It would be unusual to have a discussion on a contract of employment, except in an academic context, but this particular contract concerns the PM’s former PR-man and public money stands behind it.
The employment with Malta Enterprise is for a maximum period of nine years, starting with a fixed term of three years, renewable automatically on a three-yearly basis unless either of the parties gives six months’ notice of intention not to renew prior to the end of a current period.
Nothing much to comment about here, you might say, but the law provides that you can’t have a fixed-term contract for longer than four years unless it’s for a senior management position and you stipulate an objective reason for there to be a derogation from the “four-year rule”.
That this is a senior position goes without saying, but I didn’t spot the objective reason, so technically (but only technically) as soon as Kurt Farrugia’s employment goes beyond four years, he morphs into an indefinite term employee. The government regularly ignores the Employment Status National Standard Order by engaging people to do specific jobs (even clerical ones) while leaving them on self-employed status, so it’s not surprising that this one also escaped them.
Clause 3.4 of the agreement is interesting. It says that if the agreement is terminated, Farrugia will get his full salary up to the end of the term then current, plus an extra two years on top of that.
It is to be assumed that they meant that this would be the case if the employer were to terminate prematurely. There is a provision taking into account the situation where Farrugia terminates, but it seems to bring us back to the same position. You can do the math for yourself.
This is a departure from the law relating to termination of fixed-term contracts at will, where the terminating party is obliged to pay one-half of the salary that the other party would have received in the remaining portion. The law allows parties to derogate from this norm, though here the scale of compensation is pretty favourable to the employee.
In the case of non-renewal (rather than premature termination) Farrugia’s compensation for his services being dispensed with is of one year’s salary, again a derogation from the norm, which is that at the end of a contract, all bets are off. It’s not an unheard-of derogation, though the scale of compensation is, again, generous.
This is a departure from the law relating to termination of fixed-term contracts at will
The same pay-off (one year’s gross) is payable if Farrugia declines to renew. Clause 3.8 hammers the point home about the statutory fixed-term contract provisions being substituted by “this provision”.
It seems to imply that if Farrugia were to give three months’ notice of termination, he gets the juicy pay-out of full salary up to the end of term plus two years over and above. The parties have agreed that no court shall be able to revise, abate or cancel this, either.
The friendly tone of the agreement continues with Farrugia’s salary getting an automatic yearly top-up of €5,000.
He doesn’t get overtime, to be sure, but “the Employer [that’s us, folks] shall undertake all reasonable measures not to impose any extra, additional burden upon the Employee when such duties do not require an element of urgency”.
Given that Farrugia is the CEO one assumes that he will give full effect to this undertaking to himself.
As he will ME’s undertaking “to encourage and enhance his continued development during his period of employment”.
This government’s disregard for employment law continues: it is provided that Farrugia may be suspended on half-pay if it becomes necessary to investigate his actions for any reason. It is illegal to suspend any employee on anything less than full pay unless there’s a collective agreement in place that allows for this.
I doubt Farrugia’s position is covered by a collective agreement.
When you move on to “Document A”, the reward package, again you can do your own sums. Farrugia starts out with €105,000 per year (add €5,000 every year) and he gets the usual ‘senior man’ benefits.
He also gets €5,000 per year as “disturbance allowance for frequent travelling together with an amount covering all those expenses related to the profession of the employee while he is abroad on company business”.
Whether this latter amount is within the five-k or over and above isn’t specified.
Farrugia also gets a maximum 20 per cent performance bonus, based on an annual appraisal review by his chairman.
Nice work if you can get it, someone once said.
Andrew Borg Cardona specialises in employment law.