Spotlight on Malta

skyline of Valleta during night, Malta

Malta is a compact country with massive potential. Located in the heart of the Mediterranean between Sicily and the coast of North Africa, a Maltese regional headquarters or office can serve as a company’s strategic gateway between Europe and the Arab world. As a forward-looking EU member state, the small but mighty island state continues to attract multinational companies (MNCs) for expansion and hiring. 

Why Malta?

  • The business environment in Malta is welcoming and flexible, with over 70 favorable double tax agreements and a full imputation taxation system that can make corporate tax rates as low as 5%.
  • Malta is an EU member state with a highly-skilled, multilingual workforce. Maltese and English are the official languages, with the latter spoken by 88% of the population. Italian, French and German are also common.
  • The country has established itself as a premiere hub for innovative industries, known for iGaming, fintech, finserv, IT, eCommerce, cryptocurrency, blockchain and more. 
  • As an island that largely lacks natural resources, Malta has boasted human capital as its greatest resource for decades. This mindset has sparked immense investments in education and training in order to ensure the most effective results. 

How are labor laws determined in Malta?

The country’s Employment & Industrial Relations Act (or EIRA, Act 22 of 2002) is a consolidated piece of legislation which replaced both the Conditions of Employment (Regulation) Act of 1952 (formerly CERA, now Title I of the new Act) and the Industrial Relations Act of 1976 (IRA, now Title II). The Act is divided in the following manner:

Title I – Employment Relations

Title II – Industrial Relations

Title III – Supplementary Provisions

Malta’s Occupational Health and Safety Authority Act (OHSA) also plays an important part in Maltese employment law by ensuring the physical, psychological and social wellbeing of all workers in the workplace.

What do MNCS need to know about employment contracts?

The parties to a contract of employment are free to determine if the contract will be for an indefinite or fixed-term. A verbal contract will not suffice if the period of employment exceeds one month and the employee’s working hours exceed eight hours per week. In these cases, the employer must provide the employee with either a written contract of employment or a written statement of minimum conditions. 

Basic terms must be included in the document, such as the rates of pay, hours of work, place of work, overtime rates and leave entitlement. The contract must be issued to the employee within eight working days from the start of employment.

If there are minimum conditions of employment established by law or regulation, only provisions more favorable to the employee are enforceable. Therefore, even if an employee signs a contract for less favorable conditions, it is not enforceable.

What should MNCs bear in mind when it comes to collecting employee data and conducting pre-employment checks?

Once personal data for the pre-employment vetting of the applicant is collected, the European Union General Data Protection Regulation (GDPR) comes into effect. A prospective employer must prove a lawful basis or have consent from the candidate for processing personal data. 

In accordance with GDPR, employers must ensure they are processing data with:

  • lawfulness, fairness and transparency
  • purpose limitation
  • data minimization
  • accuracy
  • storage limitation
  • integrity and confidentiality
  • accountability

Failure to comply with the GDPR can result in fines up to €20 million or up to 4% of the annual worldwide turnover of the preceding financial year – whichever is greater. 

An employer in Malta is also permitted to hire a third party to conduct background checks, so long as the applicant is informed of this practice.

Are bonuses optional or mandatory in Malta?

All employees in Malta are entitled to a statutory bonus and a weekly allowance, each paid twice yearly as follows:

  • Paid June 15 -30: €135.10 (covering the period January to June)
  • Paid December 15-23: €135.10 (covering the period July to December)
  • Paid on the last working day of March: €121.12 (covering the period October to March)
  • Paid on the last working day of September: €121.12 (covering the period April to September)

These bonuses, which are taxable, must be paid along with the employee’s monthly or four-weekly wage.

Part-time employees are entitled to a pro-rated bonus, based on the number of hours worked.

Additionally, employees may also receive, as part of their remuneration, a bonus that is guaranteed, discretionary or a combination of both.

Are employers required to keep records on employees?

Record keeping for different categories of documents is governed by varying legislation and regulations. Personal information follows the EU Payment Services Directive (PSD) regulations. Details of employment status – including name, ID and contact details – must be retained for 10 years

What makes hiring in Malta challenging for MNCs?

The candidate-driven landscape and labor laws may be different from what the MNC’s home-country HR team is used to dealing with. Cross-border HR is rife with regulatory compliance risks, especially if a company is operating in a jurisdiction with unfamiliar labor and immigration laws. Moreover, laws in Malta are subject to change. For example, the government recently released new guidelines regulating remote work. 

Failure to comply with any law can incur expensive legal fees, compromise brand integrity or result in more serious sanctions. 

To directly hire in Malta, an MNC will need to set up a local legal entity which can take some time and also entail fees. The average amount in order to set up in Malta comes in at around €12,000, which includes company incorporation, opening a local corporate bank account and additional government fees.

Why are some MNCs turning to the Employer of Record (EOR) model for hiring in Malta?

By partnering with a local EOR, such as GoGlobal, an MNC can circumvent the pitfalls of setting up a company and administering cross-border payroll. At the same time, they can cushion themselves against many of the risks, requirements and restrictions that typically come along with hiring in Malta – while still gaining access to the country’s innovative, advanced talent pool. 

How does GoGlobal help MNCS thrive in Malta?

We make hiring and retaining international talent around the world fast and easy. Our EOR experts in Malta have a proven track record of success in helping MNCs build fully compliant workforces. 

We embrace a global mindset while maintaining a team of local experts on the ground in every market we operate. Because of this business model, our dedicated team members in Malta know the “ins and outs” of the country’s unique regulatory environment and they stay current on all trends and requirements. For example, they are fully up to date on data laws and the country’s new regulations for remote work. 

At the same time, our team is also fully immersed in the business customs and unique local culture of Malta. We can service clients and workers in their preferred language, ensuring a positive, customized experience for all parties! 

As part of the agreement, we will do the following:

  • Onboard local employees with compliant employment contracts (can be done in as little as 24 hours)
  • Process salaries, taxes and statutory benefits
  • Advise and build supplemental benefits packages
  • Support workers’ questions when it comes to payroll, taxation and benefits

Thanks to our expertise in local requirements and proven EOR solution, we infuse agility, efficiency and peace of mind into the end-to-end hiring experience in Malta. We look forward to embarking on the global hiring journey with you!

Find additional details on benefits and hiring in Malta or contact us to talk with an international HR expert.