MALTA Law and Practice Contributed by: Paul Gonzi, Rebecca Diacono and Mattea Pullicino, Fenech & Fenech Advocates
In this case, an employee wishing to take such leave must have at least 12 months of continuous service with the employer unless a shorter period is agreed to. Confidentiality Clauses, Non-Disparagement Clauses and Employee Liability Confidentiality and non-disparagement clauses in employment contracts are not expressly regulated in Malta. However, they are common clauses introduced within contracts of employment together with other clauses such as those on intellectual property, non- competition, compliance with policies and processing of personal data. Although not specifically regulated, it is understood that during employment, employees have an implied duty of confidentiality as well as an implied duty to act in the best interest of the employer. These implied obligations have often been upheld by the Industrial Tribunal and the courts. They also apply following the termination of employment but in a more limited man - ner. With certain employees one may also invoke duties of a fiduciary nature regulated by the Civil Code. With regard to employee liability, Maltese law does not explicitly regulate the liability of an employee during the course of their engagement with the employer. However, general civil law principles of contract and tort are applicable in such circumstances. The law does impose an obligation on an employee to pay a sum to the employer if the employee abandons fixed-term employment without good and sufficient cause, or if the employee fails to give prior notice of termination from an indefinite-term contract without good and sufficient cause.
Restrictive covenants of this nature do not arise by law, except indirectly in so far as trade secrets are protected, offering limited protection. Therefore, in order to be enforceable, restrictive covenants must necessarily be included in a contract of employment, or in a side letter signed by the employee. Non-competition clauses applicable during the employment period are standard and there is a gen - eral understanding that they should be enforceable. This does not mean that employees can be prevented from undertaking activities for another (non-compet - ing) employer. Post-Termination Restriction Clauses Conversely, post-termination restriction clauses, including non-competition, are not easily enforceable. Over the past decades, local courts have adopted dif - ferent interpretations, in some cases dismissing the clauses altogether for being restraints of trade that were deemed to be in breach of public policy, but in other more recent cases enforcing the restraints in so far as they were warranted, narrowly defined and limited in scope and duration, and also, in some cas - es, compensated for. On some occasions, the courts have also enforced a contractual obligation on the for - mer employee to pay a sum by way of pre-liquidated damages, with the courts maintaining that this was not an illegal fine imposed on the employee. The courts have generally interpreted such clauses restrictively and have emphasised that the limitation of time and industry area imposed have to be rea - sonable, taking into consideration the small size of Malta and the relatively small market, in that a former employee cannot be forced to leave the country to be able to pursue their vocation/profession. There is no law regulating these types of covenants and therefore there is no maximum period imposed by law. Unlim - ited periods are not permissible and, typically, restric - tions would be for periods of six to 12 months from termination. There is no mandatory obligation to compensate employees for post-termination restrictions. Howev - er, compensation is likely to increase the chances of enforceability, as has also been indicated by Maltese courts in recent months.
2. Restrictive Covenants 2.1 Non-Competes
Non-competition clauses effectively seek to prevent an employee from joining a competitor employer or facilitating a competing business during employment or for a defined period after the termination of employ - ment.
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