Employment

Malta’s greatest asset is its resourceful, competent and energetic workforce. The island’s labour force that amounts to around 165,000, is renowned for its marked ability to learn and adapt itself to new techniques.

Education is compulsory in Malta up to the age of 16 years.

Labour legislation

The Employment and Industrial Relations Act is the main law that regulates employer and employee relations and deals with conditions of employment, contracts of employment or service and organisation of workers and employers. The Act contemplates two main types of contract of employment or service namely indefinite and definite contracts. The latter would stipulate employment for a defined period of time. If an employee with a definite contract of employment remains in employment in the same position for more than four years than his/her contract of employment automatically becomes an indefinite contract of employment.

The first six months of every contract of employment or service is deemed to be a probationary period unless the parties concerned agree on a shorter period. In the case of technical, executive and managerial grades where salaries are more than double the minimum wage the probationary period is of 12 months unless agreed otherwise.

The law provides for 24 days of vacation leave. Maternity leave for female employees on full time employment is of 14 weeks. The law also provides for up to three months unpaid parental leave in the case of birth, adoption or legal custody of a minor.

As from 1st January 2010 the national minimum wage per week is 3152.30. Employers must also pay annual statutory bonuses amounting to 3512.46 to every full time employee or a pro rata amount in the case of part time employees that work at least 20 hours per week. Every employer is obliged to increase wages and salaries by an annual cost of living increase (COLA) as determined by Government on the basis of movement in the retail price index.

There are Fringe Benefit rules regulating the taxation of fringe benefits and other perks that may be given to employees. Fringe benefits would normally include free or subsidised meals, transport, health insurance, lodgings, telephone bills and use of a company car. The rules provide for the valuation of the taxable amounts arising from these benefits.

Other labour related legislation includes The Employment and Training Services Act which regulates training schemes and apprenticeship and The Occupational Health and Safety Authority Act which deals with health and safety at the workplace and holds the employers responsible to grant protection against risks and accidents at work.

EU Directives related to employment have been transposed into Maltese Law.

Unions

Workers are not obliged to join a trade union; nevertheless more than a third of Malta’s total work force is unionised. Local legislation gives unions wide latitude of immunity for industrial action resulting out of trade disputes. Despite this industrial disputes are not common in Malta. When the majority of a company’s workforce joins a union collective bargaining is done and agreements reached between employers and unions are binding at law. Professional and managerial grades are normally not unionised and are regulated by individual contracts of service.

Social security

Contributions

All employees qualify for a retirement pension under the Social Security Act based on their individual social security contributions. All employed and selfemployed individuals must pay social security contributions. Employers pay social security contribution at a rate of 10% of the basic wage paid to their employees, subject to a maximum amount of 332.91 per week per employee. Employees pay another 10% of basic wages, subject to the same maximum. The employer deducts this amount before providing the net payment to the employee. The maximum contribution for persons under 18 years of age earning the minimum wage is 36.62 per week. The employer must remit the amount due to the Commissioner of Inland Revenue by the end of the following month in which the wages or salaries are paid.

For self-employed individuals, the contribution payable is 15% of their earnings or income subject to minimum and maximum rates of 326.37 and 349.37 per week respectively.

Coverage

Maltese citizens receive free hospitalisation services and financial aid benefits for unemployment, illness, work injury, disability, old age, early retirement, marriage, maternity, children, widowhood and medical care. All employees who pay a minimum level of social security contributions are entitled to a basic pension on retirement.

At present the Maltese pensions system is being reformed through the pensions Reform Act XIX of 2006 to make the system more sustainable in view of the increasingly aged population. Pensionable age has increased from 61 (60 in case of females) to 65 for all those born after 1st January 1962. The reform Act provides for the establishment of second and third pillar pension systems, that is, a mandatory second pension and a voluntary third pension. However the rules governing the application of these pensions have still not been made out.

Termination of employment

If a definite contract of employment is terminated by either the employer or employee before the term of the contract without good and sufficient cause then the terminating party is liable to pay the other party half of the salaries that would have been due in respect of the unexpired period. In the case of an indefinite contract of employment an employee may terminate the contract at any time without providing any reason; however he/she must give a notice of termination ranging from 1 to 12 weeks depending on how long the person has been in employment. An employer can only terminate an indefinite contract of employment if it is still in the probationary period or in cases of redundancy or a good and sufficient cause. Notice periods apply in all cases and depend on the duration of the employment. If the employer fails to give the required notice period, than the employer is liable to pay the employee the full wages for the notice period.

Employment of foreigners

Foreigners, whether EU citizens or otherwise, require a work permit. These are normally issued in those cases where the skills, qualifications and experience required could not be sourced locally. Applications for work permits are made by the prospective employer.

In the case of EU citizen the work permit is normally a formality and is processed within a couple of weeks. Work permits in other cases usually take longer to process. Each application is considered on a case by case basis.