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Payroll In Malta

Comprehensive Guide to Employee Benefits and Compensation in Malta

What are Employee Benefits?

Employee benefits are the term for the additional perks and incentives employers offer. Companies in Malta offer employee benefits ranging from leaves to bonuses. 

The primary objective of providing these employee benefits is to ensure that the employees do not have to pay for their expenses while delivering their responsibilities. However, the company’s benefits must be designed to keep the employees happy and satisfied with their workplace. 

When a company drafts the benefits and compensation policy in Malta, it is essential to ensure that the labor laws of Malta are followed. Apart from providing the benefits mandated by labor laws, the company can provide supplemental benefits to its employees. These benefits act as an extrinsic motivator to motivate the employees. 

Compensation Laws in Malta

The benefits and compensation policy in Malta is designed after carefully considering all the compensation laws in place. Some of these compensation laws include the following:

  • The labor laws state that employees should be paid their salaries directly and not through intermediaries unless they agree. 
  • The National Minimum Wage Standard Order states that all employees must be paid the minimum payable wage declared by the Government. 
  • The Employment and Industrial Relations Act is the only legitimate source of compensation laws in Malta. Hence, it is binding on all the companies that operate in the country. 
  • Chapter 424 of the Laws of Malta has chalked down the Occupational Health and Safety Authority Act. The act is the guiding principle for the employees’ social well-being. 
  • The Organization of Working Time Regulations and Subsidiary Legislation regulates employees’ working hours in Malta. The same also chalk out the policies of rest days and annual leaves. 

How to Develop an Employee Benefits Program for Employees in Malta?

To create a compensation and benefits policy in Malta, you must follow the steps stated below: 

Step 1: Decide on the objectives and define a budget

  • Before drafting the employee compensation and benefits in Malta, you must finalize a budget for the entire activity. 
  • You must create a budget estimate and get it approved by the higher authorities. 
  • Once you have a defined budget, you must chalk out the benefits policy’s objectives. 
  • You must adhere to all the labor laws and collective bargaining agreements while drafting the benefits and compensation policy in Malta. 

Step 2: Understand the industry benchmark and your employees’ expectations

  • Before you lay down the policies of the benefits plan, you need to get an idea of employee benefits in Malta that other companies in the same industry offer. 
  • Once you have the industry data, you can set some benchmarks for your benefits plan. 
  • Now, you need to get an idea of what the employees are expecting from your benefits plan. You can circulate an internal form and get their responses to understand employees’ expectations. 

Step 3: Make your plan flexible

  • People from different races, cultures, ethnicities, and gender are a part of the organization. Hence, they have diverse needs. You need to make the plan flexible to incorporate these diverse needs.
  • You can make the compensation package in Malta flexible by calculating the elements of the compensation structure separately.
  • Also, once you lay down the benefits, you must inform your employees how they can avail of them. 

Step 4: Share the initial plan with the crucial stakeholders

  • As soon as you create the first draft of the benefits plan, you must reach out to all the critical stakeholders and get their feedback. 
  • Make a list of all the feedback that you receive and make the benefits plan more dynamic by incorporating the feedback. 

Step 5: Analyze the policy

  • Before launching the benefits plan, you must cross-check all the elements of worker’s compensation in Malta.
  • You must ensure that you make the plan dynamic to stay relevant even when there is a change in the business environment. 
  • Try testing the plan in different situations before you release it on a company level.

You must also look for any loopholes and flaws and fix them immediately. Also, establish a metric to understand the plan’s implementation well. 

Types of Guaranteed Benefits in Malta

Some of the guaranteed benefits that are offered in Malta to all the employees are listed below:

Minimum wage

1. The minimum wage offered to employees above 18 is EUR 182.83 per week. 
2. For employees who are 17 years old, the minimum wage is EUR 173.21 per week, while the minimum wage for employees under 17 years is EUR 173.21 weekly. 
3. The minimum wage of part-time employees is decided based on the number of hours they work. 

Working hours and overtime

1. The standard working hours in Malta is 40 hours a week. This translates to 8 hours a day for five days a week. 
2. The standard working hours should be at most 48 hours a week. 
3. The Wage Regulation Order regulates overtime payments. According to the WRO, the employees should receive 150% of their regular salaries if they work beyond 40 hours a week. 
4. Overtime payments up to EUR 10,000 are taxable at 15%. If an employee is paid over EUR 10,000 as overtime, the amount will be taxed at regular income tax rates. 
1. Malta follows an hourly system for paid leaves. All employees who work 40 hours a week are entitled to 224 hours of paid leaves in a year. 
2. Out of the 224 hours, 192 hours are given as a regular leave entitlement, while the remaining 32 hours are to compensate for public holidays that fall on a weekend. 

Public holidays

In Malta, there are 14 public holidays. 

Sick leaves

1. The Wage Regulation Order of Malta regulates sick leave entitlements. 
2. Employees are entitled to 2 weeks of sick leaves in a year if they are not covered under the WRO.
3. If the sick leaves go beyond two weeks, employees are paid for their leaves through Social Security.
4. All employees who avail of sick leave must provide a valid medical certificate. 

Maternity leaves

1. All pregnant employees are entitled to 18-week maternity leave. 
2. The maternity leave begins four weeks before the due date. Taking maternity leave for six weeks is mandatory after the child’s birth.
3. Employees are paid their regular monthly salaries during the first 14 weeks of the maternity leave period. 
4. The remaining days of maternity leaves beyond 14 weeks are paid by social security. 

Paternity leaves

There are no policies for paternity leaves in Malta. However, there are a few companies that offer their employees this benefit.

Parental leaves

1. All parents are entitled to 4 months of parental leaves until their child reaches 8.
2. However, an employee must be with the company for 12 consecutive months to avail of parental leaves. 

Bonus

1. The employees in Malta are entitled to several bonuses throughout the year. 
2. They receive a bonus of €135.10 twice, i.e., in May/ June and November/December, respectively. 

Health Insurance

1. All employees and employers in Malta contribute to the National Health Service. The NHS provides coverage for all health issues. 
2. These benefits can be accessed by non-residents too. They can either make contributions through their company payroll or privately avail of the facility. 

Employee Benefits for Expatriates

All expats employed in Malta enjoy the benefits offered to resident employees. Expats have access to all the medical benefits for employees in Malta, along with all the other mandatory benefits. Expats also avail of the supplementary benefits offered to all the employees working in Malta. 

They also get fuel reimbursements from most companies. Some companies also offer food and cab allowances to all expats in the organization. They are also entitled to all the benefits the employer agreed upon while the employment contract was drafted. 

How are Employee Benefits Taxed in Malta?

Malta follows a progressive taxation system, and most benefits are taxed at the rate of the income tax slab. The tax rates vary from 0% to 35%, depending on the income level. However, married resident taxpayers’ tax construct differs slightly from single resident taxpayers. Income up to EUR 12,700 is exempt for married resident taxpayers, whereas income up to EUR 9,100 is exempt for single resident taxpayers. 

All the fringe benefits and the benefits offered in kind are taxable. However, there are some exemptions. Expected taxed benefits include living allowances, company cars, vacation trips, etc. 

For the use of motor vehicles, the valuation of the fringe benefit depends on the car’s value, maintenance, and fuel cost. 

Restrictions for Malta Benefits and Compensation

In Malta, taxes are levied on most incentives and perks. To determine the employee’s tax obligation, you must know the value of these benefits. The employer is responsible for ensuring all taxes are paid on time to the organizations and government authorities in charge of employee social security and taxation.

Before creating benefits and compensation in Malta, ensure your business has been formally incorporated and has the required business authorizations. Businesses must give their employees at least the minimum wage required by law. The labor rules in Malta must be carefully considered when designing a compensation package. The employer must assess the benefits plan before employees receive the benefits.

Supplemental Benefits for Employees in Malta

Different companies offer supplemental compensation and benefits in Malta to their employees. Some supplemental benefits are stated below:

Additional leaves

Several additional leaves are offered to the employees in Malta depending on the collective bargaining agreements. Some commonly availed leaves include marriage, bereavement, and court witness leaves. 

Private health insurance

While all employees are covered under the National Health Service, employers might enroll them with a private insurance provider. These insurance policies come with added coverage like dental, vision insurance, etc. They also help the employees pay for additional medical care like hospital stays, surgeries, etc. 

Unemployment benefits

If an employee contributes for 50 weeks in the last two years, they can avail of unemployment benefits. 

Other benefits

While the type of supplementary benefits offered to employees depends on the employer, most companies in Malta offer value-added benefits. The primary objective of these benefits is to attract remote workers. Some benefits include budgets for short-term courses, gym memberships, therapy allowances, and birthday leaves. 

How Multiplier Can Help with Benefits Management in Malta

While launching a business, you must hire qualified employees so they can grow the company and earn good profits. Employers must abide by local rules and ordinances when drafting employment contracts and providing employee benefits. To carry out this plan, Multiplier, a global PEO platform, can come to your rescue.

With Multiplier, you can access experts who are well-equipped to handle all business-related difficulties. With the assistance of our knowledgeable staff, you won’t need to establish a countrywide subsidiary to manage the workforce effectively. With our assistance, you can increase your clients and cut labor expenses. With Multiplier, you can focus on expanding your business, and we will take care of the rest.

Frequently Asked Questions

Malta offers two significant schemes that are termed Contributory and Non-Contributory schemes. The Non-Contributory schemes aid unemployed people and job seekers, while the Contribution schemes are designed for regular salaried employees.

The value of the fringe benefits is decided based on the actual cost that the employer bears for providing a particular benefit. For example, if the employer provides subsidized meals, the employee will have to pay taxes on the actual value of the meal.

Employers contribute 10% of employees’ gross income towards social security payments.

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