Definitive Guide to Hiring in Malta

Hiring in Malta

Hiring employees compliantly in Malta means doing it yourself or using an Employer of Record like Global Expansion. You should be careful using independent contractor agreements in Malta so that you don’t run afoul of employment laws. To hire an employee compliantly and offer them mandatory benefits and compliant agreements, you can:

(a) Establish your own new legal entity, banking, accounting and payroll service in Malta; or

(b) use an Employer of Record like Global Expansion who can handle all of the details for you.

Labor Laws in Malta

Employee Probation Period

• Probationary period is of six months, unless a shorter period is agreed upon between the employer and employee.

Annual Leave in Malta

• Workers are entitled to paid annual leave of at least equivalent in hours of four weeks and four days on the basis of a 40-hour working week and 8-hour working day (24 days of annual leave).

Holidays in Malta

Workers are entitled to paid holidays during Festival (public and religious) holidays. These include memorial holidays and religious holidays (Christian origin).

Here is the full list of public holidays in Malta:

Maternity Leave Malta

• Maternity leave is 126 consecutive days (18 weeks).
• Of these 126 days, 42 days (6 weeks) is the compulsory entitlement and is taken after birth.

Paternity Leave Malta

• Paternity leave is as follows: -
  • 1 day (birth leave)
  • 5 days (for public sector employees only)

Sick Leave in Malta

• Employees are entitled to a maximum 156 days of sick leave per calendar year

Working Hours in Malta

• The working week in Malta has 40 hours on the average
• Daily office hours in the private sector are usually between 08:00 or 08:30 and 17:00 or 17:30.

Overtime in Malta

• If your job or sector is not covered by a Wage Regulation Order (WRO), then the default overtime rate is 1.5 times your ordinary pay and will apply to any hours worked over 40 per week.
• Overtime cannot exceed 48 hours per week

Termination of Employment in Malta

• 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.
• Where an employer intends to terminate the employment of an employee on grounds of redundancy, he is required to terminate the employment of that person who was engaged last in the class of employment affected by such redundancy (“Last in First Out”),
• The employee, on the other hand, is free to terminate employment of employment of an indefinite term without assigning any reason.

Notice Period in Malta

• When terminating employment during a probationary period, a one-week notice applies if the length of service is longer than one month.
• In case of indefinite contracts which extend beyond the probation period, notice has to be given prior to the termination of employment.
• Notice is to be given either by the employee, or by the employer in cases of redundancy.
• Notice is calculated on the employee’s continuous length of service, as follows:
  • Not more than one month - No notice
  • More than one month and up to six months - One week
  • More than six months and up to two years - Two weeks
  • More than two years and up to four years - Four weeks
  • More than four years and up to seven years - Eight weeks
  • More than seven years and up to eight years - Nine weeks
  • More than eight years and up to nine years - Ten weeks
  • More than nine years and up to ten years - Eleven weeks
  • More than ten years - Twelve weeks
  • For more than seven years, an additional 1 week for every subsequent year of service or part thereof up to a maximum of twelve weeks
  • For such longer periods as may be agreed by the employer and employee in the case of technical, administrative, executive or managerial posts

Severance in Malta

• No severance payment is guaranteed by the law.
• However, a collective agreement may provide for redundancy pay in the event of collective redundancies.

Malta Salary and Wages

13 / 14th Month Salary in Malta

• Yes (Mandatory)
• There is a statutory requirement to pay the 13th and the 14th month salary there are also two more bonuses.
• The total bonuses required are four at approximately 135 Euros in June and December ; and approximately 121 Euros in March and September.

• Social security is provided by a system of social insurance and a system of social assistance regulated by the Social Security Act.
• All employees who pay a minimum amount of social security contributions are entitled to a basic pension on retirement.
• For calendar year 2023, both the employer and the employee are each required to pay social security contributions at the rate of 10% of the individual employee’s salary and at fixed rates of EUR 51.60 per week for annual salaries exceeding EUR 26,831, provided the employee was born on or after 1 January 1962.
• For self-occupied / self-employed individuals, social security contributions amount to 15% of the annual net income earned during the previous year.
• The maximum contribution for persons born on or after 1 January 1962 amounts to EUR 77.40.

Immigration Malta

• To take up employment in Malta, a foreign citizen must obtain either a work permit (which would cover a residence permit) or employment license.
• Identity Malta Agency issues work and residence permits in Malta for both EU and non-EU nationals.
• From 2019, employment license applications for “service providers” are handled directly by Jobsplus (one of the stakeholders of Identity Malta) while employment license applications for intracorporate transferees (ICTs) are handled directly by Identity Malta.
• EEA and Swiss nationals and their third-country family members or dependents are required to apply for a work permit or an employment license to work in Malta.
• For non-EU citizens, work permits are normally granted only to individuals who are able to provide skills or expertise not available in the local market.
• Identity Malta issues a residence document on presentation of the residence application following the approval of the work permit or employment license (if the duration of the stay in Malta is longer than three months).
• Applications for work permits are considered on a case-by-case basis.
• Work permits are generally valid for one year and are renewable.
• It takes approximately two to six months for a work permit to be issued and four to six weeks for an employment license to be issued.
• In 2017, the Maltese government introduced a new scheme, known as the Key Employee Initiative (KEI) scheme, which processes work permit applications for non-EU nationals within five working days.
• The application can be submitted while the applicant is still abroad.
• The KEI scheme applies to employees who satisfy the following conditions:
• They earn an annual gross salary of at least EUR30,000 per year.
• They provide certified copies of their relevant qualifications, warrants (certificates provided to accountants in Malta) or documents showing the necessary work experience.
• They provide a declaration by the employer stating that the applicant has the necessary credentials to perform the assigned duties.
• Other documentation is required to complete the application.

Value Added Tax (VAT) in Malta

• Whilst Malta follows the EU rules on VAT compliance, it is still free to set its own standard (upper) VAT rate.
• The only proviso is that it is above 15%.
• Suppliers of goods or services VAT registered in Maltese must charge the appropriate VAT rate, and collect the tax for onward payment to the Maltese tax authorities through a VAT filling.

Mandatory Benefits in Malta

• These are mandatory benefits as postulated by law
• These include probationary period, annual leave, public holidays, sick leave, maternity leave, paternity leave, overtime pay, notice period, severance pay and 13th month pay
• Mandatory benefits also include social security benefits.

Payroll Accrual in Malta

Country Accruals Additional Information

Description

10% calculated on gross salary

Payroll Accruals Additional Information

Accrued Benefits in Malta

Why use Global Expansion to hire in Malta

Establishing a branch office or subsidiary in Malta can be time-consuming, expensive and complex. With such a robust labor market in place, one must pay great attention to detail when structuring employment because Malta labor laws are complex.

The company also has a responsibility to comply with specific employment practices dictated by Malta law to maintain its good standing as an equal opportunity employer.

Global Expansion makes it easy for you to expand into Malta. We'll help you hire your candidate of choice, handle HR matters and payroll, and ensure that you comply with local laws without the burden of setting up a foreign branch office or subsidiary. In addition, you'll have complete control and direction over your employees.

We enable you to stay in control of everything. Our Malta Global Professional Employer Organization (PEO) and Employer of Record (EOR) solution provides you with peace of mind to focus on running your company and the security to enter new markets.