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12 maltatoday | SUNDAY • 20 SEPTEMBER 2026 LAW MALCOLM MIFSUD Mifsud & Mifsud Advocates Court of Appeal confirms breach of natural justice in employment termination THE Appeals Court, presided by Judge Lawrence Mintoff, upheld a ruling of unfair dis- missal and sent the case back to the Industrial Tribunal for reassessment of damages. The court dismissed the em- ployer's appeal, upholding the original judgment, while also upholding the employee's ap- peal regarding compensation. The judgment was delivered on 16 September 2026 in the case Manuel Caruana vs Lead- ership Consultancy & Training Services Ltd. The dispute concerned the termination of the employ- ment of Manuel Caruana, who had been employed by Lead- ership Consultancy & Train- ing Services Ltd since 9 June 2020. Having initially served as administration officer, he was promoted to the position of head of administration on 1 January 2022. His employment was terminated with effect on 4 October 2022. Before the Industrial Tribu- nal, Caruana alleged that he had been subjected to persis- tent criticism and hostility by senior management, particu- larly the company's director. He further claimed that he was dismissed while absent on cer- tified sick leave and without being afforded an opportunity to respond to allegations made against him. He maintained that the reasons advanced for his dismissal were unfounded and insufficient at law. The employer contested the claim, arguing the dismissal was justified on the basis of se- rious misconduct, loss of trust and confidence, poor perfor- mance, and alleged involve- ment in discussions contrary to the company's interests. In a decision delivered on 15 September 2025, the Industri- al Tribunal found that Carua- na had not been granted a fair hearing before the termination of his employment. The tribu- nal concluded that the disci- plinary process adopted by the employer breached the funda- mental principles of natural justice and therefore rendered the dismissal unlawful and un- just. The tribunal emphasised that where an employer intends to take disciplinary action against an employee, the employee should be informed in writing of the allegations, be given the opportunity to defend himself, and allowed to participate fully in the disciplinary process. The evidence showed that no such procedure had been followed before the dismissal. The tribunal consequent- ly awarded compensation amounting to €12,333, com- prising notice pay and addi- tional compensation for the unlawful termination. The company appealed, claiming the tribunal had in- correctly applied the law. It argued that the Employment and Industrial Relations Act, does not expressly require em- ployers to conduct disciplinary proceedings before terminat- ing employment. The employer relied princi- pally on Article 36(14) of Chap- ter 452, which recognises that employment may be terminat- ed without notice where there exists a "good and sufficient cause" for dismissal. According to the company, the tribunal should have focused exclusive- ly on whether the facts estab- lished such cause rather than on the absence of disciplinary proceedings. The employer further argued that, as a small enterprise, it was impractical to establish a disciplinary board and that the Industrial Tribunal itself effec- tively serves as an independent forum in which the employee can obtain a fair hearing after dismissal. It maintained that the employee had breached fiduciary duties analogous to those contemplated by Arti- cle 1124A of the Civil Code, through alleged disloyalty, participation in employee chat groups discussing manage- ment, and involvement in plans that allegedly conflicted with the company's interests. The Court of Appeal reject- ed the employer's submissions and confirmed the tribunal's conclusion that the dismissal was unfair. While acknowledging that Article 36(14) of Chapter 452 permits dismissal without no- tice in appropriate circum- stances, the court held that an employer must still demon- strate the existence of valid and sufficient grounds and observe fundamental principles of fair- ness before imposing what it described as the most severe employment sanction. The court examined the alle- gations made against Caruana and found that several were based on assumptions and un- substantiated suspicions. It noted that the evidence showed his inquiries about real estate qualifications were linked to a desire to supplement his in- come through part-time work as a property negotiator, rather than to establish a competing educational institution. The court also criticised the employer's treatment of em- ployee communications and its management practices, observ- ing that participation in em- ployee WhatsApp discussions could not automatically be equated with disloyalty or in- subordination. Moreover, the dismissal was affected by email while the employee was on sick leave and without any oppor- tunity for him to respond to the allegations levelled against him. Central to the court's reason- ing was the principle that an employee should not be found guilty of misconduct without being granted an adequate hearing. The court agreed with the tribunal that a disciplinary process, even if adapted to the size and structure of the under- taking, remained an important procedural safeguard. The judgment referred to several past rulings concern- ing unfair dismissal and disci- plinary procedures, including Eileen Leone Ganado vs Link School of Languages Limited, confirmed on appeal in 2017, that argued the principle that each dismissal case must be assessed according to its own facts and circumstances, and whether misconduct occurred and whether dismissal was a proportionate response. Reference was also made to Owen Catania vs Fiona Farru- gia, decided by the Industrial Tribunal on 6 December 2021 and confirmed on appeal on 19 October 2022. In that deci- sion, reliance was placed on the judgment of the Italian Court of Cassation (24 June 2000, No. 8631) concerning the concept of "just cause" dismissal and the need to evaluate both the seriousness of the employee's conduct and the proportional- ity of the sanction imposed. The court additionally quoted Selwyn's Law of Employment, describing disciplinary proce- dures as mechanisms intended to give employees an opportu- nity to correct conduct and to ensure the fair resolution of workplace grievances. The Appeals Court also dealt with an incidental appeal filed by Caruana, who challenged the tribunal's assessment of compensation. The tribunal had refused to compensate him for the period during which he remained unemployed and for the reduction in salary in his subsequent employment because it considered that he had expressed an intention to resign. The court disagreed. Re- ferring to Article 81(2)(a) of Chapter 452, it held that compensation for unfair dis- missal must take into account the actual damages and losses suffered by the employee to- gether with any other relevant circumstances affecting em- ployment prospects. The court found that there had been no voluntary resig- nation. Rather, Caruana's re- marks about resigning were made immediately after learn- ing of his dismissal and while he was undergoing treatment for stress-related health issues. The evidence showed that he remained unemployed for ap- proximately one year before se- curing alternative employment at a lower salary. The Court of Appeal ulti- mately dismissed the employ- er's appeal and upheld the employee's cross appeal. It or- dered the case be remitted to the Industrial Tribunal to reas- sess compensation within one month, taking into account the period during which Caruana remained unemployed and the lower remuneration earned in his subsequent employment. Costs were awarded against the employer.