The Malta Independent 21 September 2019, Saturday

Law report: A company is not considered to be an employee

Ganado Advocates Wednesday, 11 September 2019, 12:35 Last update: about 10 days ago

Lara Pace

In the case Bruma Limited vs Segretarju Permanenti Ministeru Ghal Ghawdex Judgement of the Court of Appeal in its Inferior Jurisdiction dated the 24 May 2019, the court held that a Company cannot be considered to be an employee and for this reason the Industrial Tribunal did not have jurisdiction to determine a claim relating to the termination of a contract.

On the 19 January 2018, Bruma Limited (the “Company”) filed an application in the Court of Magistrates (Gozo) pursuant to which it claimed that it had been engaged by the Ministry for Gozo (the “Ministry”) to provide consultancy services as outlined in a contract for services which was executed on the 2 March 2017. According to the Company, the contract for services was for a period of one year commencing from the 1 March 2017, and the parties agreed that the Company was to be paid the sum of 11,700EUR (exclusive of VAT) for the services rendered. Pursuant to a letter dated the 24 July 2017, the contract was terminated unilaterally, by the Ministry. In light of such developments, the Company filed judicial proceedings against the Ministry. The Company asked the Court of Magistrates (Gozo) to declare that the unilateral termination was done without a cause and to order the Ministry to pay any amounts due to the Company.

In their reply, the Ministry said that the claims were unfounded, both in fact and at law, and also sustained that the Court of Magistrates (Gozo) did not have the competence to determine this dispute and that consequently, this dispute was to be determined by the Industrial Tribunal.

The Court of Magistrates (Gozo) started by examining whether it had the competence to determine this claim and pursuant to a preliminary decision of the 10 October 2018, the Court of Magistrates (Gozo) determined that it did have the competence to determine this dispute and for this reason it would continue to hear the proceedings of this case. Following this decision, the Ministry filed an appeal on the 29 October 2019. The Ministry claimed the first court failed to interpret correctly the provisions found in the Employment and Industrial Relations Act (Chapter 452 of the Laws of Malta). In particular, the Ministry claimed that it is only the Industrial Tribunal is vested with exclusive competence to determine disputes relating to unfair dismissal of employees. Moreover, the Ministry argued that the Company falls within the definition of a “worker” and an “employee” as defined in the Employment and Industrial Relations Act.  On the 14 November 2018, the plaintiff Company filed a reply to this appeal and claimed that the appeal was frivolous and vexatious. In relation to the competence of the court, the Company argued that the legal relationship which the Company had with the Ministry was not that of an employer-employee relationship and for this reason, the Industrial Tribunal did not have the competence to determine this dispute. The Company argued that it provided professional services to the Ministry and that this relationship did not fall within the scope of the Employment and Industrial Relations Act.

After referring to the Employment and Industrial Relations Act, the Court of Appeal in its inferior jurisdiction (the “Court”) had no doubt that an employee can only be a natural person and this notwithstanding the definition of the term “person” found in the Interpretation Act. In particular, the Court noted that the rights of an individual during a period of employment only apply to a natural person. The Court also made reference to the definition of an “employee” in the Employment and Industrial Relations Act and accordingly stated that an “employee” carries out the duties instructed by his employer and this on a personal and individual basis. The Court noted that a company does not per se carry out work, but it is the employees of that company who actually carry out the work. The Court also observed that the term “employer” as defined in the Employment and Industrial Relations Act  includes a partnership, company, association or other body of persons, whether vested with legal personality or not. A similar definition is not given to the term “worker” or “employee”.  The Court also examined the contract between the parties and noted that in the contract there was no reference to a salary or a bonus.  Moreover, according to the Court, the Ministry did not produce enough arguments to show that a Company could be considered to fall within the definition of an employee. Finally, the Court noted that the Industrial Tribunal does not have jurisdiction to determine an unfair dismissal claim, because in this particular case, there was no employee-employer relationship.  For the reasons outlined above the Court dismissed the claim and referred the acts back to the Court of Magistrates (Gozo) to determine the merits of this dispute.

 

Dr Lara Pace is an Associate at GANADO Advocates

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