Employment Status National Standard Order 2012

Some significant legislative measures have been introduced recently under the Employment and Industrial Relations Act which may have an impact on many businesses. Legal Notice 44 of 2012 amended by Legal Notice 110 of 2012 which came into force on 31 January 2012 reviews the employment status of individuals who are self-employed and defines a number of criteria which would indicate the existence of an employment relationship.

Employment Status National Standard Order, 2012 The Order stipulates that if five of the following eight conditions are met the individual would be considered to be an employee with comparable conditions of employment. The criteria are as follows:• The individual derives at least 75% of his income for the year from one source;

• The type and volume of work required are determined by the person to whom the service is provided;

• The tools, equipment and materials required for the work are provided by the person receiving the service;

• The individual is subject to work time schedules or minimum work periods which are set by the person receiving the service;

• The individual must perform the service himself and cannot sub-contract the work to others;

• The individual is integrated within the production process or work organisation or hierarchy of the entity requiring the service;

• The activity performed by the individual is a core element in the organisation and the pursuit of the objectives of the person to whom the service is provided;

• The individual performs similar tasks to existing employees or, where work is outsourced, to those performed by former employees.

Implications

Self employed persons who are deemed to be employees will have an indefinite contract period from the date of the initial continuous provision of services and any seniority and due notice will be considered to be with effect from that date. The date of employment shall be the date of the first contract unless there was a break of six months between successive contracts.

The probationary period will be deemed to have commenced on the date of first provision of services and if this was before coming into force of the Order it will be presumed that the probationary period will have lapsed unless proven otherwise. Working hours must be similar to that of a comparable whole time employee or if no comparable employee exists, to the hours specified in the applicable Wage Council Wage Regulation Order or, if none is available, a forty hour week.

Wages shall also be that of a comparable employee, or, in the absence of a comparable employee, the same wages provided as part of the self-employed conditions. All other conditions must be comparable to whole time employees or as provided by the Wage Council Wage Regulation Order. Any penalty clauses in the previous contract of service relating to events before the Order came into force will not be enforceable unless authorised by the Director of Labour.

However, this does not preclude the right by any party to initiate civil procedures for damages applicable under the contract of service. Employer’s Obligations If the status of the individual is deemed to be that of an employee at the time the regulations come into force, the employer is obliged to provide the employee with a letter of engagement or signed statement within eight weeks of the regulations coming into force, setting out the conditions of employment including the information required in accordance with the Information to Employees Regulations 2002 (LN431 of 2002).

If the individual does not agree with the conditions of employment or the amount of wages to be paid and leaves employment, he has a right to institute proceedings claiming unfair dismissal with the Industrial Tribunal. Exemptions The Director of Labour may, in exceptional cases or for activities of a short duration, upon his written request to retain his self-employed status, exempt an individual from the provisions of the Order. Approval of Change of Status by Director of Labour Any conversion of a contract of service from that of a self-employed person to an employee or vice versa must have the approval of the Director of Labour. Penalties The fine, on conviction for contravening any of the provisions of the Order is €1,000 per employee.

Information from: www.deloitte.com.mt