankanti. [court held in favour of welfare beneficiary].

Parental Leave Entitlement 35 SL 452.78 Applies to both FT and PT Employee has been in employment for a continuous 12 months It shall be the individual right of both male and female workers to be granted unpaid parental leave on the grounds of birth, adoption, fostering or legal custody of a child.

Parental Leave Entitlement 36 Established periods of one month each Employee shall be bound to give a minimum of three weeks notice in writing, specifying the beginning and the end of the parental leave, prior to taking such leave.

Urgent Family Leave 37 SL 452.88 Urgent Family Leave Regulations The employer is bound by law to grant every employee a minimum total of fifteen hours with pay per year as time off for urgent family reasons. These hours are to be deducted from the annual leave entitlement of the employee. Such urgent leave has to be related to cases of sickness or accident to members of the immediate family of the employee

Umpire 38 "Umpire" (Arbiter)means any umpire appointed under article 107; Under Section 108, a person may appeal a decision of the Director before the Umpire. A widow may appeal. A trade union on behalf of a member. Subsequently the Court of Appeal hears cases related to Social Security. Normally Appeals from Umpire decision which may be also originating from the Director of SS disagreeing with the Umpire s decision.

Court of Appeal 39 Ramona Calleja vs DSS (26/6/2012) - Illi huwa veru li din il-Qorti mhux normali li tiddisturba l-apprezzament tal-arbitru ( Anna Faniello vs Direttur tas-Sigurta Socjali (A.I.C. (PS) 7 ta Frar 2007) izda dan sakemm ma jkunx hemm zball manifest fil-provi quddiemu prodotti, (anke jekk din il-Qorti ma tistax ma turix il- preokkupazzjoni taghha ta kif jidher li jsiru tali seduti, kif jingabru l-provi, u wkoll kif jigu preservati l-istess, u dan apparti mill- kwalita tad-decizjonijiet moghtija li huma hafna drabi karenti minn motivazzjoni adegwata, b dan li tali zball ikun ippregudika d-drittijiet ta parti jew ohra.

Data Protection Issues 40 Maltese Data Protection laws are fully compliant with applicable EU laws. When processing employees' data, the employer must ensure that such data is: collected and recorded for specific, explicit and legitimate purposes accurate and, if necessary, updated pertinent, complete and not exceeding the purposes for which it was collected or subsequently processed strictly related to the purposes for which the data was collected or subsequently processed

Data protection issues 41 Employers act as data controllers Employer may enter in confidentiality agreements with the employees. May be included in contract: communication systems are made available to the employee with the understanding that these are used by solely and exclusively in furtherance of the employer s business

Links 42 REVISED TAXONOMY FOR PENSION PLANS, PENSION FUNDS AND PENSION ENTITIES Juan Yermo October 2002; http://www.oecd.org/finance/private-pensions/2488707.pdf Cap 318 Social Security Act: http://justiceservices.gov.mt/DownloadDocument.aspx?app=lom&itemid=8794 SL 452.78 Parental Leave Entitlement Regulations: http://www.justiceservices.gov.mt/DownloadDocument.aspx?app=lom&itemid=11212 Cap 440 - Data Protection Act: http://www.idpc.gov.mt/dbfile.aspx/DPA_amended2012.pdf

Thank you for your attention! 43 chris.a.cutajar@gmail.com