Employment and relocation to Malta
When setting up a business in Malta, you might require personnel to be employed in Malta. It is important to ensure that proper contractual agreements are in place between employer and employees safeguarding of rights of both parties. E&S Group has an expert team who can assist our clients on regularizing employment contracts, assisting in dispute resolution, and all the other relevant matters.
We are also equipped with all the necessary expertise and tools to assist our clients throughout their whole relocation process to Malta.
Conditions of Employment
The Employment and Industrial Relations Act, Chapter 452 of the laws of Malta together with its subsidiary legislation is the applicable law for employment matters. The law stipulates certain conditions whilst others are agreed to by the parties to the agreement (which must necessarily be more favourable than the minimum conditions provided by the law).
Working and Overtime Hours
As a rule, in all sectors of employment, the average working time for each seven-day period, including overtime, shall not exceed 48hrs. It is the employer’s duty to ensure that this maximum amount of hours is not exceeded and that the interests of the health and safety of the workers are protected.
However, the law provides for an exception to the rule whereby the maximum amount of hours shall not apply if a worker agrees to this with his employer (in writing), provided that no worker shall be subjected to any detriment by his employer because he is not willing to give his agreement to perform such work.
Daily Rest and Weekly Rest
Every worker shall be entitled to a minimum daily rest period of eleven consecutive hours per 24hr period.
Furthermore, every worker shall be entitled to a rest break where the working day is longer than six hours for an uninterrupted period of 15mins which can be spent away from his workstation.
Every worker shall be entitled to paid annual leave of at least equivalent in hours of four weeks and 32 hours (equivalent to 24 whole working days), on a 40hr working week (if the average weekly working time is different it is calculated accordingly – calculated on the normal hours of work excluding the overtime). When a National Holiday or a Public Holiday falls on a Saturday or on a Sunday, it shall not be deemed to be a public holiday for the purposes of entitling any person to an additional day of vacation leave.
Sick leave entitlement varies from one economic sector to another. Most of the economic sectors are regulated by the Wage Regulation Orders. With regards those which are not regulated by these orders, sick leave amounts to two working weeks per year less any sickness benefit to which they may be entitled under the Social Security Act. If sick leave of more than 3 days is taken at one go, the first 3 days are paid by the employer whilst the remaining days are paid by the Social Security and thus, have to be deducted by the employer.
All employees, whether full or part-time, are entitled to time off from work on grounds of force majeure for urgent family reasons in those cases of sickness or accident where the immediate presence of the employee is indispensable. An employer is bound to grant to every employee a minimum of 10 hours with pay per year. Furthermore, full-time employees shall be allowed 2 days paid leave on the occasion of the death of a wife, husband, mother, father, son, daughter, brother or sister.
Maltese law ensures the health and safety of working women who are pregnant, have just delivered or are breastfeeding. A pregnant employee can resort to maternity leave for an uninterrupted period of 18 weeks. The first fourteen (14) weeks are paid by the employer but the weeks beyond the first fourteen (14) weeks are not paid by the employer. The employee who exercises such a right is entitled to return to the same job or to an equivalent job where this is no longer possible. Furthermore, such employee is still entitled to all rights and benefits which may accrue to other employees of the same class or category of employment at that same place of work.
Wages and Minimum Wage
Wages should be paid at regular intervals of not more than four weeks in arrears. However, different periods of pay can be agreed to in a collective agreement. Based on the cost of living, and the economic inflation, the national minimum wage in 2017 for employees above the age of 18 has been increased to €169.76 a week.
The year of birth of an employee is the deciding factor at which age one may start to draw State Pension. A person born in 1962 or later will only be able to retire and draw the State Pension after their 65th Birthday.
Pension scheme for foreigners:
- If the foreigner worked/is working in another EU country, this period of employment is taken into consideration in Malta. However, for this time of employment (carried out in another EU country) to be taken into consideration, the individual has to work and pay contribution in Malta for a minimum of 1 year The aggregate amount of years required for eligibility of the pension is of 12 years in all EU states. E.g. 1 year in Malta and 11 years in Italy – calculated pro rata;
- Different ages have different criteria. With regard to persons born after 1962, the pension is calculated on a 40 year span.
Non-observance by an employer of these conditions shall constitute an offence. In addition, these conditions of employment shall not deny the employee the right of resorting to industrial action nor prevent him from joining a trade union.
Fixed vs. Indefinite Contracts
Besides the conditions of employment, the contractual agreement between the employer and employee shall determine also whether the contract is a fixed-term contract or an indefinite term contract. A fixed term contract is one where the end of the contract is determined by reaching a specific date, by completing a specific task or through the occurrence of a specific event whilst indefinite term contract has a fixed commencement date, but no pre-determined date of termination.
While a fixed term contract must be executed until its termination, an employee can decide to terminate an indefinite term contract at any time, without prior notice. It is however crucial to note, that in the case of an indefinite term contract, an employer cannot unilaterally decide to terminate the contract, unless the issue of redundancy is raised. The employee is also to be retained on an indefinite term contract, if, the employer decides to retain the employee under a fixed term contract, but fails to deliver a new contract within 12 working days from the expiration of the previous contract.
Termination of Contracts of Service
Maltese law rigorously regulates dismissal and the rights and obligations of the respective parties. Termination of a contract of employment by an employer can only occur on 2 grounds, namely (i) Redundancy or (ii) a good and sufficient cause.
If this is not adhered to, an employer may be held liable for compensation. Industrial Tribunals have the power to award compensation or reinstatement of employment if the redundancy is found to be unjustified or if the dismissal is found to be unfair.
An employee on an indefinite term contract may terminate employment without assigning any reason. Where employment is terminated for good and sufficient cause, there is no requirement on the part of the employer to give advanced notice or to make payment for wages in such notice period or unexpired period of a definite term agreed upon.
The first six months of any employment under a contract of service shall be a period of probation, unless there is agreement between the parties that establishes a shorter period of probation. The probation period shall be of one year in the case of a contract of service or collective agreement in relation to employees holding technical, executive, administrative or managerial posts and whose wages amount to at least double the minimum wage per year. This applies unless stipulated otherwise in the contract or agreement. During the probationary period employment may be terminated at will by either party without assigning any reason. However, in such a case, the terminating party is obliged to give one week’s notice of termination to the other party where the employee has been in employment for a continuous period exceeding one month.
Rates of Income Tax
In Malta, certain types of income and certain individuals may benefit from reduced rates of tax. Apart from these special situations, the rates of income tax as of 2017 are as follows for residents:
|Income, Euros||Tax rate||Income, Euros||Tax rate|
|0 – 12,700||0%||0 – 9,100||0%|
|12,701 – 21,200||15%||8,100 – 14,500||15%|
|21,201 – 28,700||25%||14,501 – 19,500||25%|
|28,701 – 60,000||25%||19,501 – 60,000||25%|
|60,001 – and over||35%||60,001 – and over||35%|
All employed and self-employed workers in Malta pay Malta social security contributions on a weekly basis in accordance with the provisions of the Malta Social Security Act. The extent of payment and by whom they are due depends on a number of factors.
With regards to persons employed in Malta, social security contributions generally amount to 10% of the employees’ gross weekly salary. For each person, the amount is paid three times: by the employed person, by his employer and by the State.