Payroll and Benefits Guide Malta

Employer

Employer Payroll Contributions

Employee

Employee Payroll Contributions

Employee

Employee Income Tax

Single resident taxpayers (or married couples opting for a separate computation)

Married resident taxpayers

Parent rates

* Employees are entitled to a mandatory bonus set by the government and covered by the employer at circa €512.52 per year paid in quarterly installments.

* *The income tax rate applicable on income derived from qualifying part-time employment is 10%. The maximum amount of qualifying part-time employment income that can qualify for this rate in any year is €10,535.00. Qualifying emoluments exceeding this amount are taxable at the standard applicable rates of income tax.

General

The national minimum wage for full-time employees for 2023 is 192.73 EUR per week for an employee aged 18 and over, 185.95 EUR per week for an employee aged 17, and 183.11 EUR per week for an employee aged under 17.

The national minimum wage for part-time employees is calculated pro-rata at the same hourly rate of a comparable full-time employee in accordance with the relevant Wage Regulation Order.  A full-time minimum wage worker in Malta who is at least 18 years old who receives a 192.73 EUR minimum wage income per week will receive 10,021.96 EUR from their minimum wage in their first year of work.

After a year of work, minimum wage earners have their income increased by at least 3.00 EUR per week above minimum wage and 6.00 EUR per week after the second year of work.

Payroll Cycle

Salaries are paid monthly on 25th of the month.

13th Salary

There are no provisions in the law regarding 13th salaries.

General

A standard full-time workweek in Malta consists of 40 hours per week or 8 hours per day.
The standard working hours as stipulated in the Wage Regulation Orders are 40 hours per week but not exceeding a maximum of an average of 48 hours a week across a period of 17 weeks.

Overtime

Overtime is regulated by the Wage Regulation Order (WRO), which outlines different overtime rules by industry. Written consent from the worker is required and can be revoked at any time. If the WRO does not cover an employee, overtime is calculated at 150% of the regular pay rate of work over 40 hours per week and averaged over four weeks.

The income tax rate applicable on qualifying overtime is 15% up to a maximum amount of emoluments of 10,000 EUR, rather than a maximum of 100 hours of overtime. Overtime emoluments exceeding this amount are taxable at the standard applicable rates of income tax.

Working Week

Monday-Friday

Paid Time Off

Full-time employees who work 40 hours per week are entitled to 24 working days of paid leave (pro-rata for employees not working full-time hours).
The law stipulates that a minimum of four weeks cannot be replaced by any allowances, except where employment is terminated.

Public Holidays

Public holidays falling on the weekend are added to the worker’s annual vacation allowance to be taken as days off in lieu.

Sick Days

Sick leave is regulated under the Wage Regulation Order (WRO). When the WRO does not cover an employee, the sick leave entitlement is two weeks (10 working days) per year. After two weeks, an employee may be entitled to a sickness benefit through Social Security.
The employee must provide a medical certificate for all sick leave.

Maternity Leave

Maternity leave in Malta is 18 weeks and starts 4 weeks before the expected due date and an employee must take a minimum of 6 weeks after the birth.
The maternity benefit is paid at 100% of the regular rate of salary by the employer for the first 14 weeks and after that, paid by Social Security.

Paternity Leave

There is no statutory paternity leave in Malta.

Parental Leave

Parents are entitled to 4 months of paid leave for the birth of a child, adoption, fostering, or general care until the child reaches the age of 8.
To be eligible, the employee must have been employed for at least 12 consecutive months.

Other Leave

Depending on the collective agreement/employment contract terms, an employee may be allowed additional leave types once approved between the employer and employee. In Malta, the employer must let employees take other statutory leave, such as bereavement leave, marriage leave, parental leave, court witness leave, jury service leave, injury leave, and birth leave.

Termination Process

Employers can terminate a fix term contract by giving the following reasons: business, personal, or worker misconduct. It requires notice and a written explanation for the termination. If the reason is misconduct, a warning needs to be given, and the employee gets a chance to explain their actions.

In Malta, an employer can terminate an employee for just cause, redundancy, or due to reaching the age of retirement. If requested by an employee who has completed at least one month of employment, the employer is obligated to provide an employment certificate stating the dates employed and a description of duties (the reason for termination must also be included).

Also, upon termination from employment, an employee has the right to claim financial compensation for any balance of outstanding leave that is due.

Notice Period

The amount of notice required is dependent on the length of service and reason for termination, as follows:

• If an employee has less than one month of service, no notice period is required
• For an employee with between one and six months of service, one week of notice is required
• For an employee with between six months and two years’ service, two weeks’ notice is required
• For an employee with between two- and four years’ service, four weeks’ notice is required
• For an employee with between four- and seven years’ service, eight weeks’ notice is required
• For an employee with between seven- and eight years’ service, nine weeks’ notice is required
• For an employee with between eight- and nine years of service, ten weeks’ notice is required
• For an employee with between nine- and ten years’ service, eleven weeks’ notice is required
• For an employee with more than ten years’ service, twelve weeks’ notice is required

It is possible to pay the employee in lieu of notice. However, suppose an employee is due to work the notice and chooses not to work during this period or resign without notice; in that case, they are obligated to pay the employer 50% of the wages that would have been earned during the notice period.

Severance Pay

There are no statutory laws on severance pay.

Probation Period

Malta introduced an update to its employment legislation framework in 2023 as follows: a definite contract needs to have a duration period of at least six months.

In the case of the renewal of a definite contract for the same function and tasks, the employment relationship shall not be subject to a new probationary period.

In a fixed term contract of between six months and fifteen months duration, the probationary period shall be calculated based on two months’ probationary period per six months contract duration.

If the fixed-term contract is shorter than six months, the probationary period shall be one-third of the duration of the same fixed-term contract.

If the fixed-term contract exceeds a 15-month duration, the probationary period shall be of six months.

Employees holding technical, executive, administrative, or managerial positions whose wages are at least double the national minimum wage shall be on probation for a period of twelve months.

VISA

Malta’s immigration law provides several options for employers of foreign nationals. Malta is a member of the European Union (EU) and the Schengen Area. Requirements, processing times, employment eligibility, and benefits for accompanying family members vary by visa classification.
Business visitors to Malta typically use a local version of the Schengen C Visa unless they are visa exempt based on their nationality. The Schengen Area limits stay to 90 days within 180 days.
For work, foreign nationals traveling to Malta require a Single Permit, which combines work and residence authorization. The Single Permit can be issued for one year and is renewable.

General

The standard rate of VAT in Mata is 18.00%.