MaltaSituated in the central Mediterranean Sea, Malta is a booming economy and a hotspot for businesses and entrepreneurs. This attractive destination is suitable for foreign investments as well. Besides, Malta has the lowest corporate tax rates in the European Union. All these reasons enhance the potency of doing business in Malta.
However, to hire a talented workforce and enhance business productivity, it is necessary to have a clear idea about the labor act rules in Malta. These rules will help you hire and manage the best talents while lawfully conducting your business in Malta. A foreign company can establish a subsidiary in Malta, provided they comply with the country’s labor rules and regulations, including having written employment contracts signed by both the employer and employee.
Malta has various labor rules and regulations. To learn about them, go through this employment law in Malta guide.
Applicability of the Act
The Malta labor laws apply to all employees working in Malta. It includes people who work as employees in some Maltese companies as well. Further, the labor regulations in Malta apply to those non-resident employees whom the companies send for business purposes. In short, as long as employees of a business organization live and work in Malta, they are bound by the Malta labor law. The legal framework governing employment practices in Malta is outlined in the Employment and Industrial Relations Act, which regulates various aspects of employment such as minimum conditions, dispute resolution through employment tribunals, and statutory rights for employees and employers alike.
These are the people covered by the Malta labor law:
Employees
Employers’ interest group
Trade unions
Workers
Industrial and Employment Relations
Overview of Industrial Relations Act
The Industrial Relations Act is a cornerstone of employment law in Malta, providing a robust framework for regulating employment relationships, employment contracts, and industrial relations. This comprehensive legislation aims to ensure fair labor standards, safeguard employees’ rights, and foster a positive and productive work environment. By setting clear guidelines for employment contracts and working conditions, the Act helps both employers and employees understand their rights and obligations, promoting harmony and efficiency in the workplace.
Role of the Department of Industrial and Employment Relations (DIER)
The Department of Industrial and Employment Relations (DIER) plays a pivotal role in upholding the principles of the Industrial Relations Act. Tasked with enforcing the Act, the DIER offers guidance and support to both employers and employees on a wide range of employment-related matters, including employment contracts, working conditions, and dispute resolution. The department is also responsible for investigating complaints of unfair labor practices and providing mediation services to resolve employment disputes. By promoting good industrial relations, the DIER helps create a fair and equitable work environment in Malta.
Employment Contract
Employees working in business organizations in Malta receive a contract in written form. This written contract highlights all the fundamental working conditions of the employee. Some basic information added in this contract includes working hours, remuneration, overtime, leaves, holiday entitlement, and many more. The employer provides this contract to the employee within one month of joining. Continuous employment with the employer influences the statutory notice period required for termination of an indefinite-term contract.
However, the type of employment contracts in Malta differ and largely depend on the organization. The various types of employment contracts according to the labor code in Malta include:
Indefinite or open-ended employment contract
The most common type of employment contract
Has an indefinite contract
Either party can terminate a contract
Both employer and employees must abide by severance agreements, terms of the notice, and collective agreements
Fixed-term employment contract
Employers can renew fixed term contracts for up to four years.
Shift to an indefinite contract after the tenure’s completion.
Contact the employer within 12 days for a contract extension.
Termination of the contract before the tenure will lead to paying half the wages to the employee.
Probation period in the employment contract
Some other types of employment contracts functional in Malta include part-time permanent work, commission-based employment, and apprenticeships and traineeships. The probationary period in these contracts is significant, as it allows either party to terminate the employment at will without needing to provide a reason, although notice requirements apply based on the length of the employment.
Termination of probation is possible with one week’s notice. One year’s probation applied only to managerial and executive posts.
Key Provisions of the Employment Law
The labor regulations in Malta highlight the following key provisions for the benefit of the employees:
Minimum Wage
The minimum weekly wage for an employee above 18 years is EUR 192.73.
Full-time employees of 17 years get EUR 185.95.
Employees below the age of 17 years get EUR 183.11.
After completing one year in an organization or enterprise, employees are entitled to a hike of EUR 3 per week.
Bonus and weekly allowance
Per the labor code in Malta, employees get a total statutory bonus at an interval of every six months.
A bonus of EUR 135.10 will be paid twice a year – by the end of June and between the 15th to 23rd of December every year.
Employees get a total statutory weekly allowance at an interval of every six months.
This weekly allowance of EUR 121.16 is paid twice – at the end of March and September.
Overtime
The Wage Regulation order regulates overtime rates for employees.
Employers must mention the overtime rates in the employment contract. The applicable overtime rate is one and a half times the standard wage.
Payslip conferment
Every employer must provide a payslip to the employees before or during paying wages.
This payslip should contain the following details:
Name of the employer and employee
Address of employer
Designation of employee
Break down of wages along with the total amount paid
Hours worked
Overtime hours worked
Leaves taken by the employee
Bonus, allowance, or commission
Deductions related to insurance, tax, or similar other features
Working hours
The labor code in Malta enforces a working hour of 40 hours per week for a full-time employee.
Working hours must be at most 48 hours a week.
Employers asking employees to work more than 48 hours will be considered overtime.
The night working hours must be at most 8 hours every 24 hours.
The working time for the night shift starts at 22.00 hours and ends at 6.00 hours.
Working hours in Malta labor law mentions a consecutive 11-hour rest for the employees daily.
Leave entitlement
On the occasion of the death of a family member, all employees get paid bereavement leave.
Employees get paid bereavement leave only on the death of the employee’s husband, wife, father, mother, brother, sister, daughter, and son.
Employees get a fully paid injury leave of one year.
Employees in Malta get two days of paid marriage leave as prescribed in the Minimum Special Leave Entitlement Regulations.
Employees get two weeks of paid sick leave in Malta per year and Social Security benefits.
Employees can get an urgent leave of fifteen hours if there is any family issue.
Maternity and Paternity leaves
A pregnant employee gets maternity leave provided she has filled and submitted the maternity leave form in Malta.
The leave rules of maternity are the same for maternity leave in Malta for foreigners.
Every pregnant employee gets an uninterrupted maternity leave for 18 weeks. Out of this, the first 14 weeks are payable by the employer.
For shared paternity leave in Malta, employees get ten working days right after the birth or adoption of a child.
Work-Life Balance for Parents and Carers Regulations regulate Malta paid maternity leave.
Rights on Termination of Employment
For Malta employment law termination of employment, the employer must provide a termination certificate to the employee stating the employment duration, services performed, nature of work, and wages.
Termination during probation does not require the employer to mention the causes of termination.
Notice period
According to employment law in Malta, termination during probation requires one week of notice. Notice periods are crucial as they determine the legal requirements for both employers and employees when terminating an employment contract.
The length of service of the employee determines the calculation of the notice period as follows:
Employment tenure | Notice period |
More than one month, less than six month | One week |
More than six month, less than two years | Two week |
More than two years, less than four years | Four week |
More than four years, less than seven weeks | Eight week |
For an employment exceeding seven years, an additional week is added. The mentioned addition caps at twelve weeks.
Employee Rights and Protections
Unlawful Discrimination and Protected Groups
Maltese employment law takes a strong stance against discrimination, ensuring that all employees are treated with dignity and respect. The Industrial Relations Act explicitly prohibits discrimination based on sex, race, religion, age, disability, and sexual orientation. Employers are mandated to provide a safe and healthy work environment, free from harassment and bullying. Employees who face discrimination or harassment have the right to file a complaint with the DIER or seek redress through the courts. This legal framework ensures that all employees are protected from unfair treatment and can work in an environment that values equality and inclusivity.
Penalties
The employer and the employee must adhere to the Malta Labor Law. Failing to do so can lead to legal punishment. Complaints can be made to the Department of Industrial and Employment Relations. For criminal action, the employee has the right to take civil action against the employer.
Failure to pay wages at the right time, breaching of rules made in the contract, unfair dismissal, and discriminatory treatment can all lead to civil cases. Breaching employment contracts can lead to a fine of up to EUR 2,329.37 and six months to two years of imprisonment or both. If the employer fails to give proper notice during the termination of indefinite-term contracts, they are liable to pay the employee a sum equivalent to the wages that would have been payable during the notice period.
Compliance Strategies for Employers
Companies should follow compliance strategies considering the Malta labor law to get the best talents for their enterprises. Here are some compliance strategies for effective and efficient hiring:
Understanding the employment relationship is crucial for ensuring that both employers and employees are aware of their rights and obligations under Maltese law.
In-house HR team
Suitable for medium to large enterprises with a budget allotted for looking after the labor law.
Promotes reforms to reduce workplace discrimination
Proper moderation of various perks and benefits per the labor code in Malta. Subsidiary legislation, such as wage regulation ordinances and derivative laws from the GDPR, provides additional legal protections related to employment.
Dedicated third-party HR agencies
Employers can venture with knowledgeable third-party HR agencies to comply with Malta’s labor regulations.
These agencies work in a similar fashion as an in-house HR team.
Employer of record solutions
Suitable for companies and employers hiring international talents, irrespective of the business size.
Employers can impose some ground rules according to their needs.
It saves resources and time for the employers
Less time-consuming with outstanding results.
How Can Multiplier Help?
To start a business in Malta and hire the required talents, can stand by your side. They are a comprehensive PEO-EOR platform that helps you follow the Malta labor law and hiring process accordingly. Our expert team helps businesses draft multilingual contracts, manage international payroll and conduct employee onboarding per the requirements. So, accelerate the growth of your business with the help of Multiplier and test more than 150 markets with minimum hiccups.
