Employment Regulations
The most notable legislative sources include the Constitution of Malta, the Employment and Industrial Relations Act (EIRA), the Employment Commission Act, the Employment and Training Services Act and EU Regulations and Directives.
Regulations made under the EIRA include Wage Regulation Orders which represent administrative regulations which regulate certain conditions of employment for specific sectors. At present, there are 31 different WROs in force.
Key Factors to Consider When Employing in Malta:
There are several key areas to be aware of within the Maltese employment regulatory framework, especially for companies that plan to initiate a full local office and human resources department. These challenges can be mitigated by use of a locally sourced payroll provider who is familiar with all of the local laws and rules for both local employees as well as foreign nationals.
Contracts
Maltese Labour Law is essentially based on the contractual agreement between employer and employee, provided that the statutory conditions of employment are respected. Thus, whereas certain conditions of employment are strictly regulated as a matter of law, other conditions are left entirely up to the parties to agree upon, as long as these are also considered to be objectively reasonable.
If the period of employment exceeds one month and the employee’s working hours exceed eight hours per week, the employer is bound to give the employee within 8 working days from the commencement of employment, either (i) a written contract of employment, or (ii) a written statement of minimum conditions, namely:
- The normal rates of pay;
- Overtime rates;
- Hours of work;
- Place of work;
- Leave entitlement.
Contracts of employment may be signed for a fixed term or for an indefinite term. A fixed term contract can be successively renewed up to a maximum period of 4 years after which the employee is considered to be under a contract of indefinite duration.
The exception occurs when the employer has justifiable reasons for retaining the employee on a fixed term contract. An employee whose fixed term contract has expired and is retained in employment will also be considered to be under an indefinite contract if the employer does not produce a new contract of service within 12 days following the expiry of the previous contract.
Employee Entitlements
Statutory Working Hours
48 hours are the legal maximum. (The eight additional hours have to be paid for in overtime compensation). Daily office hours in the private sector are usually between 08:00 or 08:30 and 17:00 or 17:30.
Medical Leave
The amount of sick leave varies substantially according to the relevant Wage Regulation Order that regulates the specific sector of industry. Where the type of activity of work is not regulated by any W.R.O., the sick leave entitlement of an employee amounts to two working weeks per year (calculated in hours). In occasions of sickness, a medical certificate has to be presented to the employer.
If the absence from work is not covered by a medical certificate, other arrangements (like applying for leave) have to be sought. The employer is only required to issue wages for the amount of sick leave entitlement provided by law. If an employee remains sick after having exhausted all the sick leave entitlement, s/he will only continue to receive the Sickness benefit from the Social Security to which s/he may be entitled.
Annual Leave Accrual Entitlement
By law, an employee working 40 hours per week is entitled to 192 hours of paid annual leave (that is at least the equivalent in hours of four weeks and four working days calculated on the basis of a 40-hour working week, and an 8-hour working day).
If the average normal hours (excluding overtime) calculated over a period of 17 weeks is below or exceeds 40 hours per week, the vacation leave entitlement in hours should be adjusted accordingly.
Maternity Leave in Malta
Both male and female workers have the individual right to be granted unpaid parental leave in case of birth, adoption, fostering or legal custody of a child to enable them to take care of that child for a period of four months until the child has attained the age of eight years. Parental leave can be availed of in established periods of one month each.
An employee must have at least 12 months continuous service with his/her employer to be eligible to apply for Parental Leave, unless a shorter period is agreed to.
The employee’s balance of parental leave is transferred to the new employment. The employee is not entitled to a fresh parental leave entitlement.
Employment Termination
Dismissal and the rights and obligations of the respective parties are matters which are subject to very strict regulation.
The Employer may only terminate a contract of employment on the basis of:
- A good and sufficient cause- a term which has no statutory definition and which constitutes the interpretational basis for each case of unfair dismissal brought before the Industrial Tribunal.
- Redundancy, or
- The employee reaching retirement age.
The employee, on the other hand, is free to terminate employment of employment of an indefinite term without assigning any reason.
Where the employer or employee are terminating a contract of employment of an indefinite term, the advance notice to be given by the terminating party to the other party is calculated according to the period for which the employee has been in the employment of the same employer continuously.
Probation Period
The first 6 months of each employment contract constitutes probation, unless the parties agree to a shorter term. By way of exception to this rule, in the case of contracts of service, or collective agreements in respect of employees holding technical, executive, administrative or managerial posts whose wages are at least double the applicable minimum wage, such probation period is of 1 year unless a shorter period is agreed upon in the contract of service or in the collective agreement.
During the probation period employment can be terminated by either party without assigning any reason, provided that at least 1 week’s notice of termination is given by the terminating party to the other party where the employment relationship has exceeded 1 month.
Pension Requirements
Entitlement to contributory benefits, apart from any other statutory conditions, depends upon a contribution test.
- A Two-thirds Pension – an insured person needs to have at least 1 contribution paid after 21st January 1979.
- A Retirement Pension – an insured person needs to have paid 1 contribution before the 16th January 1979.
The test is an arithmetical calculation of the yearly average of contributions paid by or credited to the insured during a certain period (as specified by the Social Security Act Cap. 318). Normally this period can vary from 35 years in the case of a Two-thirds Pension up to 42 years in the case of a Retirement Pension. For further details on the method of calculation see 6 and 7 below.
