Hiring and Recruiting Top Talent in Malta
The island of Malta has many attractions apart from its commercial potential for international businesses. A relaxed lifestyle, warm and sunny weather cooled by sea breezes, history and culture plus leisure options both on land and the surrounding Mediterranean are ‘bonuses’ that companies can offer when hiring and recruiting talent.
The International Monetary Fund (IMF) rates the Maltese economy as one of the most dynamic in the Eurozone. Unemployment was among the lowest in the European Union (EU) at 3.4% in 2019 - another of the factors encouraging expansion from other EU nations and countries worldwide.
Despite being the smallest economy in the Eurozone, Malta has among most skilled, flexible, multi-lingual and cost-effective workforces.
Industry employs 19.3% of the population, representing 12.1% of GDP, with microchips and pharmaceutical products featuring prominently. The World Bank estimates manufacturing accounts for 7% of GDP.
Malta’s economic strength lies in the services sector and it is now one of the largest in the Mediterranean region in this sector, and represented 84% of GDP in 2018 and employing 80%. Malta was the first EU state to regulate online gaming.
These statistics highlight the potential of the Maltese market … and Bradford Jacobs’ expertise as a Professional Employer Organization (PEO) will source top-level staff from any country to fill key roles in any country. This is backed up by Employer of Record (EOR) outsourcing services to handle all aspects of staff administration and compliance with Malta’s employment, tax and registration laws. We provide the solutions to foreign expansion without companies risking the expense and uncertainty of establishing a subsidiary.
Challenges when expanding into Malta
Foreign companies planning to establish a subsidiary in Malta face a number of practical challenges. The process for registering new companies is a well-structured but long process, needing meticulous attention to detail. It involves registering with the tax and social security authorities, producing the Company Memorandum and Articles of Association to the Registry of Companies, registering with the Financial Services Authority and Maltese Commerce Department, registering for Value Added Tax and obtaining Tax Identification and Permission to Employ (PE) numbers.
When these have been negotiated, other issues can involve construction permits, enforcing contracts, obtaining electricity and dealing with potential insolvencies. Malta, an island nation rich in heritage and history, may also pose cultural issues for foreigners moving in.
These complexities make it strongly advisable to consult with global recruitment specialists Bradford Jacobs and consider the alternatives to opening a subsidiary. Our Professional Employer Organization (PEO) international recruitment network will source the brightest talent either within Malta or from abroad. Then our Employer of Record (EOR) services relieve all the administrative headaches, freeing incoming companies to concentrate on their territorial expansion. The employee is all yours – the paperwork is all ours.
The Recruitment Process in Malta
The recruitment process in Malta begins in the traditional way - preparing a job description, locating candidates, reviewing applications, conducting interviews, verifying references, selecting the employee and drawing up contracts. Time consuming … and difficult to achieve efficiently if your company is 5,000 miles away from the new target territory.
Once on board, employees must be registered with the relevant authorities so they can operate legally on your payroll. The legal requirements of the recruitment process in relation to the employee involve:
- Obtaining a Tax Identification Number (TIN) online is necessary for completing mandatory annual tax returns. Professional support is advisable for submitting tax returns
- Limited liability companies must obtain a PE number, which can be done online from the Inland Revenue’s website. The PE number is mandatory for companies operating in Malta to be able to withhold and pay the taxes and national insurance for their employees. These payments are established under final settlement tax reporting procedures
- Registering with the Employment and Training Centre (ETC, now known as Jobs Plus). A form must be completed for every employee engaged, with further forms completed and filed on termination of employment
Outsourcing recruitment through Bradford Jacobs’ Professional Employer Organization networks and outsourcing payroll with our Employer of Record services for Malta is the sensible alternative to setting up a subsidiary. You avoid the mass of red tape and possible sanctions and fines. Bradford Jacobs’ proven success as global payroll service providers for a host of companies will ensure you comply with every step of the payroll registration process. You concentrate on expanding your business while we take care of the admin. Contact Bradford Jacobs today.
Legal Checks you can make on Employees in Malta
As a European Union member, Malta has strong measures protecting employees against any form of discrimination, which also covers the questions that can be asked during an interview or included in a job description. Background checks are subject to the EU’s General Data Protection Regulation (GDPR) and Malta’s Labor Code. The employee’s right to privacy must not be unreasonably affected and the employer must have a legitimate reason to obtain the information.
The employer’s right to make checks cannot include references to racial or ethnic origin, religious beliefs, disability, age or sexual orientation. It is permissible for an employer to verify such areas as academic qualifications, and reference from previous employers.
How do Companies hire Employees in Malta?
Foreign companies hiring in-country employees as part of expanding into Malta must comply with complex employment law, based on Malta’s Labor Code and a variety of subsidiary laws and European Union directives that have been integrated into national laws. These include:
- The Employment and Industrial Relations Law (Labor Code)
- The Employment Commissions Law and Employment and Training Services Law
- Wage Regulation Orders
- The Public Service Management Code
These laws must be followed by all companies operating in Malta, including foreign businesses and cover areas such as:
- Employment contracts
- Obligations between the employee and employer
- Working hours and annual leave
- Foreign workers
- Terminating contracts
Once staff have been sourced, interviewed and selected, the employer has a number of statutory obligations to fulfil to place the employees on the payroll, including:
- Registering with the Malta Commissioner for Revenue Office
- Registering with the Malta Directorate of Social Security
These requirements emphasise the administrative workload facing foreign companies planning expansion into Malta. Instead, outsourcing payroll to Employer of Record (EOR) providers such as Bradford Jacobs is a cost-effective, time-saving method of onboarding employees and dealing with wages, filing tax returns and fulfilling social security obligations.
Our role features:
- Creating employment contracts
- Applying special expatriation status (if applicable)
- Calculating monthly salary and creating pay slips
- Researching available tax free allowances
- Submitting wage tax returns and national insurance forms
- Corresponding with involved parties
- Annual accounts, administration and year-end statements
- Creating payment schedules for wage tax, national insurances and net wages
Basic Facts on Hiring in Malta
- The European Union’s General Data Protection Regulations (GDPR) restrict questions an employer can ask at interview. The must not discriminate against race or ethnic origin, sexual orientation, religious beliefs, age or disability. The applicant has the right to refuse to answer any questions in these categories
- The contract must include information on salary, overtime, notice periods, work schedule including breaks, payment cycle (which must not exceed four weeks), place of work and vacation
- Employers must adhere to the National Minimum Wage, which reached an all-time high of €777.10 per month in the first quarter of 2020, though higher wage rates may be set by collective agreements
- Various notice periods apply depending on length of service. Maltese law is very strict on dismissals. Contracts can only be ended with good cause, in case of redundancy or retirement
- If redundancy is the reason for dismissal it must be on the basis of ‘last in, first out’
- A full-time employee in Malta is required to work 40 hours per week, with a rest break if the working day exceeds six hours. Working hours can vary per sector. Overtime must not exceed an average 48 hours over a set period
- Full-time employees are entitled to 25 days holiday per year; part-time workers’ vacations are calculated pro-rata
Work Culture in Malta
Although work culture and etiquette may vary between companies and sectors, some guidelines apply across the board.
- Expect working hours to be between 8.30am and 5.30pm
- Maltese employees appreciate a blend of teamwork, initiative and personal accountability with individual roles clearly defined
- Work atmosphere tends to be relaxed, with communication polite but direct
- Punctuality is vital. Plan meetings well ahead and confirm two or three days before. Phone ahead to inform if delayed, and apologize
- Handshakes are normal at start and end of meetings. Address counterparts as ‘Mr/Mrs/Ms’ then surname at first meeting, exchange business cards; engaging in ‘small talk’ is normal
- Maltese and English are both official languages, but English tends to dominate in business sector
- Discussions, including disagreements, are conducted diplomatically and politely. Do not interrupt while your counterpart is talking – rude! Negotiations tend to be lengthy; agreement can take a while
- The dress code tends to be formal for both men and women, with business suits the norm, but jackets come off in summer
What Employment Laws exist in Malta?
Maltese employment law is based on the Employment and Industrial Relations Act plus subsidiary laws aimed at ensuring employers and employees have a clear idea of their rights and obligations. These focus on wages, conditions of employment, discrimination, the regulation of contracts, termination and the methods by which disputes are settled.
Before a company can begin hiring employees and operating they must comply with:
- The Wage Regulations Order that outlines conditions applying to certain sectors
- The Employment and Industrial Relations Act, also known as the Labor Code
- The Employment Commissions Law and Employment and Training Services Law
- The Public Services Management Code
Contracts must be presented to the employee no later than eight days after commencement, and key factors include:
- Terms of employment, detailing whether contract is permanent, fixed term or temporary and whether a probation period (not to exceed six months) is involved
- Remuneration and benefits, guaranteeing the National Minimum Wage
- Social conditions such as sick pay, maternity and parental leave
- Notice periods, termination and redundancy
- Frequency of pay and overtime payments
- Working hours, job description and location of employment
- Procedure for breach of contract
- Annual leave
The simple solution? Use Bradford Jacobs’ comprehensive knowledge of all aspects of Maltese employment laws. We are the ideal partner for your expansion into this vibrant market. The global reach of our Professional Employer Organization (PEO) recruitment platforms, allied to the in-country knowledge of our Employer of Record (EOR) specialist teams, guarantee a successful and smooth transition into your new territory.
How do you Onboard Employees in Malta?
Moving existing staff from across the globe, or recruiting new staff in-country, are the initial stages for companies planning to onboard employees in a subsidiary in Malta. The next step is to deal with visas and work permits and ensure the employees’ contracts comply with the complexities of the Maltese Labor Code. Employers must take into account essential requirements, covering:
- Salary, overtime, notice periods, work schedule including breaks, payment cycle (which must not exceed four weeks), place of work and vacation
- Employers must adhere to the National Minimum Wage of €777.10 per month, though higher rates may be set by the contract or by collective agreements – another factor which complicates the employment process for employers
- Notice periods depend on length of service. Maltese law is very strict on dismissals. Contracts can be ended only with redundancy or ‘good cause’, which is not always easy to define
- If redundancy is the reason for dismissal it must be on the basis of ‘last in, first out’
- Full-time employees in Malta are required to work 40 hours per week, with a rest break if the working day exceeds six hours. Working hours can vary per sector. Overtime must not exceed an average 48 hours over a set period
- Full-time employees are entitled to 25 days holiday per year; part-time workers’ vacations are calculated on a pro-rata basis
The most efficient and effective method of onboarding employees into Malta is through a global recruitment company such as Bradford Jacobs. Our Professional Employer Organization (PEO) and Employer of Record (EOR) services manage every stage of the process from finding the employee to seeing they are promptly paid. Bradford Jacobs deal with every element of payroll, tax, human resources, holiday entitlements and more. We also devise specific onboarding plans to integrate your new employee into the company, local business etiquette and culture.
What are the Benefits of Outsourcing Hiring for Malta?
Outsourcing recruitment streamlines expansion into overseas territories, such as Malta. Instead of attempting to open a foreign subsidiary, foreign companies that use recruitment outsourcing have an efficient, speedy and cost-effective solution to establishing a presence within days rather than months.
Advantages for the parent company include:
- A wide-ranging talent search undertaken by a Professional Employer Organization (PEO) with reduced recruitment costs
- Control over capital expenditure, as there is no initial investment in premises for a subsidiary
- Mitigate risks with an ‘easy in, easy out’ operation while you explore new markets
- Quickly start new projects
- Focus on core business
- Improve flexibility
- Scale your global workforce to fit expansion plans
The next stage is to outsource payroll, by utilizing Bradford Jacobs’ Employer of Record (EOR) platforms to deal with the demanding requirements of Malta’s employment laws and regulations, which are based not only on the Labor Code but also a raft of subsidiary laws. Bradford Jacobs’ global recruiting and EOR services take care of selection, onboarding, payroll, compliance and providing ongoing support and consultation.
Working with a Recruitment Agency in Malta
Malta is a member of the European Employment Network (EURES) with other European Union nations plus Norway and Iceland. The member nations exchange information on job vacancies, living and working conditions. Malta’s representative on EURES is Jobs Plus, the Public Employment Service.
Previously known as the Employment and Training Corporation (ETC), Jobs Plus aims to match requirements of employers and employees online to reduce recruitment costs and assist both parties in their training needs. Once registered with Jobs Plus, jobseekers are matched with suitable vacancies.
Employment Contracts in Malta
Employment contracts comprise full or part-time definite (Fixed Term) and full and part-time indefinite. They can be verbal or written and both are enforceable by law. Contracts or signed statements should include:
- Start date and any probation period
- Normal rate of wages
- Overtime rates
- Usual working hours
- Schedule of salary payments
- Paid holidays, vacations, sick and other leave
- Conditions under which employer may impose fines
- Title, grade, nature or category of work
- Notice periods
- Any applicable collective agreements
Minimum Wage in Malta
As of June 2020 the National Minimum Wage was set at €777.10 per month. The NMW for part-time workers is calculated on a pro rata basis at the same hourly rate of comparable full-time workers in accordance with the relevant Wage Regulation Order. Monthly wages are calculated at 4.33 times the weekly wage.
Probation Periods in Malta
During probation employer or employee may terminate without a reason, giving one week’s notice if employment exceeded one month. Probation can be up to a year for technical, managerial or executive positions where salaries are double the national minimum wage.
Overtime in Malta
Employees whose overtime rate is not covered by a Wage Regulation Order are paid one-and-a-half times the normal rate for working over 40 hours, averaged over four-weeks. Overtime may exceed eight hours a week within the average 48-hour maximum. Non-consenting employees cannot be asked to work above that average.
Notice Periods in Malta
One week’s notice applies during probation if employment exceeds one month. Indefinite contracts extending beyond probation require notice either by the employee or employer. Notice is calculated on the employee’s continuous length of service, as follows:
• Up to one month - no notice
• One month to 6 months - 1 week
• 6 months to 2 years - 2 weeks
• 2 years to 4 years - 4 weeks
• 4 years to 7 years - 8 weeks
• 7 years to 8 years - 9 weeks
• 8 years to 9 years - 10 weeks
• 9 years to 10 years - 11 weeks
• Over 10 years - 12 weeks
Longer periods may apply for technical, administrative, executive or managerial posts.
Redundancy, Termination, Severance in Malta
Under redundancy terms, employees on fixed term or indefinite contracts are subject to the same ‘last in/first out’ policy. Without a justified reason to terminate fixed-term employment after probation, the party who breaches the contract must pay the other party one-half of the full wages due.
When the employer terminates, the employee can continue working the notice period or request the employer pays half the wages due for the remainder of the notice period. If the employer does not want the employee to work the notice period they must pay the full wages due for the unexpired notice. Termination laws that apply under law are waived if there is sufficient cause, such as disciplinary action or medical condition.
Pension Plans in Malta
Employers need not provide private workplace pensions. Retirement age is 65, with the maximum state pension approximately €229.20 per week.
The Voluntary Occupational Pension Scheme was retrospectively applied from January 1 2017 to provide tax deduction and credits as incentives for employers. The benefits are:
- • A maximum employer’s tax deduction of €2,000 per employee, per year
- • A maximum employer’s tax credit of €500 per employee, per year
- • A maximum €500 tax credit against the employee’s tax bill
Public Holidays in Malta
There are 14 paid holidays each year.
- New Year’s Day January 1
- Feast of St. Paul’s Shipwreck February 10
- Feast of St. Joseph March 19
- Good Friday March/April
- Worker’s Day May 1
- Feast of St. Peter and Paul June 29
- Feast of the Assumption August 15
- Feast of the Immaculate Conception December 8
- Christmas Day December 25
- Freedom Day March 31
- Sette Gugno June 7
- Feast of Our Lady of Victories September 8
- Independence Day September 21
- Republic Day December 13
Working Hours in Malta
Normal working hours for full-time and part-time work are based on 40 hours a week. Hours worked may be more than the 40 but must not exceed a 48-hour average over 17 weeks. In certain sectors such as manufacturing and tourism, the average period is one year.
An employer cannot ask an employee to work more than the average 48 hours per week, without their written consent.
Employees have a minimum 15 minutes’ rest after six hours. There must be a minimum uninterrupted rest of 11 hours between work days, with uninterrupted 24 hours rest every seven days, or 48 consecutive hours in 14 days.
Sick Leave and Benefits in Malta
Sick leave entitlement depends on the relevant Wage Regulation Order (WRO), or is two working weeks per year. Absence requires a medical certificate, with long term absence eventually covered by social security benefits.
Employees receive benefit from the fourth day since the first three days are payable by the employer. Sickness Benefit is payable up to 156 days, and may be extended up to 468 benefit days over two years depending on the Medical Board’s decision. This payment depends on the number of social security contributions paid during the claimant’s employment.
Vacation and Holidays in Malta
Employees on a 40-hour week receive 216 hours’ paid annual leave, including the hours for three public holidays falling on weekends.
- Where normal hours (excluding overtime) calculated over 17 weeks are below or above 40 hours per week, vacation is amended accordingly
- An employee working less than 12 months, will have leave adjusted pro rata.
Up to 50% of annual leave entitlement can be carried on to the following year if there is an agreement with the employer, but should be utilized first as it cannot be carried forward again.
Annual vacation continues to accrue when an employee is on maternity leave and can be carried forward to the following year if it is not possible to take the vacation during the same year when the maternity leave commenced.
Maternity and Parental Leave in Malta
A pregnant employee receives maternity leave for 18 weeks. She can take up to six weeks immediately after confinement and four weeks before as agreed between employee and employer. The remaining leave can be taken as the employee decides.
Maternity benefit: The first 14 weeks of entitlement is by the employer. The subsequent four weeks is paid by the government at €179.33 per week. Application must be through the Department of Social Security and must include a medical certificate.
Parental leave is four months' unpaid leave until the child reaches eight years and can be taken one month at a time. An employee must have at least 12 months continuous service to apply for parental leave, unless a shorter period is agreed to. The employee’s balance of parental leave is transferrable to new employment, but not a new period of leave.
Work with Bradford Jacobs’ Employer of Record and Global Recruiting Services in Malta
Recruiting and hiring employees in Malta is not a straightforward process. Companies attempting to do this remotely before expanding into the country with their own subsidiary will encounter complex laws and regulations on employment, tax filing, payroll and other issues. Bradford Jacobs are specialists in all of these areas. Our Employer of Record (EOR) and Professional Employer Organization (PEO) know-how will ensure compliance with every aspect of Maltese legislation. Remove the hazards, expenditure and ‘unknowns’ of establishing a subsidiary in Malta by outsourcing your recruitment and payroll through Bradford Jacobs. The solution is at hand – contact us now.