The Employment Act
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The Employment Act

on 10 November 2020

​Human resources are the only natural resource our country has and thus needed to be protected. And since Malta depended a great deal on its workforce, its economic progress could only be achieved if this is tied up with social development – this is what, at the end of the day, will improve the quality of life of the Maltese citizens.

So after plenty of rather heated discussions within the Malta Council for Economic and Social Development, where all the social partners have their say, the first draft of the new Employment and Industrial Relations Act was drawn up. Following a thorough consultation process, the government prepared the final draft, discussed it in parliament and the new law came into force at the beginning of this year.

There are several differences between what the workers had as of right, and the improved conditions the Maltese workers will avail of in the future. For many, 2003 is perceived as a year of increased rights and better working conditions, along with better ways of how to combine working and family life for a better quality of life.

In this article, we shall be looking at some of the improved rights Maltese workers can benefit from as a result of measures included in this new Act.

Parental leave

For the first few months after giving birth, especially if it is the first-born, parents usually find it difficult to cope with a married life, work and a child. This usually results in depression or an inferior quality of life.

For this specific reason, this measure provides for unpaid leave from work for birth mothers and their spouses on the birth of a child. Male and female employees are entitled to three months unpaid leave. This is applicable to full-time, part-time and also fixed-term contract workers. This entitlement may also be extended to adoptive parents and legal custodians.

After the three months are up, the employee has the right to return to his/her same job and enjoy the same employment conditions as before taking the leave.

It is illegal to either dismiss or discriminate against an employee on grounds of pregnancy or for taking parental leave under the Act. Infringement of this measure will result in a fine of between EUR 1164.57 and EUR 1164.59.

If a female employee becomes pregnant, she has the right to a total of 14 weeks of maternity leave but receives payment equivalent to 13 weeks of basic wage. This provision is not included in the Employment and Industrial Relations Act 2002 but forms part of the Health and Safety Act.

Probationary period

The minimum probationary period under the new Act is no longer three months but has been increased to six, unless otherwise agreed by the employee and the employer. However, those employees holding technical, executive, administrative or managerial posts, and those whose wage exceeds double the minimum wage, have a minimum of one-year probation.

There is the impression that workers on probation can leave the job on the spur of the moment. But according to the new Act this is not so, unless they have worked there for less than a month. Workers have the right to terminate their employment without being obliged to give reasons as to why they took this decision. However, the workers must give their employer a minimum of one weeks’ notice of their termination of employment if they have been working for more than a month. This would give the employer enough time to begin looking for a replacement.

People, even those who are still on probation can be made redundant, but what is redundancy? Redundancy happens when either a position filled by an employee is no longer needed, or when the employer, for commercial reasons, takes a genuine decision to discontinue employment. In this case, the principle of last in, first out will apply. The Act also provides for family-run businesses. In fact, if the last person is related to the employer, the latter may move to the next person in line.

Collective redundancies

When an employer decides to make collective redundancies, he is bound by certain provisions in the new Act. The employer is bound to give a seven-day notification period prior to dismissal. Following this, the employer is bound to hold a consultation process with the employees earmarked for redundancy. In this consultation exercise following the notification of intention to dismiss, the employer is to explain the grounds for redundancy.

Collective redundancies cannot exceed 10 workers for employers employing between 20 and 100 workers; a maximum of 10 per cent of workers for employers employing between 100 and 300 workers and a maximum of 30 workers for employers employing more than 300 people.

The infringement of this provision brings about the minimum of a EUR 1164.59 fine per redundant employee.

Information to employees

The Act also provides for the employers of a keep their employees informed at all times. Workers have the right to be provided with a written contract or statement of employment with their working conditions. Workers who are required, from the nature of their job, to work abroad, should have such information at hand before departing Malta for work reasons.

This provision also applies to out-workers (people working on outside jobs– not in an office), as well as those employees working on a commission basis.

Workers who are already in employment and who don’t have this information at hand, have the right to request this information in writing from their employer.

Contravention of this measure carries a fine of between EUR 116.47 and EUR 1164.59.

Merger on transfer of business

The Act also includes provisions in the case of a merger between two or more organisations and a transfer of business. This regulation is only applicable for businesses employing more than 20 workers. The Act stipulates that a merger does not entail dismissal of employees. Moreover, the workers are to retain their invalidity, old age and supplementary occupational rights.

The transferring party is bound to inform workers beforehand of the merger intentions. As in the provision for collective redundancies, the employer has to begin a consultation process seven days after the employees are notified of the merger intentions. The infringement of this provision carries a minimum fine of EUR 1164.69 for every employee affected by the transfer.

Guarantee fund

As its name suggests, the guarantee fund is a fund that would guarantee claimed wages of workers in cases of employers facing insolvency situations.

The fund will initially be supported by the State. However, later the employers, employees and the State itself will have to contribute towards this fund. The Act also provides for the setting up of a Guarantee Fund Administration Board to process the claims.

Protection of wages

An employee has the right to receive his wage in cash or by cheque, or alternatively deposited directly into his bank account.

The Act states that an employee cannot sign a contract with his employer giving the latter the right to make any deductions from his wage. At the request of an employee in writing, the employer may make deductions from the wages of the employee for the purpose of a thrift scheme. This may be done as long as the said employer would not be doing so to benefit from any financial interest, whether direct or indirect. Fines for the non-observance of rules on the workplace may be deducted directly for the employee’s wage.


The Act binds an employer to pay his workers at regular intervals, which should not exceed four weeks in arrears, unless otherwise decided in an agreement between employer and the employee or a trade union representing the workers.

Upon termination of the contract, the employer is bound to settle the amount due to the employee. This should include cash for the leave not used. This amount must be settled by the next pay-day, as if the contract had not been terminated. Employers owed commission or a share of the company’s profits must receive their payment at least once a year.

Government bonuses are granted twice a year. Employees working for more than 30 days are entitled to their bonus calculated on the number of days the employee has been in employment. The second bonus should be given to the employee between 15 and 23 December. Full-time employees working less than 40 hours per week are entitled to a pro rata calculation of leave, sick leave, government bonuses and other benefits.

Part-time workers

The Act stipulates that part-time workers cannot be provided with less favourable conditions than comparable full-time workers, just for the reason that they work part-time. Nevertheless, different treatment could be justified on objective grounds.

Moreover, part-time workers are entitled to pro rata calculations of leave, sick leave, bonuses and income supplements. These entitlements are only available for part-time employees working not less than 20 hours per week. Part-time employees are entitled to participate in vocational training offered to full-time employees. The employer is duty-bound to inform part-time workers of a full-time employment opportunity within his business. But the part-time workers have the right to refuse such full-time employment after evaluating their personal situations.

The new Act recognises the possibility of having full-time employees with reduced hours. It does not impose an obligation on the employer to grant reduced hours, but if the employer decides to do so, then there are minimum rules that have to be applied. Namely that such employees should remain entitled to their pro rata share of annual leave, sick leave, maternity leave and parental leave, leave for urgent family reasons and injury leave.

For more information, kindly direct your request to [email protected]

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