Understanding Employment Law
Introduction
One of the most fundamental aspects of any employment relationship is the wage – the agreed remuneration that reflects the value of an employee’s work. In Malta, the Employment and Industrial Relations Act (Chapter 452 of the Laws of Malta) provides a robust framework that governs the payment and protection of wages, setting out clear rules on what wages include, how they must be paid, and the safeguards employees are entitled to.
Defining Wages under Maltese Law
In accordance with the definition of wages under EIRA, it is established that wages go beyond just a basic salary. They may also include bonuses or other earnings, provided these fall within the scope of the law.
The EIRA also establishes important protections to guarantee employees are paid fairly and transparently. These include:
Form of Payment: Under Article 11, wages must be paid in money, specifically legal tender in Malta. Any contract providing payment in goods or services is null and void.
Direct Payment: Article 13 requires wages to be paid directly to the employee, except where a legal maintenance order applies. This safeguards the employee’s control over their earnings.
Regular Payment Intervals: According to Article 22, wages must be paid regularly, not more than four weeks in arrears, unless a collective agreement states otherwise. The employment contract must specify the payment frequency.
Payslips and Transparency: Employees must receive a detailed payslip with each payment, showing basic pay, overtime, bonuses, and deductions such as tax and social security. Payslips promote transparency and accountability.
Deductions and Bonuses: The Act regulates when deductions are allowed and how bonuses are treated, ensuring employees are not unfairly deprived of their earnings.
Minimum Wage in Malta
Beyond the general right to wage, Maltese law also guarantees that every employee is entitled to at least the national minimum wage, acting as a safeguard against exploitation and ensuring a basic standard of living.
The national minimum wage varies depending on an employee’s age and experience. As at January 2026, the minimum wage is as follows:
- Workers aged 18 and over (2025): €229.44 per week
- Workers aged 17: €222.66 per week;
- Workers under 17: €219.82 per week;
- Apprentices and trainees: Lower, legally prescribed rates apply depending on the programme.
If an employer is found to be paying below the minimum wage, they may be ordered to back-pay any outstanding wages with interest, and may face further penalties.
Statutory Bonuses and Additional Benefits
In addition to wages, Maltese law provides for statutory bonuses, which employers are obliged to pay. Unlike performance-related bonuses, statutory bonuses are fixed amounts that must be paid to employees at specific times of the year. The law clearly sets out the timing:
- The first statutory bonus is to be paid between the 15th and 30th of June;
- The second statutory bonus is to be paid between the 15th and 23rd of December.
- Importantly, statutory bonuses are in addition to the agreed wage in the employment contract.
Beyond statutory bonuses, employees may also be entitled to other forms of bonuses or benefits under the terms of their individual employment contracts. These may include:
- Performance bonuses, rewarding productivity or achieving targets;
- Incentives, such as sales commissions or attendance bonuses;
- Benefits in kind, like allowances, vouchers, or other perks agreed upon in writing.
The distinction is important: statutory bonuses are non-negotiable and mandatory, while contractual or performance-based bonuses are supplementary, depending on the agreement between employer and employee.
Wage Deductions: What the Law Permits and Prohibits
While the law safeguards employees’ right to receive their full wages, it also recognises that certain limited circumstances may justify wage deductions. To strike a balance, the EIRA places strict restrictions on when and how deductions can be made.
Generally, employers are not permitted to reduce an employee’s wages through discounts, interest, or similar charges. The only automatic deductions allowed by law are income tax and social security contributions payable to the Government of Malta.
Despite the general prohibition, there are a number of situations in which wage deductions may be lawful:
- Legal Provisions or Court Orders;
- Agreements between the Employer and Employee as long as they Involve Trade Unions/Employee Representatives or are otherwise authorised by the DIER;
- Employee’s Written Request (for example, an employee may request salary deductions to contribute to a retirement savings fund);
- Approved Fines in Employment Contracts, so long as these are pre-approved by the DIER;
- Suspension from Work.
These provisions protect employees from arbitrary or unfair wage reductions, while still allowing limited flexibility in situations where deductions are legitimate, consensual, or legally required.
Remedies for Unpaid Wages
Even with strong legal protections in place, situations may arise where employees are not paid their wages on time. Maltese law provides clear remedies to safeguard workers in such cases, ensuring that employees can recover what is rightfully owed to them. If an employee is not paid as agreed, the employee must first raise the issue directly with the employer. If the problem persists, the employee may escalate the matter by reporting it to the Department of Industrial and Employment Relations (DIER), which can take action to enforce payment. Importantly, unpaid wages are given the status of privileged debts. This means employees have a priority claim against their employer’s assets, ranking above most other debts. However, this privileged claim is capped:
- It covers up to three months’ wages, and
- It cannot exceed the national minimum wage applicable at the time, calculated over a six-month period.
- The Guarantee Fund: Protection in Case of Insolvency
- When an employer becomes insolvent, employees are further protected by the Guarantee Fund,. This fund, administered by the Guarantee Fund Administration Board, ensures that employees can still recover unpaid wages if their employer is unable to pay.
- To make a valid claim, employees must submit an application within two months from the onset of insolvency of the employer.
- Employees can claim for:
- Unpaid basic wages for the relevant period;
- Unpaid overtime;
- Arrears of leave entitlement for the current and previous calendar year;
- Notice money, as provided by law.
However, claims may only cover wages payable within the six months prior to the employer’s insolvency or termination of employment. In addition, payments from the Fund are capped at the equivalent of 13 weeks’ national minimum wage applicable at the time of termination.
Conclusion
The payment of wages is not just a contractual obligation – it is one of the most fundamental rights of every employee. Maltese law recognises this by putting in place strong protections to ensure that wages are not only paid in full, but also in a manner that is fair, transparent, and timely. From minimum wage guarantees to statutory bonuses, from restrictions on unlawful deductions to remedies in cases of non-payment or insolvency, the law provides employees with multiple layers of security.
By safeguarding wages, Maltese legislation ensures a balanced employment relationship where both parties know their rights and obligations. For employees, this awareness empowers them to claim what is due. For employers, it underscores the value of integrity and responsibility in business practices.
This article is for information purposes only and should not be construed as legal advice. The information provided reflects the law as it stands on the blog’s publishing date. For the most updated version or advice tailored to your specific circumstances, you are strongly encouraged to consult a lawyer.
Article and research done by Ms Caitlin Turner, LL.B. (Hons) (Melit.), currently reading a Master of Advocacy at University of Malta.
Sciberras Advocates founded by Dr Adrian Sciberras, is a law firm based in Malta. The firm prides itself to be multi-disciplinary, innovative and flexible in order to meet the changing times and any challenges in the local and international legal scenario. No matter what private or corporate complex demands are called for, Sciberras Advocates offers practical and cost-effective legal solutions to achieve your desired results. You may reach Sciberras Advocates by phone on +35627795222 or via email on [email protected].
