We provide an array of employment-related solutions including contracts of employment, dismissals, redundancies, transfers of employees between undertakings, equal treatment on the workplace and the implementation of appropriate systems and procedures for clients’ human resources, among which employment agreements, industry-specific conditions of employment, implementation of suitable incentive schemes, work permits, incentives and grants, Malta Data protection and privacy issues, transfer of employees between undertakings, dismissals, redundancies and proceedings before the Industrial Tribunal.
Data Protection & Privacy
Maltese Data Protection laws are fully compliant with applicable EU laws and these privacy matters affect various aspects of the employer-employee relationship. Thus, when processing employees’ data, the employer must ensure that such data is:
collected and recorded for specific, explicit and legitimate purposes
accurate and, if necessary, updated
pertinent, complete and not exceeding the purposes for which it was collected or subsequently processed
strictly related to the purposes for which the data was collected or subsequently processed
It is also important that employers, in their capacity as data controllers, take measures to ensure that employees who will be involved in processing other employees’ or customers’ personal data are contractually bound to process such data acting only on the instructions of the employer and taking all those security measures available to the employer to protect the personal data against accidental, destruction or loss or unlawful forms or processing.
As good practice for employers, it would be beneficial to include in the contract of employment, a clause to the effect that the employer’s communication systems are made available to the employee with the understanding that these are used by solely and exclusively in furtherance of the employer’s business and that all communications made through the employer’s communication systems are subject to interception, surveillance and monitoring. This avoids potentially uncomfortable privacy-related situations for the employer by making things clear to all employees from the outset.
Dismissal and the rights and obligations of the respective parties are matters which are subject to very strict regulation under Maltese law. The Employer may only terminate a contract of employment on the basis of:
a good and sufficient cause – a term which has no statutory definition and which constitutes the interpretational basis for each case of unfair dismissal brought before the Industrial Tribunal.
the employee reaching retirement age.
Where an employer intends to terminate the employment of an employee on grounds of redundancy, he is required to terminate the employment of that person who was engaged last in the class of employment affected by such redundancy (“Last In First Out”), provided that, where the employer and the last employed employee are related by consanguinity or affinity up to the third degree, the employer may, instead of terminating the employment of such person, terminate that of the person next in turn.
The employee, on the other hand, is free to terminate employment of employment of an indefinite term without assigning any reason. Where the employer or employee are terminating a contract of employment of an indefinite term, the advance notice to be given by the terminating party to the other party is calculated according to the period for which the employee has been in the employment of the same employer continuously, which can be set out in the following:
1 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: add 1 week for each subsequent year up to a maximum of 12 weeks.
Longer notice periods may be agreed upon in the case of technical, administrative, executive or managerial posts due to the nature or responsibilities involved in such roles and the hand-over usually required in such cases.
By way of exception to what is set out above, in cases where employment is terminated for good and sufficient cause, the employer is not required to give advance notice of termination and/or pay the employee for any wages relating to such notice period or the unexpired period of a definite term agreed upon. Typically, the employer would be expected to provide a very compelling reason for the dismissal of any employee on this ground, particularly more so when the dismissal is not preceded by any verbal or written disciplinary warnings given by the employer to the employee over a period before the dismissal. Two written warnings given by the employer over a reasonable period of time prior to the final warning and contemporaneous dismissal should serve to demonstrate a degree of prudence on the part of the employer if such dismissal is challenged by the employee as unfair. If both parties agree to the termination, it is possible to terminate the employment contract by mutual consent. The terms and conditions of the termination may be, and usually are, incorporated in a settlement agreement signed by both parties.
Posting of Workers
We say a worker is “a posted worker” when he is employed in one EU Member State but sent by his employer on a temporary basis to carry out his work in another Member State. For example, a service provider may win a contract in another country and send his employees there to carry out the contract. This trans-national provision of services, where employees are sent to work in a Member State other than the one they usually work in, gives rise to a distinctive category, namely that of “posted workers”. This category does not include migrant workers to go to another Member State to seek work and are employed there.
To guarantee that the rights and working conditions of a posted worker are protected throughout the European Union, and to avoid a situation where foreign service providers can undercut local service providers because their labour standards are lower, the European Community law has established a core of mandatory rules regarding the terms and conditions of employment to be applied to an employee posted to work in another Member State. These rules will reflect the standards of local workers in the host Member State (that is, where the employee is sent to work).
The idea is that where a Member State has certain minimum terms and conditions of employment, these must also apply to workers posted to that State. However, there is nothing to stop the employer applying working conditions which are more favourable to workers such as, for instance, those of the sending member State (that is, where the employee usually works).
There are three situations in which the provision of services involves the posting of workers. First, a firm can send its employees abroad to perform a contract for service concluded with a third party client or a subcontract. Second, within a group of companies, staff can be temporarily assigned to an establishment located abroad in order to provide services. Thirdly, a temporary employment agency based in one country can supply labour to a client enterprise located in another country.
All posted employees shall be entitled to receive equality of treatment as the comparable employees and in particular they shall have equal access to employment rights and health and safety rights under Maltese law.
Residence & Work Permits in Malta
We provide full support to its clients in obtaining residence and work permits for their staff and in administering client payrolls, co-ordinating all relevant paperwork with the relevant authorities and guiding clients through the procedures and pitfalls in the course of administering these formalities.
EU nationals can work in Malta without an employment licence. Third-country nationals require work permits to work in Malta, and the granting of the permit is subject to a labour market test. Permits will be given on a temporary basis and have to be renewed every 1 to 3 years. The applicant must possess a professional qualification or a high degree of skill or experience.
EU nationals can work in Malta without an employment licence, however they would still require a residence permit to reside in Malta. Residence permit applications for EU nationals should be submitted 3 months from the date of entry into Malta.
Third-country nationals (non-EU nationals) require an employment licence to work in Malta, and the granting of the licence is always at the discretion of the Employment Licence Unit. Employment licences will be given on a temporary basis and have to be renewed every year. The applicants must possess a professional qualification or not less than 3 years’ experience relating to the job position they are applying for to be able to apply for an employment licence. Together with the employment licence application, proof of search for suitable EEA/Swiss/Maltese candidates must be submitted. Third-country nationals (non-EU nationals) would require to obtain a residence permit after obtaining an employment licence. Resident permit applications for non-EU nationals should be submitted 3 months from the date of the work permit should the applicant be in Malta OR 3 months from the date of entry into Malta, if the applicant is abroad).
A secondment is where an employee temporarily transfers to another job for a defined period of time for a specific purpose, to the mutual benefit of all parties. A secondment job can be full-time, part-time or job share. Given the need for induction and training, it is unlikely a secondment of less than four months would be effective. In a typical secondment an employee will be seconded by their employer (“A”) to a third party (“B”). The intention is generally that the employee will remain employed by A for the duration of the secondment, and will return to A’s business at the end of the period of secondment. In addition, the employee usually continues to be paid by A, and continuity of employment with A remains unaltered.
During the posting, the employee keeps his or her employment contract with the home company and remains an employee of the home company. At first glance, only the place of work is temporarily changed. However, many other legal issues may come into play and need proper preparation and well-drafted paper work.
The European Union upholds the fundamental principle of freedom of movement of persons. This guarantees European Union citizens the right to live and work freely in another Member State. However, in some countries transition measures may still impose limits on the free movement of employees from new EU Member States.
Non-EU nationals need authorisation to work in Europe. Work permits are still a national matter, meaning that a separate work permit is needed for each country where the employee will work. Some countries may provide for exemptions for short-term assignments or business travel.
Income Tax Systems
The income tax systems are based on national law. There are significant differences in the level of income tax on salaries and wages amongst the different Member States. When an employee is on a cross-border secondment, the tax law of at least two states is involved, i.e. the tax law of the state of residence and the tax law of the work state (also known as the ‘state of source’). Therefore, it is important to verify whether a bilateral tax treaty exists between the two countries to avoid double taxation.
Income and capital gains arising in Malta are taxable in Malta irrespective of the characteristics of the person who received such income or gain. Income arising in Malta is taxable in Malta even if the recipient of such income is a non-resident, a non-domiciliary or a temporary resident. Additionally, Malta also exercises jurisdiction to tax on chargeable income and gains arising outside Malta and derived by persons who are ordinary resident and domiciled in Malta. Furthermore, Malta exercises jurisdiction to tax foreign source chargeable income derived by persons who are resident, ordinarily resident or domicile in Malta but not ordinary resident and domiciled in Malta, to the extent that such income is received in Malta. It is important to note that income derived from a contract is taxable in Malta if the relevant contract is executed in Malta and the recipient of such income establishes some form of presence in Malta.
Maltese law affords additional protection from termination of employment to:
employees suffering from any personal injury by accident in the course of their employment or any occupational disease occurring in the service of that employer, unless termination is agreed to by the employee;
full-time female employees during the period of maternity leave for the period of 5 weeks following the end of such maternity leave, during which she may be incapable of working owing to a post-natal pathological condition. The law, however, also introduces a measure to reward the employer for supporting such full-time female employees during their pregnancy by providing that if the employee does not resume work after the birth of her child or, having resumed work, terminates her employment without good and sufficient cause within 6 months of the resumption of work, she would liable to refund the wages received during the maternity leave availed of.
The employer is also prohibited from using the following circumstances as a “good and sufficient cause” for terminating the employment of any employee/s:
the employee is a member of a trade union or has acted or is to act as the employees’ representative;
the employee has filed a complaint or participated in proceedings against the employer involving any alleged violation of laws or regulations by such employer;
the employee discloses information, whether confidential or otherwise, to a designated public regulating body, regarding alleged illegal or corrupt activities being committed by the employer or by persons acting in the employer’s name;
the employee has contracted marriage;
the business in which the employee is engaged has undergone a transfer of ownership, unless such termination is shown to be necessary for economic, technical or organisational reasons entailing changes in the workforce.
It is also noteworthy that, by contrast, persons employed on Maltese-flagged vessels are not afforded the protection of many of the provisions of Maltese law dealing with minimum conditions of employment.
The Employment Contract
Maltese Labour Law
Maltese Labour Law is essentially based on the contractual agreement entered into between employer and employee, provided that the statutory conditions of employment are respected. Thus, whereas certain conditions of employment are strictly regulated as a matter of law, other conditions are left entirely up to the parties to agree upon, as long as these are also considered to be objectively reasonable. Where the minimum conditions of employment are established by law or regulation, only those provisions that are more favourable to the employee are considered as being legally valid and enforceable.
Collective agreements work in the same way, binding the employer party to the agreement and the members of the trade union negotiating on the employees’ behalf. Individuals not belonging to the trade union in question may also agree to be governed by the terms of the collective agreement.
If the period of employment exceeds one month and the employee’s working hours exceed eight hours per week, the employer is bound to give the employee within 8 working days from the commencement of employment, either
(i) a written contract of employment, or
(ii) a written statement of minimum conditions, which must be furnished to the employee.
Such information is expected to include such basic things as the normal rates of pay, overtime rates, hours of work, place of work and leave entitlement. Wages should be paid at regular intervals not exceeding 4 weeks in arrears. Different periods of pay can be agreed in a collective agreement.
Contracts of Employment
Contracts of employment may be entered into for a fixed term or for an indefinite term. A fixed term contract can be successively renewed up to a maximum period of 4 years after which the employee shall be considered to be under a contract of indefinite duration. The exception occurs when the employer has justifiable reasons for retaining the employee on a fixed term contract. An employee whose fixed term contract has expired and is retained in employment will also be considered to be under an indefinite contract if the employer does not produce a new contract of service within 12 days following the expiry of the previous contract.
A caveat worth making in the context of contracts of employment for a fixed term is that if the parties would like to terminate the contract prior to the expiry of the established term, the terminating party has to pay to the other a penalty which is established by law which is a sum equal to half the wages that the employee would have earned in the remaining period of employment.
The first 6 months of each employment contract constitutes probation, unless the parties agree to a shorter term. By way of exception to this rule, in the case of contracts of service, or collective agreements in respect of employees holding technical, executive, administrative or managerial posts whose wages are at least double the applicable minimum wage, such probation period is of 1 year unless a shorter period is agreed upon in the contract of service or in the collective agreement. During the probation period employment can be terminated by either party without assigning any reason, provided that at least 1 week’s notice of termination is given by the terminating party to the other party where the employment relationship has exceeded 1 month.