Hire in Malta through our Employer of Record (EOR)

An Employer of Record (EOR) is a third-party organization that takes on the legal and administrative responsibilities of employing workers on behalf of another company. This arrangement allows businesses to hire employees in countries where they don't have a legal entity, effectively expanding their global reach without the need to establish a local subsidiary. EORs handle crucial aspects of employment such as payroll, tax compliance, benefits administration, and adherence to local labor laws.

For a country like Malta, with its unique blend of historical richness and modern economic diversity, an EOR can play a pivotal role in facilitating international business operations and fostering economic growth. As Malta continues to attract foreign investment and expand its presence in sectors like financial services, iGaming, and advanced manufacturing, EORs can help streamline the process of hiring and managing a global workforce.

How Does EOR Work?

When a company decides to use an EOR service, the process typically unfolds as follows:

1. The client company identifies a candidate they wish to hire in Malta.
2. The EOR becomes the legal employer of the worker, handling all formal employment paperwork.
3. The client company maintains day-to-day management of the employee's work and responsibilities.
4. The EOR manages payroll, tax withholding, benefits administration, and ensures compliance with Maltese labor laws.
5. The client company reimburses the EOR for the employee's salary and associated costs, plus a service fee.

This arrangement allows companies to quickly establish a presence in Malta without navigating the complexities of local employment laws and regulations on their own.

Benefits of Using an EOR

Utilizing an EOR in Malta offers several advantages:

1. Rapid Market Entry: Companies can hire employees in Malta without setting up a local entity, significantly reducing time-to-market.

2. Compliance Assurance: EORs are well-versed in Maltese labor laws, ensuring that all employment practices adhere to local regulations.

3. Risk Mitigation: By taking on the legal responsibilities of employment, EORs help mitigate risks associated with non-compliance.

4. Cost-Effectiveness: Companies can avoid the expenses of establishing and maintaining a local subsidiary.

5. Flexibility: EORs allow businesses to scale their operations in Malta up or down without long-term commitments.

6. Local Expertise: EORs provide valuable insights into Maltese business culture and employment practices.

7. Focus on Core Business: By outsourcing HR and payroll functions, companies can concentrate on their primary business activities.

8. Access to Talent: EORs can help companies tap into Malta's diverse talent pool, particularly in sectors like finance, technology, and tourism.

In the context of Malta's unique socio-economic landscape, an EOR can be particularly beneficial. It allows companies to navigate the intricacies of Malta's labor market, which is influenced by its EU membership, high population density, and diverse economic sectors. By leveraging an EOR's expertise, businesses can effectively contribute to and benefit from Malta's dynamic economy while ensuring full compliance with local regulations.

Malta's employment landscape is characterized by a high labor force participation rate, increasing female workforce involvement, and a reliance on foreign workers to address skills gaps. The country boasts a well-educated workforce, with a higher proportion of university graduates than the EU average. However, Malta faces challenges such as an aging workforce and occasional mismatches between workers' qualifications and job requirements.

Overview of Labor Laws

Malta's labor laws are designed to protect workers' rights while maintaining a balance with employers' needs. Key aspects of Maltese labor laws include:

• Regulated working hours, typically 40 hours per week
• Mandatory paid annual leave
• Maternity and paternity leave provisions
• Protection against unfair dismissal
• Minimum wage requirements
• Occupational health and safety regulations

These laws are generally in line with EU standards, providing a framework for fair and safe working conditions.

Cultural Considerations

When operating in Malta, it's essential to understand the local work culture:

• Family-oriented: Maltese culture places a strong emphasis on family, often leading to flexible work arrangements.
• Work-life balance: Malta generally scores well in work-life balance compared to other EU nations.
• Communication style: Maltese professionals value building personal relationships and engage in small talk before focusing on business.
• Hierarchy: While respect for age and experience is important, there's generally less distance between executives and lower-level employees compared to more hierarchical cultures.
• Language: English fluency is widespread, alongside proficiency in Maltese.

Challenges of Direct Hiring

Direct hiring in Malta can present several challenges:

1. Skills mismatch: Despite high education levels, finding candidates with the right skill set for specific roles can be challenging.

2. Aging workforce: The demographic shift towards an older population may lead to skills shortages in certain sectors.

3. Competition for talent: With a small population and high employment rate, attracting top talent can be competitive.

4. Regulatory compliance: Navigating Malta's labor laws and ensuring compliance can be complex for foreign companies.

5. Cultural adaptation: Understanding and adapting to local work culture and communication styles is crucial for successful hiring and retention.

6. Language barriers: While English is widely spoken, some roles may require proficiency in Maltese or other languages.

7. Administrative burden: Managing payroll, taxes, and social security contributions for employees can be time-consuming and complex.

By understanding these aspects of Malta's employment landscape, companies can better navigate the challenges and opportunities of hiring in this dynamic Mediterranean nation.

Malta's payroll and tax system is designed to ensure fair contributions from both employers and employees while providing social security benefits and maintaining economic stability. The system involves various contributions and deductions, with specific responsibilities for employers and employees alike.

Employer Contributions

Social Security Contributions

Employers in Malta are required to contribute to the country's social security system. The contribution rate for employers matches that of employees, currently set at 10% of the employee's gross salary. For higher earners, there is a fixed weekly rate in place.

Maternity Fund Contribution

In addition to social security, employers must contribute to the Maternity Fund. This fund provides benefits for employees during maternity leave. The current employer contribution rate is 0.3% of the employee's basic weekly wage.

Other Potential Employer Contributions

Employers may have additional financial responsibilities, including:

1. Annual bonus: Determined by the government and paid in installments throughout the year.
2. Fringe benefits: If provided (e.g., company car, health insurance), these may be subject to additional taxes depending on their nature.

Administration of Employer Contributions

Employers are responsible for:

1. Deducting employee social security contributions from wages
2. Adding their own matching contributions
3. Remitting both employer and employee contributions to the Inland Revenue Department, typically on a monthly basis

Employee Contributions

Types of Employee Tax Deductions

The primary tax deductions for employees in Malta include:

1. Income tax: Based on a progressive rate system, where higher incomes are taxed at higher percentages
2. Social Security Contributions (SSC): Generally 10% of the gross salary, with contribution caps based on the employee's year of birth

These deductions are typically handled through the Pay-As-You-Earn (PAYE) system, where employers deduct the required amounts from employees' salaries before payment.

Allowable Deductions

Employees may be eligible for certain deductions to reduce their taxable income:

1. Expenses directly and solely related to generating income from employment
2. Alimony payments to an estranged spouse (deductible for the payer, taxable for the recipient)

Tax Calculations and Filings

Under the Final Settlement System (FSS), employers calculate tax deductions throughout the year. In most cases, employees do not need to file a yearly tax return. However, those with additional income sources or special circumstances may need to submit a tax return.

Double Taxation Treaties

Malta has established numerous double taxation treaties to prevent individuals from being taxed on the same income in multiple countries. These agreements can be particularly beneficial for employees earning income from foreign sources.

By understanding these various aspects of Malta's payroll and tax system, both employers and employees can better navigate their financial responsibilities and ensure compliance with local regulations.

Malta's employee benefits package is designed to ensure a high quality of life for workers, combining mandatory protections with optional perks that enhance job satisfaction and work-life balance. As an Employer of Record (EOR), Rivermate expertly navigates the complexities of Malta's benefits system, ensuring full compliance with mandatory requirements while also helping companies implement attractive optional benefits. This comprehensive approach not only safeguards employee rights but also boosts talent acquisition and retention in the competitive Maltese job market.

Mandatory Benefits

Malta's labor laws mandate a robust set of benefits for employees, including:

• Annual Leave: A minimum of 224 hours (28 working days) of paid leave for a standard 40-hour workweek
• Sick Leave: 2 weeks (10 working days) of paid sick leave annually
• Public Holidays: 14 paid public holidays per year
• Maternity Leave: 18 weeks of paid leave for expectant mothers
• Paternity Leave: 2 weeks of paid leave for new fathers
• Probationary Period: Negotiable duration between employer and employee
• Notice Period: Minimum required period before employment termination
• Severance Pay: Compensation for redundancy or unjust dismissal
• Overtime Pay: Premium rates for work beyond standard hours
• Social Security: Employer contributions to the national social security system

Optional Benefits

To attract and retain top talent, many companies in Malta offer additional benefits such as:

• Private Health Insurance: Comprehensive medical coverage beyond public healthcare
• Wellness Programs: Gym memberships, fitness classes, or on-site health initiatives
• Flexible Work Arrangements: Remote work options, flexible hours, or compressed workweeks
• Additional Paid Leave: Extra vacation or personal days beyond legal requirements
• Performance Bonuses: Incentives tied to individual or company performance
• Profit Sharing: Distributing a portion of company profits to employees
• Training and Development: Investment in employee growth through courses or conferences
• Company Discounts: Reduced rates on various products or services
• On-Site Amenities: Free or subsidized meals, laundry services, or childcare facilities

By leveraging both mandatory and optional benefits, companies in Malta can create a compelling employee value proposition that supports a productive, engaged, and satisfied workforce.

The process of termination and offboarding in Malta is governed by comprehensive employment laws that ensure fair treatment of employees. These laws outline specific procedures and requirements that employers must follow when ending an employment relationship.

Lawful Grounds for Dismissal

In Malta, employers can legally terminate an employee's contract under two main circumstances:

1. Good and Sufficient Cause: This includes serious misconduct such as theft, violence, gross negligence, or significant underperformance. Employers must provide evidence of the severity of the reason and often issue warnings before proceeding with termination.

2. Redundancy: This occurs when a position becomes obsolete due to economic reasons or restructuring. Employers must follow specific procedures, including consulting with employees and potentially offering severance packages.

Notice Requirements

The notice period for termination in Malta varies based on factors such as the employment contract, collective bargaining agreements, and length of employment:

• During the probation period (typically up to one year), shorter notice periods may apply.
• After the probation period, the required notice period increases with tenure. For example, an employee with more than one year of service may be entitled to several weeks' notice.

Severance Pay

Severance pay is typically relevant in redundancy situations:

• Employees who have been with the company for at least one year may be eligible for severance pay.
• The amount is calculated based on factors such as length of service and final salary.

Offboarding Process

When terminating an employee in Malta, employers should follow these steps:

1. Provide written notice of termination, clearly stating the reasons for dismissal.
2. Conduct an exit interview to gather feedback and ensure a smooth transition.
3. Retrieve company property, including access cards, laptops, and other equipment.
4. Process final payments, including any outstanding salary, unused vacation days, and severance pay if applicable.
5. Provide necessary documentation, such as a certificate of employment and tax-related forms.
6. Update internal systems and revoke access to company accounts and information.

It's important to note that specific circumstances and contractual terms can affect termination procedures and entitlements. Therefore, consulting with a local employment lawyer is highly recommended to ensure compliance with Malta's employment laws and to handle the termination and offboarding process correctly.

Malta, a picturesque Mediterranean island nation, has become an increasingly popular destination for foreign workers seeking new opportunities. As a member of the European Union, Malta offers a unique blend of European culture and island lifestyle. However, like any country, it has specific visa and work permit requirements for non-EU citizens looking to work within its borders.

Visa Requirements

For short-term stays of up to 90 days, many nationalities can enter Malta without a visa. However, for longer stays or work purposes, a visa is typically required. The type of visa needed depends on the duration and purpose of the stay:

• Schengen Visa: For stays up to 90 days within a 180-day period
• National Visa: For stays longer than 90 days

Work Permit Requirements

To work legally in Malta, non-EU citizens generally need to obtain a work permit. The process involves both the employer and the employee:

1. Employment License: The employer must apply for an employment license from JobsPlus, Malta's public employment service.

2. Single Permit Application: Once the employment license is approved, the employee can apply for a single permit, which combines the residence and work permit.

3. Supporting Documents: Applicants need to provide various documents, including:

   • Valid passport
   • Proof of qualifications and work experience
   • Police conduct certificate
   • Signed work contract

4. Processing Time: The process typically takes 8-10 weeks but can vary.

Key Considerations

• EU/EEA Citizens: They generally don't need a work permit but must register with the authorities if staying longer than three months.

• Highly Qualified Persons: Malta offers a special program for certain high-skilled professions, which can streamline the process.

• Self-Employed Individuals: They follow a different process and must prove their business viability.

• Language Requirement: While not strictly necessary for the visa process, knowledge of English (one of Malta's official languages) is highly beneficial.

Understanding these requirements is crucial for a smooth transition to working in Malta. As regulations can change, it's always advisable to check with the official Maltese immigration authorities or consult with an Employer of Record service like Rivermate for the most up-to-date information and assistance with the application process.