Employee Benefits in Malta

Who Is Entitled to Employee Benefits In Malta

In Malta, employee benefits primarily apply to individuals employed under a contract of service, whether full time or part time, on an indefinite or fixed-term basis. As soon as someone qualifies as an employee under the Employment and Industrial Relations Act and is registered with Jobsplus and the Commissioner for Revenue, they are covered by the core statutory framework on working time, leave, public holidays, and social security.

Entitlements may vary according to working hours, sectoral rules, and length of service. Full-time employees receive the full package of statutory leave and public holiday rights, while part-time employees receive most benefits on a pro-rata basis according to their weekly hours. Fixed-term employees are generally entitled to the same benefits as comparable indefinite employees. Contractors engaged under a genuine contract for services are not typically covered by employee benefits law, but misclassification is closely scrutinised, and individuals who are economically dependent and subordinated may be reclassified as employees, making them retroactively entitled to benefits.

Overview of Employee Benefits In Malta

Employee benefits in Malta are relatively robust by global standards, reflecting both EU minimums and local practices that favour strong leave and social protection. Benefits play a central role in workplace culture, where work–life balance, family support, and job security are highly valued, and international employers are expected to respect and often exceed statutory minima.

Mandatory Employee Benefits In Malta

Mandatory benefits are legally required and form the core of any employee benefits package in Malta. Here's a comprehensive list of mandatory benefits in Malta:

Statutory Annual Leave

Your company must provide a minimum amount of paid annual leave to employees, set in hours per year and aligned with a standard 40‑hour week. The baseline entitlement is generally equivalent to at least four weeks of paid annual leave per year, with an additional allocation tied to national public holidays that fall on weekends; the government may publish exact hour entitlements periodically, so you should verify the current figure when planning policies. Part-time employees accrue leave pro rata based on their normal working hours.

Annual leave accrues over the year and is usually scheduled by mutual agreement, with employers required to keep leave records. You may set rules about carryover and shutdown periods in compliance with the law and any applicable Wage Regulation Orders. You cannot substitute cash for annual leave except on termination, and you must not penalise employees for taking their entitled leave.

Public Holidays and Compensation When Worked

Employees in Malta are entitled to paid leave on official public holidays recognised in Maltese law. When a public holiday falls on a normal workday, full-time employees receive their normal pay for the day off, and part-time employees are compensated on a pro-rata basis. Where business needs require work on a public holiday, the employee is generally entitled to additional compensation or time off in lieu, as provided by legislation and any sectoral Wage Regulation Order.

Your company must keep accurate records of hours worked on public holidays and how compensation or time off in lieu is granted. These records are important for compliance in case of inspections or disputes and help you demonstrate that employees receive at least the statutory minimum rest and pay.

Maternity Leave and Maternity Benefits

Pregnant employees are entitled to a period of maternity leave that meets or exceeds EU standards, currently at least 18 weeks, with a compulsory portion taken after childbirth. A set number of weeks are paid by the employer at full pay, while the remaining weeks are typically covered by maternity benefits paid through the social security system, subject to eligibility criteria such as contribution history. During maternity leave, the employee’s employment relationship continues, and they are protected against dismissal on grounds related to pregnancy or maternity.

To access maternity leave and benefits, the employee normally provides medical certification of pregnancy and expected due date, along with any documentation required by the Department of Social Security. Your company must maintain the employee’s position or an equivalent role and ensure that seniority and other rights continue to accrue as required by law.

Paternity Leave, Parental Leave, and Other Family-Related Leave

Following EU directives, Malta provides specific leave rights for fathers or second parents, as well as broader parental leave for caregiving. Paternity or birth leave gives fathers or equivalent second parents a short, defined period of leave around the birth or adoption of a child, with protection against dismissal and adverse treatment for using this entitlement. Parental leave offers parents of young children the right to take time off work, which may be paid or unpaid depending on the specific scheme and period, and may be taken in blocks or part-time arrangements.

Employees may need to provide birth certificates or adoption documentation and comply with notice requirements. Your company should have transparent policies explaining eligibility, pay levels if any, how to apply, and how parental leave interacts with other forms of leave. This is critical for ensuring compliance and avoiding discrimination claims, especially in relation to gender equality.

Carers’ Leave and Force Majeure Leave

Carers’ leave allows employees to take time off to provide personal care or support to relatives or persons living in the same household who require significant care due to serious medical reasons. This entitlement is derived from EU work–life balance measures and implemented in Maltese law, often as unpaid or partially paid leave, with defined annual limits. Force majeure leave provides time off for urgent family reasons, such as serious illness or accidents, where the employee’s immediate presence is indispensable.

Employees may be required to provide basic evidence, such as medical certificates or hospital documentation, particularly for extended or repeated requests. Your company should make clear in internal policies how carers’ and force majeure leave are requested, what proof is needed, and how these entitlements co-exist with sick leave or parental leave.

Sick Leave and State Sickness Benefits

Employees in Malta are entitled to sick leave when they are unable to work due to illness or injury. The specific amount of paid sick leave that an employer must provide may be governed by general law and by sector-specific Wage Regulation Orders, which often stipulate a minimum number of paid sick days or weeks per year. For longer-term incapacity, employees may qualify for sickness benefits or injury benefits through the social security system, which provide income replacement based on contribution history and medical certification.

Employees must usually notify the employer as soon as possible and provide a medical certificate from a registered practitioner to qualify for paid sick leave. Your company should keep records of sick leave used, certificates provided, and any coordination with state sickness benefits, especially where you top up state benefits to full salary. This supports legal compliance and helps you manage absence consistently.

Social Security Contributions and State Pension Coverage

Malta operates a contributory social security system that funds the state pension, sickness and injury benefits, maternity benefits, unemployment, and other social protections. Both employer and employee must pay social security contributions on insurable earnings at rates set periodically by law, with different classes for employed and self-employed persons. Contributions are usually withheld through payroll and remitted with income tax via the Commissioner for Revenue.

As an employer, you are responsible for registering employees, calculating and withholding the correct contribution amounts, and submitting payments and reports on time. Contributions help build entitlements to state pensions and other benefits, so they are a central part of the overall benefits package even though they are statutory obligations. Failure to comply can result in arrears, interest, and penalties.

Occupational Health and Safety Protections

Maltese law requires employers to safeguard the health and safety of employees at work, in line with EU health and safety directives. This includes risk assessments, provision and maintenance of safe equipment and workplaces, training and information, personal protective equipment where necessary, and measures to prevent work-related accidents and occupational diseases. These protections function as a core benefit because they directly impact employees’ physical and mental wellbeing.

Your company must document its risk assessments, safety policies, training records, and accident reporting procedures. Inspections may be carried out by the Occupational Health and Safety Authority, and non-compliance can lead to fines, improvement notices, or stop-work orders, as well as civil liability if employees are harmed.

Written Statement of Employment Conditions

Employers in Malta must provide employees with a written statement or contract setting out key terms and conditions of employment, such as job title, working hours, pay, leave entitlements, and notice rules. This obligation reflects EU rules on transparent and predictable working conditions and ensures employees understand their benefit entitlements from the outset. The statement must be provided within defined time limits after employment commences.

Providing a clear, compliant contract helps prevent disputes and builds trust with employees. When you hire in Malta, you should ensure that your contract templates include all mandatory information, correctly reflect statutory rights, and are updated when legislation or company policies change.

Protection from Discrimination and Dismissal Related to Benefit Use

Maltese and EU law protect employees from discrimination and victimisation when exercising their legal rights to benefits such as maternity leave, parental leave, sick leave, or working time limits. You cannot dismiss, demote, or otherwise penalise an employee because they have taken or requested statutory leave or raised a complaint about benefits. This protection is not a benefit in the traditional sense, but it is essential to the effective use of benefits without fear.

Your company should implement fair procedures, keep decisions well documented, and train managers on equal treatment obligations. This reduces legal risk and supports a culture where employees feel safe to use the benefits to which they are legally entitled.

Supplemental Employee Benefits In Malta

Supplemental benefits are not required by law, but can help you stand out as an employer and attract top talent. They include:

Private Health and Dental Insurance

While Maltese residents have access to public healthcare, many employers provide private health insurance to reduce waiting times, widen provider choice, and support faster return to work after illness. Coverage commonly includes inpatient and outpatient care, diagnostic tests, and sometimes dental and optical benefits. This is especially attractive for international talent who may be unfamiliar with the local public system.

Your company can offer individual or group policies, often with tiered coverage levels depending on seniority or job family. Premiums are usually partly or fully employer-funded, and some employers also extend coverage to dependants. Clear communication on what is covered, pre-authorisation rules, and claims processes helps employees make the most of this benefit.

Supplementary Pension or Retirement Savings Plans

Alongside the state pension funded through social security, employers increasingly offer voluntary occupational pension schemes or retirement savings plans. These can take the form of defined-contribution plans or group personal pension arrangements, where the employer contributes a set percentage of salary and may encourage or match employee contributions. This helps employees build additional retirement security beyond the state system.

Offering a retirement plan can be a powerful differentiator in Malta’s competitive labour market, particularly for mid-career and senior professionals. You should work with licensed providers to design a compliant scheme, document eligibility and vesting rules, and communicate clearly about contribution levels, investment options, and portability if employees leave the company.

Performance and Retention Bonuses

Bonuses are a common supplemental benefit used to reward individual, team, or company performance and to retain key talent. In Malta’s tech, gaming, and financial sectors, you will see a mix of annual performance bonuses, sign-on bonuses, retention payments, and discretionary spot awards. These payments are typically treated as taxable income and subject to social security contributions, but they can significantly enhance the perceived value of the overall package.

Your company should define objective criteria for bonus eligibility and calculation, such as revenue metrics, performance ratings, or project milestones. Including bonus terms in the employment contract or a separate bonus policy reduces ambiguity and supports fairness and transparency.

Flexible and Remote Working Arrangements

Although not strictly classified as a “benefit” in law, flexible and remote work options are now a major part of the value proposition for employees in Malta. Employers may offer options such as hybrid work, fully remote roles where feasible, flexible start and end times, compressed weeks, or part-time arrangements beyond statutory rights. These arrangements can help employees manage family commitments, reduce commuting time, and support wellbeing.

For your company, flexible work can expand the talent pool, especially if you hire internationally into Maltese entities, and can reduce office space costs. You will need clear policies on eligibility, expectations, working hours tracking, equipment provision, and health and safety for remote workers, as well as data protection when employees work from home or abroad.

Professional Development and Training Budgets

Many employers in Malta offer structured training, education allowances, or sponsorship for professional certifications. This is especially prevalent in regulated sectors like financial services, iGaming, and aviation, where continuing professional development is critical. Support may include covering course fees, exam costs, study leave, or access to online learning platforms.

Investing in skills development benefits both employee and employer by enhancing capability, engagement, and internal mobility. You should outline eligibility criteria, budget limits, and any repayment obligations if an employee leaves shortly after funded training, making sure these conditions are clearly captured in policies or agreements.

Meal, Transport, and Cost-of-Living Allowances

In Malta’s urban centres, some employers offer allowances or benefits to help with everyday costs. These can include meal vouchers, subsidised canteens, transport allowances, company shuttle services, or general cost-of-living stipends. They can be structured as fixed monthly allowances, per-diem payments for travel days, or vouchers with participating vendors.

Such benefits can be particularly valued by employees who commute long distances or work shifts that make meal planning more difficult. You should consider the tax treatment of allowances and benefits in kind and design them in a way that is administratively simple and compliant with Maltese tax rules.

Wellbeing and Employee Assistance Programmes

Wellbeing initiatives and Employee Assistance Programmes are increasingly common in Malta, especially among international employers. These programmes may include confidential counselling services, mental health support, wellbeing workshops, fitness subsidies, or access to mindfulness and stress-management tools. Their goal is to support employees’ mental and emotional health and to reduce absenteeism and burnout.

Your company can contract with EAP providers or integrate wellbeing tools into broader HR offerings. Communication and confidentiality are key; employees need to trust that using these services will not negatively affect their career prospects or privacy.

Tax Implications of Employee Benefits in Malta

How Employee Benefits Are Taxed for Employees

In Malta, most cash benefits and many non-cash benefits provided by employers are treated as taxable income in the hands of the employee. Salary, bonuses, allowances, and many benefits in kind are subject to Pay-As-You-Earn income tax and social security contributions, which your company withholds through payroll. The taxable value of benefits in kind, such as company cars, private health insurance, or housing, is typically determined according to guidelines issued by the Commissioner for Revenue, which set out valuation rules and any exemptions or thresholds.

Certain statutory benefits paid directly by the state, such as social security sickness benefits or maternity benefits, are taxed according to specific rules set in social security and tax legislation. Employees should be informed that additional perks may increase their taxable income and social security contributions, although the practical value of these benefits often outweighs the tax impact.

How Employee Benefits Are Treated for Employers

For employers, most costs of providing employee benefits are generally deductible as business expenses for corporate income tax purposes, provided they are incurred wholly and exclusively in the production of the company’s income. This typically includes employer social security contributions, payroll costs, and many supplemental benefits like health insurance, training, and pension contributions, subject to Maltese tax rules and any specific limitations.

However, where benefits have a mixed business and personal element, such as entertainment, vehicles, or accommodation, deductibility and VAT treatment may be restricted or subject to special rules. You should consult local tax advisors to structure benefit packages in a way that is tax-efficient and compliant, and to manage documentation and substantiation requirements.

Tax Advantages and Planning Opportunities

Malta sometimes offers specific incentives or favourable treatment for certain types of benefits or schemes, such as voluntary occupational pension plans or training expenses, to encourage long-term savings and skills development. While you should not design benefits solely for tax reasons, aligning your benefits strategy with available incentives can improve cost-effectiveness. For example, employer contributions to registered pension schemes may enjoy particular tax advantages within prescribed limits.

Planning opportunities can also arise from choosing between cash allowances and benefits in kind, structuring variable pay, and deciding how to fund professional development. The details change over time, so regular consultation with Maltese tax professionals is recommended to ensure that your benefits remain optimally structured and compliant.

Required Documentation for Tax Compliance

To stay compliant, your company must maintain accurate and up-to-date payroll records showing salaries, bonuses, allowances, benefits in kind, employee and employer social security contributions, and PAYE tax withheld. You should retain invoices and contracts for benefits such as insurance policies, pension schemes, and training providers, as well as internal policies explaining how benefits are calculated and allocated.

These records support regular filings with the Commissioner for Revenue and the social security authorities and are critical in the event of an audit or enquiry. Good documentation also underpins transparent communication with employees about their taxable benefits and helps resolve queries quickly.

Legal Considerations for Employee Benefits in Malta

Employee benefits in Malta are primarily governed by the Employment and Industrial Relations Act, sector-specific Wage Regulation Orders, health and safety legislation, and social security and tax laws, all of which operate within an EU law context. These rules collectively cover working time, leave entitlements, equal treatment, social security coverage, and transparency of employment conditions. Any collective agreements or company-level policies you adopt must at least match, and often may improve upon, statutory minima.

Penalties for non-compliance can include administrative fines, orders to pay arrears of wages or benefits, reinstatement or compensation in unfair dismissal cases, and, in serious health and safety breaches, potential criminal liability. Authorities such as the Department of Industrial and Employment Relations, the Occupational Health and Safety Authority, and the Commissioner for Revenue have powers to inspect, request documents, and investigate complaints. Employees and unions can bring claims before the Industrial Tribunal or the courts, which can lead to financial and reputational damage.

Given this environment, your company should regularly review and audit its employment contracts, handbooks, and payroll processes at least annually or when laws change. Monitoring EU-level developments that affect Maltese law, such as new work–life balance or transparency directives, is also essential. Training HR staff and managers on local rules, documenting decisions, and seeking timely local legal advice when implementing or changing benefits will help ensure compliance and reduce risk.

How Benefits Impact Employee Cost

The total cost of employing staff in Malta goes beyond base salary to include employer social security contributions, paid leave, and any supplemental benefits you choose to offer. Employer social security contributions can add a significant percentage to gross pay, and when you factor in paid annual leave, public holidays, and statutory family and sick leave, your effective cost per working hour increases compared with nominal salary alone. Adding private health insurance, pension contributions, bonuses, and allowances can further increase total compensation, but these elements are often necessary to compete in high-demand talent markets.

Cost management strategies typically include designing tiered benefit packages by role or level, focusing on benefits with high perceived value but moderate cost, and periodically reviewing utilisation to adjust offerings. When designed well, benefits can deliver strong return on investment through higher retention, reduced absenteeism, faster hiring, and better engagement and productivity. Careful forecasting and benchmarking against local market practices will help your company strike the right balance between competitiveness and sustainability.