Susan MeierThe number of companies establishing themselves in Malta is growing steadily. Whether driven by the attractive tax framework or the island lifestyle, business operations are expanding faster than ever. For any aspiring entrepreneur, having a solid grasp of Malta’s employment regulations isn't just optional—it is essential.
The Importance of Employment Law
It is difficult to overstate the importance of getting employment law right. There is a common misconception that these laws exist solely to protect the employee as the "weaker" party. In reality, they are just as critical for the business owner. Companies must align their contracts, rules, and internal regulations with local legislation, or they risk facing significant fines—or worse.
Beyond mere compliance, these laws provide a structure that protects both the company and its staff, fostering a stable working environment where people can actually perform. When employees feel secure and clearly understand their rights and obligations, efficiency improves. Compliance, therefore, is a win-win situation.
Overview of Employment Law in Malta
Employment law in Malta is primarily governed by the Employment and Industrial Relations Act (Chapter 452 of the Laws of Malta). Other key pieces of legislation include the Occupational Health and Safety Authority Act (Chapter 424) and the Employment and Training Services Act (Chapter 594).
These laws set the baseline for a fair workplace—prohibiting discrimination and harassment, ensuring equal treatment, and mandating proper record-keeping. For a new business owner, however, the immediate priority is usually the employment contract. The specific requirements for these agreements are largely detailed in Legal Notice 267 of 2022 (Transparent and Predictable Working Conditions Regulations), issued under the authority of the Employment and Industrial Relations Act.
Key Requirements for Employment Contracts
Employers are legally obliged to provide specific details to their staff in writing. First and foremost, the contract must state the employer's name and registered address. It must also clearly identify the employee's primary place of work. If the role involves working across multiple locations, this must be explicitly stated, while still identifying the main base of operations.
Employers must also specify the start date of employment and provide a clear description of the duties the employee is expected to perform. If the contract is for a fixed term, the end date must be included. If no end date is specified, the contract is considered open-ended (indefinite).
Other critical elements include the remuneration package and all statutory leave entitlements, such as vacation leave, sick leave, and parental leave. The employer is also legally required to specify the probationary period and its duration. This is a specific window during which either party can terminate the employment without providing a reason. Properly defining this in the contract is one of the most effective ways to protect your business interests while assessing a new hire's fit.
Note: The list above is not exhaustive. For a complete checklist of requirements, please contact one of our advisors.
Ensuring Adequate Protection
To truly protect your business, full compliance with statutory requirements is the only way forward. Beyond the contract itself, employers are required to maintain proper records of employees and their activities. You must also strictly adhere to non-discrimination and equal treatment principles—rights enshrined not just in employment law, but in the Maltese Constitution and the European Convention on Human Rights. Understanding these obligations—and the procedures to follow if things go wrong—is vital for risk management.
Dispute Resolution
Both the Legal Notices and the main Act provide employees with the right to lodge complaints with the relevant authorities if disputes arise. For example, if an employer breaches employment conditions, a case can be brought before the Industrial Tribunal.
If the Tribunal finds a complaint to be justified, it can order specific remedies. These might include the reinstatement of an employee, the cancellation of a contract (or specific clauses within it), or financial compensation for damages. Proceedings before the Tribunal are generally oral and personal, and the decision is binding on both parties. Notably, there are no court fees for filing a case with the Industrial Tribunal.
Out-of-Court Settlements
Litigation isn't the only path. Many disputes are resolved more efficiently outside of court. Both parties often prefer to reach an amicable agreement to avoid the time, stress, and uncertainty of a Tribunal hearing.
In these scenarios, employers and employees are free to engage legal counsel to protect their interests. A lawyer can draft a formal settlement agreement that clearly defines the terms of the resolution, ensuring that claims are settled and preventing future legal action. It is always advisable to have professional legal support when drafting these agreements to ensure your position is secure and to avoid being taken advantage of.
At DW&P, we frequently assist with these matters. We advise clients on the best strategic course of action and, where a settlement is reached, our legal team drafts the necessary agreements to finalize the matter.
How DW&P Can Help
The legal team at DW&P Dr. Werner & Partners has extensive experience in Maltese employment law. We are well-equipped to guide you through every aspect of the employer-employee relationship.
We offer specific services such as drafting robust employment contracts. When you engage us to prepare your agreements, we ensure that every statutory requirement is met while maintaining a fair balance between the rights of the employer and the employee. We also provide ongoing advice on compliance.
Should a breach of contract or a dispute arise, we can advise on the most effective legal strategy and represent your interests in negotiations or proceedings.
Conclusion
Employment law in Malta is detailed and strict. It is easy to overlook a specific provision or requirement, but the consequences of doing so can be severe. We strongly recommend seeking expert advice before hiring staff. This ensures your contracts are watertight, compliant with the law, and aligned with fundamental principles like equal treatment and non-discrimination.
Disclaimer: The above article is based on independent research by Dr. Werner & Partners and does not constitute legal advice. If you would like to meet with one of our representatives for further information, please make an appointment with us.
