To succeed in business in Malta, it is vital for both employers and employees to have a strong understanding of the business culture.
As a global PEO (Professional Employment Organization) it is our goal to be familiar and updated with the business culture in the country we work with and in. By sharing our knowledge about Maltese work culture, we want to support your global expansion plans. Therefore, we will address all aspects of the work culture in Malta to start your expansion well-informed.
Work Culture in Malta
Malta has a dynamic, progressive, ‘go ahead’ economy – qualities recognized by the World Bank and the International Monetary Fund (IMF).
The IMF rates the Maltese economy as one of the most vibrant in the Eurozone, which Malta joined in 2008, four years after becoming a member of the European Union (EU). Unemployment was among the lowest in the EU at 3.6% in 2021 - another of the factors encouraging expansion from international companies.
Being part of the EU, gives tariff-free access to the world’s third largest economy with nearly 500 million consumers. A boon for any business.
The island of Malta has many attractions apart from its commercial potential for international businesses. A relaxed lifestyle, warm and sunny weather cooled by the Mediterranean, plus history and culture are ‘bonuses’ that companies can offer when recruiting and hiring talent.
Despite being the smallest economy in the Eurozone, Malta has among the most skilled, flexible, multi-lingual, and cost-effective workforces. It is time to ‘get down to business’ so here are a few tips on taking the right steps … and avoiding the pitfalls!
- Language: Maltese and English are both official languages, but English tends to dominate in the business sector
- Business Environment: The Maltese display a blend of teamwork, initiative and personal responsibility with individual roles clearly defined. Atmosphere tends to be relaxed, with communication polite but direct.
- Negotiations: 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.
- Punctuality: Be on time to create a good impression. Plan meetings well ahead and confirm two or three days in advance. Phone ahead if delayed.
- Greetings: Handshakes are normal at start and end of meetings. Address counterparts as ‘Mr./Mrs./Ms.’ then surname at first meeting and exchange business cards; engaging in ‘small talk’ is normal.
- Dress Code: Tends to be formal for both men and women, with business suits the norm, but jackets come off in summer.
- Gift-giving: Something modest and symbolic will be appreciated, but presents are not essential.
Malta Minimum Wage
In January 2021 the minimum was increased to €784.08 (US$906) per month or €9,416 (US$10,876) per year, based on 12 monthly payments for full-time workers aged 18 and over and was fixed until December 2021.
Wage Regulation Orders (WROs) applying to different sectors take precedence over national minimum rates.
The 2017 National Agreement on the Minimum Wage decreed that after one year with the same employer, employees earning minimum wage receive a weekly increase of €3 (US$3.47) for the second year. The weekly increase becomes €6 (US$6.93) after more than three years with the same employer.
The minimum wages of part-time employees are calculated pro rata with the hourly rate of full-time employees.
Probation Periods in Malta
Probationary or trial periods allow for employers and employees to assess the position and either can terminate during the trial period without giving any reason for doing so. However, when the probationary period has been running for longer than one month, one week’s notice should be given.
The length of the probation is decided at the beginning of the contract and is paid at the agreed salary which cannot be lower than the minimum wage or any collective bargaining agreement to which the employer is committed. The same applies to the maximum duration of the trial period which is six months.
However, a shorter period can be agreed and written into the contract.
For white-collar managerial staff whose salary is twice the national minimum wage, the period can be extended to 12 months.
Working Hours in Malta
In the private sector, 40 hours a week between the hours of 8am till 5pm is considered ‘normal working hours’ and does not include overtime. For flexibility and in certain conditions, this can be extended to a maximum 48 hours over a 17-week period and in some sectors averaged over one year. Anything over and above this would require written permission from the employee.
During their working day, employees are entitled to at least one 15 minutes’ break after six hours and a minimum uninterrupted rest period of 11 hours between workdays. Employees must have 24 hours’ rest every seven days or 48 consecutive hours in 14 days or two 24-hour periods over a two-week period.
Overtime in Malta
Any hours above the agreed ‘normal working hours’ is defined as overtime, which should be included in the employment contract along with the hourly rate. There is no maximum hours which can be worked as long as it does not exceed the weekly 48 hours allowed over a four-week period. Employees cannot be compelled to work more than 48 hours without their written consent.
The overtime rates of pay are regulated by the Works Council through Wage Regulation Orders (WRO) by sector. For those not covered by a WRO, the rates paid are 1.5 times their normal hourly rate.
Regardless of any law, collective bargaining agreements or employment contracts, even if there is a written consent, the Protection of Maternity (Employment) Regulations prohibits overtime during pregnancy and for the first 12 months of the birth or adoption of a child.
Notice Periods in Malta
Notice is calculated on unbroken service and ranges from one week for up to six months’ service to a maximum of 12 weeks for more than 10 years’ service:
- 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 be stipulated in the employment contract in the case of technical, administrative, executive, or managerial posts.
The established notice period cannot be extended. Other termination provisions include the dismissed employee’s right to a certificate stating the length of service, nature of the work and rate of pay, the employee’s right to be re-engaged if the ‘redundant’ position is filled by a new recruit. Fixed-term contracts can be ended during probation periods without a reason, but one week’s notice applies to either party if employment exceeded one month.
There will be no notice given for employees who are dismissed for just cause e.g., gross misconduct.
Notice cannot be given for dismissal if the employee is pregnant or on maternity leave, for being a member of a Trade Union, is on injury leave or because the employee has ‘contracted to marry’.
Redundancy, Termination / Severance in Malta
Termination, dismissal, and severance regulations are governed by the Employment and Industrial Relations Law (the Labor Code) but may vary according to individual contracts. Any compensation due is waived if there is a justifiable cause, such as disciplinary action or long-term medical incapacity.
With redundancies, employees on fixed-term contracts have the same ‘last in / first out’ rights as employees on open-ended / indefinite contracts. With indefinite contracts, notice can be given by either party and is calculated on employees’ length of service.
Malta also uses the ‘Guarantee Fund’ to cover unpaid wages to employees whose contract is terminated due to insolvency.
Other entitlements and termination rights include:
- On termination where employment exceeds a month, the employee is entitled to request a certificate stating the nature and duration of employment, the reason for termination and salary.
- Employees should receive all entitlements and remuneration including wages, overtime payments, statutory bonuses, notice pay and settlement of outstanding holidays. If the employer refuses, the Department of Industrial and Employment Relations can act.
Pension Plans in Malta
There are three ways people can collect a Contributory Retirement Pension (CRP) when they reach retirement age in Malta:
- Two Thirds Pension – who have made contributions on their declared income over a period of years
- Retirement Pension – for those in receipt of a Service Pension
- National Minimum Pension – for those who have a low pensionable salary
Statutory pension age for persons:
- born between 1952 and 1955 is 62
- between 1956 and 1958 is 63
- between 1959 and 1961 is 64
- After 1961 is 65
People can retire at 61 if all contributions have been paid between 18 years old and 61 years
Also, if people want to retire later, they can, and this will increase their pension. Full rates of the state pension depending on the age of claimant can be seen here.
Occupational pensions are set up by employers for their workers as a way of saving for retirement. There are a number of benefits for employers including tax incentives.
The Voluntary Occupational Pension Scheme from January 1, 2021, to provide tax deduction and credits as incentives for employers from 2022 year of assessment. The benefits are:
- A maximum employer’s tax deduction of €3,000 (US$3,432) per employee, per year
- A maximum employer’s tax credit of €750 (US$858) per employee, per year
- A maximum €750 (US$858) tax credit against the employee’s tax bill
Public Holidays in Malta
There are 14 paid holidays a year, nine public holidays and five national Holidays:
- New Year’s Day - January 1
- Feast of St. Paul’s Shipwreck - February 10
- Saint Joseph’s Day - March 19
- Freedom Day - March 31
- Good Friday - March / April
- International Workers’ Day - May 1
- Sette Giugno - June 7
- Feast of Saints Peter and Paul - June 29
- Assumption of Mary - August 15
- Victory Day - September 8
- Independence Day - September 21
- Feast of the Immaculate Conception - December 8
- Republic Day - December 13
- Christmas Day - December 25
Sick Leave in Malta
Entitlement varies according to the Wage Regulation Order (WRO) for the sector. Those employees not covered by a WRO are entitled to claim two weeks per year, calculated in hours.
Employees receive benefit from the fourth day with the first three days paid by the employer. A medical certificate is required to be delivered to the Department of Social Security within 10 days of the illness with the copy to the employer. A medical certificate is required every two weeks of illness.
Sickness benefit is payable up to 156 days and may be extended up to 468 days over two years depending on the Medical Board’s decision.
The sickness benefit is paid to the employee. However, the employer can decide either to pay the full salary to the employee, with the employee giving the received benefit to the employer OR the employee keeps the benefit, and the employer makes up the difference to the employee.
Vacations / Holidays in Malta
In 2021, employees on a 40-hour working week received 216 hours paid leave (27 working days), comprising 192 hours basic entitlement plus 24 hours for three public holidays falling on weekends.
In 2022, the total entitlement is 224 hours (28 working days) comprising an extra 32 hours in lieu of four weekend public holidays, while in 2023 the total entitlement is 208 hours (26 working days) as only two public holidays are on weekends.
By mutual agreement between employer and employee, leave can be taken in hours.
Under Organization of Working Time Regulations, if average working hours (excluding overtime) average less than or exceed 40 hours over 17 weeks, vacations are adjusted accordingly. Only 50% of unused vacation can be carried forward to the following year. Employees who have worked less than 12 months have leave adjusted pro rata.
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. There are also 14 paid public and national holidays a year.
Maternity/Paternity Leave in Malta
Maternity / Paternity / Parental Leave: Maternity leave totals 18 weeks, with eight weeks before the birth and six weeks post-natal. Six weeks are compulsory to be taken after birth; four weeks before birth with the remaining weeks taken as the employee wishes.
The employee should give a minimum four weeks’ notice she intends taking leave; after taking leave she has the right to return to her former or a related position if her former post is no longer open.
There is no statutory provision for paternity leave, beyond fathers receiving one day’s paid leave following the birth unless stipulated in a Wage Regulation Order (WRO).
Parents can take up to four months’ unpaid parental leave until their child is eight years old.
Maternity Benefit: Pregnant women receive full pay from their employer for the first 14 weeks of the 18-week maternity leave. Under the Social Security Act, the government pays €181.08 (US$207.56) for the remaining four weeks.
‘Self-occupied’ women (a different category to self-employed) receive €181.08 (US$207.56) per week from the government. (Self-occupied refers to earning more than €910 (US$1,043) per year from business activities and paying social insurance contributions. Self-employed refers to passive income from such as rents and investments.)
Women not in employment receive a flat rate of €99.59 (US$114.16) per week. Application for maternity benefit is made through the Department of Social Security and must include a medical certificate.
Bonuses in Malta
There is no statutory provision for a 13th month salary, although mandatory quarterly bonuses and allowances are paid twice a year in June and December. These are imposed by the government for employers to pay staff. From 2016 to 2022 the rates were set at €135.10 x 2 and €121.14 x 2 totaling €512.48 (US$586), which is taxable.
This does not include any productivity or performance bonus paid by companies.
Car Allowance Malta
Car allowances in Malta are given provided employees use their own cars. These ‘fringe benefits’ must be included in their employment contract or as agreed by any relevant collective bargaining agreement; for instance, depreciation of car, maintenance and fuel purchased. Reimbursements on these benefits are 50% taxable capped at €1,170 (US$1,340), after this, 100% taxable.
Do not Suffer Culture Shock, Call Us!
To expand into Malta successfully, the nuances of Malta’s tax, payroll and employment laws are part of a business culture that will increase your workload and slow progress while trying to prioritize international expansion.
Bradford Jacobs’ Professional Employment Organization (PEO) and Employer of Record (EOR) platforms remove the mysteries of these issues – freeing your staff to concentrate on growing your business. Plus, our on-call HR advisers help with adjusting to the workplace environment and understanding a new culture.
Contact us today to learn more about how we can help you succeed in business expansion!