Employer of Record in Malta

An Employer of Record (EOR) in Malta is a company that legally hires employees on your behalf. This means you can build a team in Malta without setting up a local entity. An EOR handles all the essential HR tasks, like payroll, taxes, benefits, and employment contracts, ensuring you comply with all Maltese labor laws. This lets you focus on your business goals. For companies looking to hire in Malta, a provider like Rivermate can simplify the process.

How an Employer of Record (EOR) Works in Malta

Using an EOR in Malta is a straightforward process. It allows you to onboard new employees quickly and compliantly.

Here is how it typically works:

1. You Find the Talent: You recruit and select the best candidate for your team in Malta.
2. The EOR Hires Your Candidate: The EOR legally hires the employee through a local, compliant employment contract.
3. Onboarding and HR Management: The EOR manages all HR-related administrative tasks. This includes payroll, tax withholdings, and ensuring all social security contributions are paid according to Maltese law.
4. You Manage Your Employee: While the EOR handles the legal and HR aspects, you manage your employee's day-to-day work and responsibilities.
5. Ongoing Compliance: The EOR stays up-to-date with any changes in Maltese employment laws, ensuring your business remains compliant. This includes regulations outlined in the Employment and Industrial Relations Act.

Why use an Employer of Record in Malta

Using an EOR in Malta offers a practical solution for businesses that want to expand into the country without the immediate need to establish a legal entity. It simplifies international hiring and ensures you follow local rules from day one.

Here are some key benefits:

• Enter the Market Faster: You can hire employees and start operations in Malta much quicker than if you had to register a local company.
• Ensure Legal Compliance: EORs are experts in Maltese labor law. They make sure your hiring practices, contracts, and payroll adhere to all local regulations, including the Employment and Industrial Relations Act.
• Reduce Administrative Burden: An EOR takes care of complex HR tasks like payroll processing, tax filings, and benefits administration. This frees up your time to focus on your core business activities.
• Access Local Talent: You can tap into Malta's skilled workforce without the geographical and legal barriers of setting up a foreign entity.
• Lower Costs: It is often more cost-effective to use an EOR than to establish and maintain a legal entity in another country, especially when you are just starting to build a small team.

Rivermate's transparent pricing model eliminates complexity with a single, competitive monthly fee per employee. Unlike traditional PEO providers, our pricing in Malta includes comprehensive HR support, benefits administration, compliance management, and access to our proprietary dashboard for real-time workforce analytics. No hidden costs, no setup fees—just straightforward pricing that scales with your business needs while ensuring full legal compliance in Malta.

Hiring in Malta means tapping into a European talent pool with a strong work ethic. The island nation has a thriving economy, particularly in sectors like iGaming, finance, and technology. English is an official language, which simplifies communication for international companies. The legal system in Malta is well-defined, providing a clear framework for employment.

Employment contracts & must-have clauses

While not legally required to be in writing, it is standard practice to have a written employment contract in Malta. If you don't provide a written contract, you must give the employee a written statement of their core conditions within eight working days of their start date.

Every employment contract should include these key clauses:

• Parties to the contract: Clearly identify the employer and the employee.
• Place of work: State the primary location where the employee will work.
• Job title and description: Outline the employee's role and responsibilities.
• Start date: The official first day of employment.
• Duration: Specify if the contract is for a fixed term or an indefinite period.
• Wages: Detail the salary, payment frequency, and any overtime rates.
• Working hours: Define the standard working hours.
• Leave entitlement: Include information on vacation, sick leave, and other types of leave.
• Probation period: State the length of the probationary period.
• Notice periods: Outline the required notice for termination by either party.

Probation periods

Probationary periods are a standard feature of employment in Malta. They allow both you and the new employee to assess the fit.

• Standard duration: The typical probation period is six months.
• Longer periods: For managerial or technical roles with a salary at least double the minimum wage, the probation can be up to one year.
• Fixed-term contracts: The probation period for fixed-term contracts is proportional to the contract's length.
• Termination during probation: Either party can terminate the employment during probation without giving a reason. If the employee has worked for more than one month, one week's notice is required.

Working hours & overtime

The standard working week in Malta is 40 hours.

Employees must consent in writing to work more than an average of 48 hours per week.

Public & regional holidays

Malta has a number of public and national holidays. If a public holiday falls on a weekend, an extra day of leave is added to the employee's annual leave entitlement.

Here are the public holidays for 2024:

Hiring contractors in Malta

You can hire independent contractors in Malta for project-based work. This offers flexibility and access to specialized skills. However, it's crucial to distinguish correctly between an independent contractor and an employee.

Misclassifying an employee as a contractor can lead to significant risks. These include fines, back taxes, and being liable for employee benefits. An Employer of Record (EOR) can help you avoid these risks. An EOR acts as the legal employer for your workers in Malta, ensuring compliance with local labor laws. This means the EOR handles payroll, taxes, benefits, and employment contracts, allowing you to focus on managing your team and growing your business.

In Malta, paying your team correctly and on time is straightforward. The system is built on a clear framework of payroll cycles, minimum wage laws, and statutory bonuses. Both you and your employees contribute to social security, and income tax is handled through a pay-as-you-earn (PAYE) system. This guide breaks down what you need to know to manage compensation and payroll in Malta.

Payroll cycles & wage structure

In Malta, you typically pay employees monthly. The standard is a 40-hour work week.

Beyond the basic salary, you are required to pay statutory bonuses. These are paid quarterly in four installments:

• End of June: €135.10
• End of December: €135.10
• End of March: €121.16
• End of September: €121.16

Additionally, a cost of living allowance (COLA) is announced each year to adjust salaries for inflation.

Overtime & minimums

Any work that goes beyond the standard 40-hour week is considered overtime. You must pay employees 1.5 times their normal rate for this work. A reduced tax rate of 15% applies to the first €10,000 of overtime pay.

Malta has a national minimum wage, which is updated to account for the cost of living. For employees 18 and over, the minimum wage is set on a weekly basis.

Employer taxes and contributions

As an employer, you are responsible for making social security contributions for your employees. These payments fund the national social security system. The main contribution is a percentage of the employee's basic weekly wage, up to a certain maximum.

Employee taxes and deductions

You deduct taxes and social security contributions directly from your employee's salary. Malta uses a progressive tax system, meaning the tax rate increases with the employee's income. The tax brackets vary depending on whether the employee is single, married, or a parent.

Here is a general overview of employee obligations:

In Malta, you'll find a system of employee leave and benefits that supports a healthy work-life balance. The approach is straightforward, ensuring employers provide fair and legally required time off and protections. This is all backed by a strong social security system. For companies looking to hire in Malta, understanding these local laws is key to staying compliant and attracting top talent.

Statutory leave

When you employ someone in Malta, you must provide several types of leave.

• Annual Leave Employees who work a 40-hour week get 192 hours of paid annual leave. They receive additional hours to compensate for public holidays that fall on weekends.
• Sick Leave Employees are generally entitled to two weeks of sick leave each year. To use this leave, they need to provide a medical certificate. If an employee is sick for longer, they may be able to get support through the Social Security system.
• Maternity Leave Mothers get 18 weeks of maternity leave. The employer pays for the first 14 weeks, and the government provides a benefit for the remaining four.
• Paternity Leave Fathers are entitled to 10 working days of paid paternity leave, which must be taken right after the child's birth or adoption.
• Parental Leave Both parents can take four months of unpaid parental leave before their child turns eight. To be eligible, an employee must have worked for the company for at least one year.

Public holidays & regional holidays

Malta has a number of public holidays throughout the year. Here is a list of the national holidays.

Typical supplemental benefits

To attract and keep the best employees, companies often offer more than the legal minimum. Here’s a look at both required and common extra benefits.

How an EOR can help with setting up benefits

Setting up a benefits package in a new country can be complex. An Employer of Record (EOR) simplifies this process for you.

An EOR acts as the legal employer for your workers in Malta. They handle all the administrative tasks, including benefits. This means they ensure your company complies with all of Malta's labor laws.

An EOR can:

• Manage statutory benefits like social security and required leave.
• Advise on and administer competitive supplemental benefits.
• Handle payroll and make sure your employees are paid correctly and on time.
• Keep you updated on any changes to local employment laws.

Using an EOR saves you time and reduces risk. You can focus on growing your business, knowing that your team's benefits and payroll are in expert hands.

When you part ways with an employee in Malta, you need to follow a clear process. Maltese law protects both you and your employees by setting out rules for ending an employment contract. This ensures fairness and predictability. The main law governing this is the Employment and Industrial Relations Act (EIRA). You can terminate a contract for a good reason, like misconduct or redundancy, or when a fixed-term contract ends. In each case, you must follow specific steps to stay compliant.

Notice periods

Giving notice is a key part of the termination process. The amount of notice you need to give depends on how long the employee has worked for you. The law sets out minimum notice periods.

Here is a breakdown of the statutory notice periods in Malta:

For employees in managerial or technical roles, you can agree to a longer notice period in the employment contract. During the notice period, the employee is entitled to their usual pay and benefits. You can also choose to pay the employee in lieu of them working the notice period.

Severance pay

In Malta, there isn't a general rule for severance pay in every termination. However, there are situations where you will have to make a payment to the employee.

• Fixed-term contracts: If you end a fixed-term contract early without a good reason, you must pay the employee half of the wages they would have earned for the rest of the contract.
• Redundancy: When you make an employee redundant, the rules for notice periods apply.
• Unfair dismissal: If an employee successfully claims unfair dismissal with the Industrial Tribunal, they may be awarded compensation.

How Rivermate handles compliant exits

When you use an Employer of Record like Rivermate, we manage the entire offboarding process for you. We make sure every termination is handled correctly and in compliance with Maltese law.

Here’s how we help:

• Legal compliance: We stay up to date with local labor laws to ensure every step of the termination process is compliant.
• Documentation: We handle all the necessary paperwork, including the termination letter and final payslip.
• Calculations: We calculate all final payments, including any outstanding wages, accrued leave, and other entitlements.
• Clear communication: We help you communicate the decision to the employee in a clear and professional way.

By managing the process for you, we reduce the risk of legal issues and ensure a smooth exit for both you and your employee.

Navigating the world of visas and work permits in Malta can feel complex. This guide breaks down what you need to know. We keep it simple and straightforward, so you can understand your options for bringing international talent to Malta.

Employment visas & sponsorship realities

An Employer of Record (EOR) can help you hire in Malta, even without a local entity. An EOR acts as the legal employer for your team members, handling everything from contracts and payroll to taxes and benefits. This includes sponsoring work permits for international hires.

Here are the common routes for employing non-EU nationals in Malta:

• Single Permit: This is a combined residence and work permit. It allows someone to live and work in Malta for a specific employer. The application is typically submitted by the employer.
• EU Blue Card: This permit is for highly skilled workers who have specialized qualifications and a higher salary.
• Key Employee Initiative (KEI): This is a fast-track option for highly skilled managers and technical professionals.

An EOR can sponsor these permits, but it's important to know that visa quotas and local regulations can sometimes limit the ability to sponsor foreign nationals.

Business travel compliance (short‑term visits)

For short-term business trips, the rules are more relaxed. Malta is part of the Schengen Area, which allows for visa-free travel for up to 90 days in any 180-day period for citizens of many countries, including the United States.

During these short stays, you can typically engage in the following activities without a visa:

• Attend business meetings
• Go to conferences or seminars
• Meet with clients or colleagues
• Conduct market research

It's important to remember that this visa-free travel does not permit actual employment. If you plan to work in Malta, even for a short period, you will likely need an employment license. Always check the specific entry requirements with the Maltese authorities before you travel to ensure you are compliant.