Revolving door is blocked for top civil servants who seek private sector jobs

Civil servants and public employees holding posts in regulators and inspectorates are being prohibited from transitioning straight to the private sector, in new revolving doors rules.

Under new rules issued by the Principal Permanent Secretary, public employees holding positions that involve regulatory or inspectorate functions will be asked to agree to conditions where, for two years after leaving or retiring from a public post, they are prohibited from joining a private company or NGO with which they have dealt during the last five years in their public job.

The term ‘revolving door’ refers to the movement of individuals from public office to private companies and non-governmental bodies.

Revolving doors rules might not affect MPs in executive roles

The rules seek to prevent public employees from using their government experience and connections to unfairly benefit their new private employer, or even favour certain companies or sectors in their decisions while they are in office, in the hope of landing a job in the corporate world once they exit government.

The designation of the posts and positions liable to revolving doors rules will be carried out by a Revolving Door Policy Governance Board, which will also give rulings to employees on whether entering into a particular relationship of profit would constitute a breach of the rules.

The rules are intended at safeguarding against conflict, with the highest ethical conduct expected of officers holding or having held public office.

The period of two years following resignation, retirement or termination will be reduced to six months for employees who as at September 2019 already held an appointment to the posts listed as being under the revolving doors rules.

Any appointment after this date will be governed by the two-year obligation.

Revolving doors rules will enable better governance in the transition of top public sector leaders who find more lucrative exits when transitioning to the private sector, especially in booming industries such as gaming or financial services.

But restraint-of-trade clauses might be challenged due to the right to work or freedom to improve one’s working conditions. In 2015, a Court of Appeal ruled on whether a former company employee could seek a job with the Maltese financial regulator within two years of the termination of her job. The first court had decided the restraint-of-trade clause was against public policy and had no validity at law.

But the appeals court overturned the decision, arguing that it was a reasonable condition set for a limited time-period and accepted voluntarily by the employee.

The court argued that such clauses prevented former employees from joining competitors soon after leaving work, especially when they could be able to pass on sensitive information.

This did not make it a total restriction of the employee’s freedom to work, but limited in terms of principal clients.

But while high-ranking civil servants will now be stopped from ambitious leaps into the private sector, it is also a fact that Maltese MPs and ministers fall foul of the unwritten ‘revolving door’ principle: when the curtain falls on their political life, MPs often dive headlong into company directorships and consultancies frequently related to their own portfolios.

Jobs where the revolving doors rule will enter into force include in the main, all top posts, and regulatory and inspection roles at the Malta Financial Services Authority, the Financial Intelligence Analysis Unit, Customs, Internal Revenue and Contracts departments, the Malta Communications Authority, the Malta Gaming Authority, various standards commissions in the education ministry, the energy regulator, Transport Malta – but not its CEO, the Planning Authority, the Environment and Resources Authority, and others.