Malta, a strategically located island nation in the Mediterranean Sea, boasts a rich cultural heritage and a robust economy that's appealing for businesses looking to expand globally.

The country offers a favorable business environment with attractive tax incentives, a skilled, multilingual workforce, and a strong legal framework, making it an ideal location for international companies to hire employees and establish operations.

Types of Contracts

• Fixed term (can only be renewed for a maximum period of 4 years)
• Indefinite term

Working Hours

According to the Wage Regulation Orders, standard working hours are set at 40 hours per week (8 hours per day), with a maximum average of 48 hours over a period of 17 weeks.

Overtime is calculated at 150% of the regular pay rate for work exceeding 40 hours per week, averaged over a 4-week period. The statutory maximum working hours are 48 hours per week, averaged over 17 weeks.

Minimum Wage

The minimum wage in Malta for adults 18 years and older is EUR 192.73 per week. The employer must provide employees with 3 additional bonuses: the annual government bonus, the maternity fund, and the COLA (Cost of Living Allowance).

Probation Period

The probation period can be mutually agreed upon for up to 12 months (or shorter if all parties agree). If termination occurs during the probationary period, a 1 week notice period applies if the length of service exceeds 1 month.

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Taxes & Local Employment Costs

Employee Taxes

Income is taxable at graduated progressive rates, ranging from 0% to 35%. The 35% tax bracket is reached at annual chargeable income above EUR 60,000.

Employees contribute to social security at a rate of 10%, or a flat rate of EUR 51.60 per week if the employee's salary is above EUR 26,831.

Employer Taxes & Contributions

Employers also contribute to social security at a rate of 10%, or a flat rate of EUR 51.60 per week if the employee's salary is above EUR 26,831.

Annual Leave (Vacation)

Employees are entitled to a minimum of 192 hours per year, equivalent to 24 days, plus additional hours corresponding to Public Holidays falling on weekends, calculated on a pro-rata basis.

However, the law mandates that a minimum of 4 weeks of leave cannot be substituted with any allowances, except in cases of employment termination.

PTO accrual follows the rule of 24/12, meaning 2 days accrue per month starting from the beginning of the year. Annual leave days can be carried over until March 31. After that, they are reimbursed to the employee.

Sick Leave

The employee is entitled to 10 working days of sick leave at full pay per year. The first 3 days of any claim for sick leave are paid by the employer. In occasions of sickness, the employee needs to present a medical certificate from a recognized medical institution or a doctor to the employer. After 2 weeks, the employee may be entitled to a sickness benefit through Social Security.

Maternity Leave

In Malta, maternity leave spans 18 weeks, commencing 4 weeks prior to the expected due date, with a mandatory minimum of 6 weeks after childbirth. During the initial 14 weeks, the maternity benefit is equivalent to 100% of the regular salary and is covered by the employer, after 14 weeks it is covered by Social Security.

Paternity Leave

Paternity leave from work is allowed to all employees on the occasion of the birth or the adoption of a child for the purposes of providing care. The paternity leave is of 10 working days, to be taken immediately after the birth or the adoption of the child, without loss of wages. The right to paternity leave shall not be subject to a period of work qualification or to a length of service qualification.

Parental Leave

Both male and female workers have the individual right to be granted paid parental leave upon birth, adoption, child fostering (for foster parents), or legal custody of a child. Each parent is entitled to 4 months of parental leave per child until the child reaches the age of 8 years.

Parental leave shall be paid per parent for a period of 2 months at the same rate established for sickness benefit entitlement under the Social Security Act. Leave must be taken in established periods of at least 2 weeks each.

Employees must have at least 12 months of continuous service with their employer to be eligible for Parental Leave, unless agreed otherwise. Foster parents receive payment at the same rate as above, per parent, not per child fostered.

Public Holidays

There are 14 Public Holidays in Malta. If the the Public Holiday is happening on a weekend day, the employee may opt for a compensatory day off.

• New Year’s Day - January 1
• Feast of St Paul’s Shipwreck - February 10
• Feast of St Joseph - March 19
• Good Friday - Friday before Easter
• Freedom Day - March 31
• Workers' Day - May 1
• Sette Giugno - June 7
• Feast of St Peter and St Paul - June 29
• Feast of the Assumption - August 15
• Victory Day - September 8
• Independence Day - September 21
• Immaculate Conception - December 8
• Republic Day - December 13
• Christmas Day - December 25

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Benefits

Summary

Employers in Malta can typically offer Private Health Insurance and Life Insurance.

Termination Process

Indefinite-term contracts can only be terminated by the employer with valid and substantial reasons or through mutual agreement. For fixed-term contracts, termination necessitates a compensation payment, equivalent to 50% of the salary owed for the remaining contract period.

Notice Period

Notice periods in Malta depend on the length of employment at the company:

• 0-1 month = No notice
• 1-6 months = 1 week
• 6 months-2 years = 2 weeks
• 2-4 years = 4 weeks
• 4-7 years = 8 weeks
• 7-8 years = 9 weeks
• 8-9 years = 10 weeks
• 9-10 years = 11 weeks
• 10+ years = 12 weeks

Statutory Payments

Maltese law provides that an employer who terminates the fixed-term contract before its expiration shall be obliged to pay to the employee a sum equal to one-half of the full wages that would have accrued to the employee in respect of the remainder of the time specifically agreed upon.

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

In Malta, there are no statutory laws on severance pay for indefinite contracts.

Payment in Lieu of Notice

Paying the employee in lieu of notice is an option. However, if an employee is scheduled to work the notice period but opts not to or resigns without notice, they are required to compensate the employer with 50% of the wages they would have earned during the notice period.

The employer must provide employees with three additional bonuses: the annual government bonus, the maternity fund, and the COLA (Cost of Living Allowance).

The Government bonus is disbursed by the employer in March, June, September, and December as follows:

• March and September: EUR 121.16 each, calculated at EUR 4.66 per week.
• June and December: EUR 135.10 each, calculated at EUR 0.74 per day, including Saturdays and Sundays.

The COLA bonus totals EUR 514.80, equivalent to EUR 9.90 per week.