Redundancy fails if a contractor carries on the same work

The Industrial Tribunal, chaired by Geoffrey Vella, decided on 28 July 2026 in D.J. vs Bequant Pro Limited that a dismissal presented as a redundancy was unfair. The tribunal found that the employee's work did not end but passed to a contractor, and that the company neither consulted him nor gave him a reason.

It ordered Bequant Pro Limited to pay €12,000 in compensation under article 81(2) of the Employment and Industrial Relations Act (Chapter 452 of the Laws of Malta).

The facts

The applicant joined the group in 2019 on an indefinite contract as a full stack developer, was later transferred to Bequant Pro Limited and led the team behind its internal software tools. By a letter dated 30 December 2022 the company told him his employment would end on 29 January 2023. The letter gave no reason.

The company, which provides investment services in digital assets, pleaded that the crypto-currency market had turned and that it had cut about half of its staff contracts worldwide, according to its chief executive. Before he left, the applicant was asked by email to hand over his work to a software engineer engaged as a contractor, who then maintained and developed the same systems.

The applicant found another job, and that later employer did not pay several of his salaries.

What the tribunal held

The tribunal accepted that several employees were dismissed because of financial problems in a new and unstable market. It held, however, that an employer who turns to redundancies must follow the rules on redundancy scrupulously.

The company's argument that the applicant's function had become redundant was not valid, because its own officials' evidence showed that the function continued. The applicant handed over to the contractor, who went on doing the same work.

Relying on a Court of Appeal judgment of 26 June 2012, the tribunal held that "sabiex tigi sodisfatta sitwazzjoni ta’ redundancy il-pozizzjoni ghandha tigi abolita totalment, u dan anke f’xenarju fejn kien qieghed isir ristruttar" (for a redundancy to be made out, the position must be abolished entirely, even where a restructuring is under way).

The position was not abolished here. The tribunal also rejected the argument that the contractor worked from outside the European Union, because that kind of strategy could open the way to abuse.

On procedure, the tribunal found no consultation with the applicant or any representative, no offer of alternative work and no reason given for the dismissal. Drawing on an English employment law textbook, it said consultation exists to avoid dismissals, reduce their number and soften their effects.

It found that the company did not follow the redundancy rules in S.L. 452.80, and that the lack of any serious consultation showed the company had not acted in good faith. Although the company pleaded financial difficulty, the tribunal found it never produced credible evidence of it.

The tribunal refused to hold the company liable for the salaries the later employer did not pay, since taking that job was the applicant's own choice. In setting compensation it weighed the cost of living, the absence of any redundancy payment, moral damages and the lower salary in the new job. It rejected the company's pleas, declared the dismissal unfair and ordered payment of €12,000 within one month.

Why it matters

An employer relying on redundancy must show that the job itself has gone, not only that money is short. Passing the work to a contractor, in Malta or abroad, defeats the defence.

Employers planning cuts should consult, give reasons, look for alternative roles and keep evidence of the financial position. An employee's lawyer should first ask who is doing the work now.

Where it sits

Chapter 452 contains no definition of redundancy, and the Maltese courts have followed the English approach. The tribunal applied three questions drawn from English case law, as the Court of Appeal (Inferior Jurisdiction) set them out on 23 May 2008: was the employee dismissed; had the business's need for employees to do work of that kind ceased or diminished; and was the dismissal caused wholly or mainly by that state of affairs.

The Court of Appeal (28 June 2011) and (4 October 2011) framed the decisive question as whether the employer still needed the work the employee was doing. In its judgment of 26 June 2012 the same court found no genuine redundancy where a third person was engaged in the post, and the tribunal treated a contractor taking over the work in the same way.

The remedy sits in article 81(2). Where the tribunal finds a complaint of unfair dismissal well founded and makes no order for reinstatement, it must award compensation that takes into account the real damages and losses suffered, as well as other circumstances, including the worker's age and skills. On those factors the tribunal referred to the Court of Appeal (Inferior Jurisdiction) (11 February 2019, 9 March 2019 and 11 October 2019).

Source

Industrial Tribunal, 2026/3192, 28 July 2026.