EMCC European Monitoring Centre on Change

Different conditions of employment in exceptional circumstances

Malta
Phase: Management
Typ:
  • Response to COVID-19
  • Working time flexibility
Zuletzt geändert: 03 August, 2021
Ursprünglicher Name:

Different conditions of employment in exceptional circumstances

Englischer Name:

Different conditions of employment in exceptional circumstances

Coverage/Eligibility

The Employment and Industrial Relations Act (2002) states that employers may use this tool in 'exceptional cases'. However, the act does not elaborate on the definition of 'exceptional'. The Director of Industrial and Employment Relations, who is the government-appointed person responsible for protecting the interests of lawfully engaged workers in accordance to the established labour laws, has the authority to determine which cases qualify as exceptional. The role of the Director also includes actively promoting a healthy relationship with social partners and contributing to stable industrial relations.

 

Main characteristics

The Employment and Industrial Relations Act (2002) states that, in exceptional cases, the employer, in agreement with the employee and union representatives, may issue different conditions of employment as a temporary measure to avoid redundancies. The act does not specify which conditions of employment may be changed, and there is no publicly available information on all the individual cases in which this clause was implemented. However, some cases involved the reduction of working time or the postponement in the payment of wages. For this special measure to be implemented, it must be approved by the Director responsible for employment and industrial relations. Although the said act stipulates that approval needs to be reviewed every four weeks and that this measure is ‘temporary’, it does not specify a limit that restrains the repeated use of this instrument.

 

Funding

  • National funds
  • Employer

Involved actors

National government
Labour legislation and relating amendments are discussed at the formulation stage in the tripartite Employment Relations Board (ERB). Members forming this board come from trade unions, employer associations and government. Funding for the COVID-19 related subsidy.
Employer or employee organisations
Labour legislation and relating amendments are discussed at the formulation stage in the tripartite Employment Relations Board (ERB). Members forming this board come from trade unions, employer associations and government.
Andere
Labour legislation and relating amendments are discussed at the formulation stage in the tripartite Employment Relations Board (ERB). Members forming this board come from trade unions, employer associations and government.

Effectiveness

This regulation, which has been used effectively many times since its inception, has become particularly important during the emergence of the COVID-19 pandemic. In fact between March and May 2020, the Department for Industrial and Employment Relations has issued around 800 approvals to employers to implement different conditions of employment other than those specified in the act, per the provisions of article 42. This is the greatest recorded increase, far greater than that witnessed during the 2008 international economic crisis. Data obtained from the Department of Industrial and Employment Relations (DIER) for that period reveals that entities adopting this measure had then reached a high in 2009 with a total of 148 implementing this instrument. In 2010, there were 61 employers were utilising this instrument, gradually decreasing to 32 by 2014. During 2015, only four employers made use of this instrument. In February 2016 and April 2018, approval was granted to a company to reduce its working hours to a four day week, consisting of 32 hours. This measure was implemented to avoid redundancies as this company experienced a lack of demand for its services resulting in a difficulty to pay wages. In 2016, another company was granted permission to pay its July wages in September and to pay its August wages in October as the company was facing financial difficulties due to logistical issues with a foreign client.

Strengths

Flexible employment contracts may relieve employers from some financial pressure during difficult times. By reducing the number of redundancies, companies can move back to normal operations quicker when international demand for goods increases. In 2009, the Minister for Finance validated this claim by stating that the government's direct assistance to firms which ran into problems due to the international economic crisis resulted in saving a total of 2,000 jobs. This instrument’s increase in popularity during the COVID-19 pandemic continues to reinforce its relevance. Since one cannot predict when a particular company or undertaking is going to experience financial difficulties or lack of orders this measure could be instrumental as it allows that particular company to adopt measures such as operating a four day week to avoid redundancies. The Department of Industrial and Employment Relations believes that this instrument will retain its relevance and the criteria governing this instrument are expected to remain as they are for the foreseeable future.

Weaknesses

Some employers may occasionally try to use this regulation inappropriately, by falsely claiming exceptional circumstances to lower employees' working conditions. However, it remains the sole responsibility of the Director of Industrial and Employment Relations whether to accept or reject such claims.

Beispiele

In 2008, Trelleborg Sealing Solutions, a producer of 'O' rings for the car industry, experienced a significant decline in demand due to the downturn in international car sales. In response to a crisis, the company, that employed around 562 employees in 2008, cut down on overtime, changed its shift system and subsequently switched to a four-day week production, and dismissed 25 workers. The reduction of the working week from five to four days was only possible thanks to the specific regulation about exceptional circumstances in the Employment and Industrial Relations Act (2002). The company's action reduced its losses through such actions. At a later stage, as the company continued to make losses, the Government also intervened by granting an undisclosed amount of tax credits so that workers could return to a five-day week, with the fifth day being reserved to training for 17 weeks. All these actions prevented the company from closing down its operations in Malta. Similarly, following the 2008 financial crisis, several companies chose to resort to different conditions of employment, placing their employees on a four-day week. Dedicated Micros Malta Ltd, Dragonara Casino, Carlo Gavazzi, Methode Electronics and Stainless Steel Products made use of this particular instrument to avoid mass redundancies.
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