A former Air Malta human resources chief has been awarded €33,333 in unpaid performance bonuses after a court ruled that the airline could not rely on its own failure to establish performance targets to avoid paying him.

Roberto Cristiano, the former executive, who served as chief officer human resources and later chief officer people and performance, successfully sued the airline over bonuses owed under his employment contracts.

In a judgment delivered on Thursday, the First Hall of the Civil Court ordered Air Malta to pay the full amount claimed, together with legal interest and court expenses.

The man was employed by Air Malta between January 2015 and May 2019, initially serving as Chief Officer Human Resources before taking up the position of Chief Officer People and Performance in January 2018.

Under his first employment contract, Cristiano was entitled to an annual performance bonus of up to €10,000, provided that certain key performance indicators (KPIs) were met. His second contract increased the annual bonus to €20,000.

Both contracts stipulated that the performance targets were to be established by Air Malta, following consultation with the employee, before the beginning of each financial year.

However, the former executive argued that the airline had never established the personal performance indicators against which his entitlement to the bonuses was supposed to be assessed.

Cristiano maintained that his performance throughout his employment had been satisfactory, referring to a performance evaluation signed by the airline's then chief executive.

Despite this, Cristiano received a performance bonus for only one financial year, 2017/2018.

He subsequently sought €10,000 for the financial year ending March 2017, €20,000 for the financial year ending March 2019, and a further €3,333 representing the proportionate bonus for his final two months of employment.

Air Malta argues former executive was responsible for performance management

Air Malta contested the claim, arguing that the former executive had already received the only performance bonus to which he was entitled.

The airline maintained that its performance bonus policy, which had been in place since 2012, required certain corporate performance targets to be achieved before individual employees could qualify for bonuses.

According to evidence presented by the airline's company secretary, the policy required corporate performance indicators relating to operating earnings, unit costs and punctuality to reach at least 92% of their targets.

Only after that threshold, known as the "bonus gate," had been reached would an employee's individual performance become relevant.

Air Malta argued that the required corporate targets had not been met during the relevant financial years, except in the year in which the former executive had already received his bonus.

The airline also argued that, given his senior position overseeing human resources and performance management, Cristiano had been responsible for ensuring that the company's performance assessment procedures were implemented.

It maintained that Cristiano could not complain about the absence of a performance assessment system when its administration fell within his own departmental responsibilities.

However, the court rejected this argument, distinguishing between his responsibility for overseeing employee performance management generally and the airline's contractual obligation to establish performance targets for the executive himself.

The court observed that an employee could not reasonably be expected to assess his own performance or unilaterally determine the targets governing his entitlement to a bonus.

It emphasised that the employment contracts expressly placed responsibility for setting those targets on the company.

Court finds airline failed to fulfil contractual obligations

When examining the evidence, the court found that Air Malta had failed to establish personal KPIs for the former executive during the financial years in dispute.

His successor as chief human resources officer also confirmed that the contractual process of setting targets, evaluating performance and determining bonus payments had never been implemented in his case.

Air Malta's chief financial officer was also unable to confirm whether specific personal performance targets had ever been established.

The court noted that although Air Malta had produced evidence concerning its corporate performance bonus policy, it had failed to produce documentation showing that the former executive had been assigned any individual targets.

It further observed that the employment contracts made no reference to the airline's broader bonus policy or to any requirement that corporate financial targets first be achieved.

Consequently, the court concluded that his entitlement to a performance bonus was governed by the individual KPIs that Air Malta was contractually required to establish, rather than by the airline's overall financial performance.

The court also referred to previous judgments involving Air Malta in which courts had considered the company's obligations concerning employee performance bonuses.

It held that the burden rested on Air Malta to demonstrate that the former executive had failed to meet his performance targets.

However, because the airline had never established those targets, it could not subsequently argue that he had failed to achieve them.

The court found that Air Malta's failure to implement the contractual assessment mechanism could not operate to the employee's disadvantage.

It also noted that he had generally been regarded as performing his duties satisfactorily throughout his employment.

The court concluded that the full amounts claimed were payable, since the absence of any performance assessment was attributable to Air Malta itself.

Air Malta ordered to pay full amount plus interest

Upholding the former executive's claim in full, the court ordered Air Malta to pay €33,333 in outstanding performance bonuses.

The amount comprises €10,000 for the 2016/2017 financial year, €20,000 for the 2018/2019 financial year, and €3,333 for the period between April and May 2019.

The court also ordered the airline to pay legal interest on €30,000 from the date it was notified of a judicial letter issued on 31 October 2022, with interest on the remaining €3,333 running from the date of Thursday's judgment.

Air Malta was further ordered to bear all court expenses, including those associated with the judicial letter.

Judge Henri Mizzi handed down the judgment.

Lawyer Stephanie Bonnici appeared for Air Malta, while lawyers Andrew Grima and Sheldon Micallef appeared for Roberto Cristiano.