Understanding Malta’s labor relations and social security

Availability of labor
The island of Malta has a dominantly male workforce. Investments made into Malta’s labor force have ensured the nation is well equipped with skilled labor. The Maltese government also offers free education and vocational training programs in order to improve skilled labor in the country.
The Employment and Training Corporation is the government organization tasked with maintenance of human resources in Malta. Due to the heavy presence of foreign investors in Malta, workers are well adapted and equipped to take part in international business operations. The mobility of labor is an advantage Malta derives from its small size.
Employer vs Employee relations
The Employment and Industrial Relations Act was enacted to regulate employer/employee relations. It covers conditions of employment and termination as well as the organization of workers and employers. The act seeks to inhibit worker discrimination on any grounds and also ensures workplace safety. Malta seeks to provide equal employment opportunities for all including the disabled. Services directly related to labor are regulated by the Act, this includes training programs and apprenticeships.
Workers organizations
Worker organization in the form of Trade Unions is not compulsory in Malta. Unions are offered a degree of legal immunity which benefits workers in collective bargaining. Industrial actions have to be sanctioned within the labor laws and trade disputes are managed by the Arbitration Tribunal. All agreements between employers and unions are binding by law. Workers representatives are mandatory for businesses which employ more than 20 people. This is to cover events of collective redundancies and transfers of business whereby dialogue is considered necessary. In the interest of the worker, some public corporations are required to have a worker-director by law.
Employer organization
In Malta employers also have associations for collective action. The largest is the Association of General Retailers and Trade Union and the Employers’ Association.
There are no enforced guidelines on profit sharing but there is a set minimum wage that is applicable to worker compensation. Employers are required to pay annual statutory bonuses and wage increases equivalent to the cost of living adjustment forecast by the government. Part-time employees are paid pro rata full-time employment wages. Workers tend to be awarded fringe benefits of meals, transport and health insurance. Executive employees are normally incentivized through telephone bills and company vehicles.
Conditions of employment
On average, workers work 40 hours a week in Malta. Labour laws allow for 24-day vacations, paid maternity leave as well as unpaid parental leave. Generally, probation is set to be 6 months from the commencement of employment with 12 months considered for executive employees.
Termination of employment
Employers are only able to terminate employment without issuing a reason during probation. Outside of that, a reason must be issued. Discriminatory termination is illegal. In the case of redundancy, the employee is required to give statutory notice or be fined to pay full wages to the terminated worker for the notice period.
Social Security System
The social security act is there to improve the living conditions of the people of Malta. The benefits afforded to the population are funded by the contributions from the public. Social security benefits in Malta include free health care, retirement pension as well as education.
Members of the population who have a significant income are liable to contributions to the social service. This includes employers, employees and self-employed persons. Foreign employees whose employer pays a contribution to their home country do not have to pay contributions in Malta as well. In the case where they choose to make these contributions, they will typically be eligible for social security benefits.
Foreign employees in Malta
Foreign employees have access to reasonably priced accommodation and transportation. The environment is friendly for foreigners as the island already has services to cater to foreign tourists. English can be used as a medium of communication in business and government departments. A work permit is necessary to work in Malta if you are not from the EU. As a part of the EU and the Schengen area, Malta abides by the immigration policies agreed on. In order to reside in Malta, a resident permit is required and passport documentation also applies for travel with a few exempted nationalities.
 Learn More!
To gain more insight into the Maltese labor relations and social society system, reach out to SIGTAX. Our team of accountants, lawyers, and consultants stay au courant with the latest business trends and regulations in Malta. They can also help with legal counsel on how to set up a company in Malta including giving a profound understanding of the nations’ tax system. Thus, you can be confident that you will get relevant info which guides you to do everything the right way and in your favor.


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