Recent developments in employment matters

Deloitte Malta Tax News

08 February 2019

Recent developments in employment matters

A number of legal notices published towards the end of 2018, introduced some important developments in connection with employment law matters.

The amendments relate to itemised payslips, annual leave entitlement and the organisation of working time. Changes shall come into effect as of the 1st January 2019.

The national minimum wage and the Cost of Living Allowance (‘COLA’) were also adjusted for 2019.

1. Obligation to issue itemised payslips

Employers shall be required to issue an itemised payslip to their employees, on or before the date of payment of wages.

The following information shall be included:

  • Details of the employer and employee (i.e. name, address and designation)
  • Total wages paid
  • Breakdown of the wages paid (i.e. basic wage and a breakdown of any bonuses, allowances or commissions etc. received)
  • The period to which the payment relates
  • The number of hours worked including any hours worked at overtime or special rate (if any)
  • The number of hours of annual leave availed of, and any remaining balance
  • Any deductions including national insurance contributions and tax payments

While the employer is not required to include the number of hours of sick leave availed of during the calendar year, the employee has the right to request this information, up to a maximum of 4 times a year. The information should be provided to the employee in writing, within 5 working days from the date of the request.

Failure to issue a payslip in terms of these regulations can result in a fine ranging between € 500 and € 1,165.

2. Annual leave entitlement

The annual leave entitlement of an employee working on a full time basis (i.e. a 40 hour working week) shall be increased by an additional 8 hours to reach 208 hours for 2019.

3. Organisation of Working time - shutdown

As of the 1st January 2019, unless otherwise agreed upon, the employer may only use up to the equivalent in hours of 12 working days for shutdown purposes.

Shutdowns and any other temporary closure must be communicated to all the employees by the end of January of the calendar year concerned.

4. Minimum wage

The national minimum wage calculated on a weekly basis for 2019 shall be as follows:

  • 18 and over – € 175.84
  • 17 – € 169.06
  • Under 17 – € 166.22

Part-time employees shall be entitled to the applicable pro-rata amount.

It should be noted that in terms of Legal Notice 144 of 2017, National Minimum Wage (Amendment) National Standard Order, employees who are paid the weekly minimum wage shall be entitled to an increase of € 3 per week upon the start of the second year of employment. The wage shall be topped up by a further € 3 per week (for a total of € 6 per week on top of the weekly minimum wage) upon the start of the third year of employment.

5. Cost of Living increase

The cost of living increase for full time employees shall be of € 2.33 per week. Weekly wages shall also increase by a further € 1 per week as a mandatory supplement. Employees shall therefore receive a total of € 3.33 per week, unless otherwise provided for in terms of a collective agreement.


Other recent changes related to employment matters

1. FSS online submission

Employers submitting more than 9 annual FS3s are required to submit all FSS forms online, as from the 15th February 2019.

Smaller employers who submit less than 9 FS3s annually may continue to submit FSS documentation manually.

2. Closure of IRD cash office

As of the 1st September 2018, tax payments are to be made online or at any MaltaPost branch in Malta and Gozo.

3. Amendment to the fringe benefits rules (2017)

The Fringe Benefits Rules were amended in late 2017 to bring the regulations up to date with revenue practice and guidance.

Among the more notable changes are the following:

  • A sourcing rule was introduced to confirm that a benefit is deemed to arise in the country where the services in terms of the relevant contract of employment or office are wholly or principally performed;
  • The private use of a van by an employee will not constitute a fringe benefit;
  • Accommodation provided to a shareholder in a property owned by the company shall not constitute a fringe benefit provided that a number of conditions are satisfied;
  • The benchmark rate to determine the value of the benefit for loans granted to employees at beneficial terms has been reduced from 8.5% to 6.5%. The value of the benefit remains the difference between the benchmark rate and the interest paid.
  • Share options shall be taxed at a flat rate of 15%. A new FS3 form has been issued to provide for this amendment.

Relocation costs have been added to the list of exempt fringe benefits, under certain terms and conditions.

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