How to Hire Remote Employees In 

Malta

The Basics

Currency
Euro (EUR)
Employer Taxes
10%
Payroll Frequency
Monthly
Official Language
Maltese, English

Employment in 

Malta

Hire Independent Contractors

Independent contractors or freelancers are self-employed individuals who provide services to companies as a non-employee. This is one of the most common ways companies tend to hire non-local designers, engineers, support reps, etc.

For legal and tax purposes, independent contractors are not classified as employees. They may work for multiple clients, set their own work hours, negotiate their pay rate, and decide how a job gets done.

For example, the IRS says that if an independent contractor or freelancer does work that can be controlled (what will be done and how it will be done) by an employer then they are, in fact, classified as an employee.

As you can imagine, hiring someone as an independent contractor versus an employee is a fine line to tread.

While there are benefits when you choose the contractor route, there are quite a few drawbacks to consider and you’ll need to weigh them carefully to determine the best fit for your company.

Benefits of Hiring Independent Contractors
Reduced overhead: Lower cost in expenses, payroll, benefits, and more.
Greater flexibility: Contractors can be brought on as-needed. If not a good fit, you simply don’t have to move forward with the contract.
Reduced legal risk: Contractors aren’t usually protected by employment anti-discrimination and workplace safety laws.
Disadvantages of Hiring Independent Contractors
Risk of Misclassification: Not only does this deny workers their proper protections, it can also result in steep penalties and damage to your company. If the IRS determines that employee misclassification has occurred, you will be liable for a percentage of the employees wages, FICA contributions, penalty fines, unpaid taxes, up to a year in prison, and more.
Lack of Control: Contractors are drawn to being independent because it gives them greater control over the work they perform and who they work with. Because they’re not employees, you can’t tell them what to work on and how it should be done.
Lack of Loyalty: Contractors come and go as-needed. Many companies hire contractors for short-term work, which makes it difficult to cultivate loyalty.
Increased Scrutiny: Using Independent Contractors typically leads to an increased risk of being audited.

Set up a subsidiary in 

Malta

A foreign subsidiary is a company that operates overseas as part of a larger company who’s HQ is in another country.

Establishing a foreign entity is great for having an international presence and accessing new markets. Though, setting up a subsidiary in Malta can be expensive, stressful, and time-consuming. It's not for the faint of heart.

To set up a subsidiary in Malta, you have to:

  1. Register your business name and file articles of incorporation
  2. File for local bank accounts
  3. Learn and keep track of the local employment laws
  4. Set up local payroll
  5. Hire local accounting, legal, and HR people

If you're lucky, this process can take months. If you're not so lucky, it can take up to a year. And on average, it costs about $50k-$80k, all-in-all, to get setup. And that's just for Malta.

Use an Employer-of-Record (EOR)

An employer-of-record (EOR) is a company that hires and pays an employee on behalf of another company.

An EOR is typically used to overcome the financial and regulatory hurdles that often come with employing remote workers.

Each country has its own payroll, employment, and work permit requirements for non-resident companies doing business in their jurisdiction. Meeting those demands can be a huge obstacle when it comes to hiring remotely.

At Panther, we help companies employ and pay people in over 160 countries, without having to set up a foreign subsidiary. Payroll, benefits, taxes, compliance, and more are all handled by us, at a fraction of the cost.

Outside of saving you months and tens of thousands of dollars, other advantages of using Panther are:

  • Ability to attract talented and motivated employees from all over the world.
  • Full legal compliance: There is no risk of violating local employment laws.
  • Transparency: Employees are still your employees. All the work, processes, operations and day-to-day business belong to you, the company, just like with any other employee. Panther just takes on all of the responsibilities, obligations and admin work related to your team's employment.
  • No risk of misclassification

Because you no longer have to set up your own subsidiary, you’ll save a ton of time and tens of thousands of dollars using Panther.

Paying Remote Employees

Paying employees in Malta is not the same as paying workers in your own country. Employees have to be paid using Malta’s employment and payroll standards.

This means that you have to know, understand, and keep up with 1) fluctuating currency changes, and 2) local payroll and tax laws in the countries you’re looking to hire in.

Outside of the laws and regulations around payroll, there may be different conditions surrounding leave, overtime, termination, and more. As you can imagine, maintaining this kind of regulatory knowledge can be challenging. But it is crucial and necessary to follow local legislation.

After, you’ll have to determine the best way to pay your international employees. This can be done in a number of ways, including but not limited to:

Pay through a local entity

One of the most challenging (and expensive) parts of paying international employees is setting up the infrastructure to do so.

Before you start to run payroll, you have to register your company as the local employer in the country the worker resides in. As you can see in the “Set up a subsidiary” section, this is a multi-step process that can take up to a year and put you on your way to bankruptcy.

Work with an EOR

Outside of EORs acting as the full admin employer, many also provide remote payroll.

For example, at Panther, in just 1-click, you’re able to pay your entire global team, anywhere in the world. We send you an invoice each month, charge you in US Dollars, and pay your employees the same amount in their local currency.

We factor in currency fluctuations and use the mid-market rate plus any applicable fee passed on by our provider at cost at the time of billing.

Malta

 Specific Information

Working Hours

A standard full-time work week is 40 hours or 8 hours per day.

Overtime

Overtime is regulated by the Wage Regulation Order (WRO) which outlines different overtime rules by industry.

If an employee is not covered by the WRO, overtime is 150% of the regular pay rate of work over 40 hours per week and averaged over 4 weeks.

Payroll Tax

Employer

Employer

  • Social Security. A flat rate of 48.05 EUR is added for annual income over 24,986 EUR.

Minimum Wage

Malta minimum wage policy is 181.08 EUR a week for employees over the age of 18.

Payroll

Pay Cycle

Salaries are paid every 4 weeks on regular payment schedules.

13th Salary

Not required.

Leave

Paid Time Off (PTO)

PTO is calculated by the:

  • If an employee has completed 1 year of full-time employment, they are entitled to 192hrs basic leave entitlement plus 24 hours in lieu of the 3 Public Holidays that fall on weekends.
  • An employee can carry over up to 50% of their paid leave to the following year, so long as there is an agreement with the employer.

Public Holidays

There are 14 public holidays.

Sick Days

The duration of sick leave entitlement provided to workers is dependent on how long they have been employed by their employer:

  • Sick leave is regulated under the Wage Regulation Order (WRO).
  • In cases where an employee is not covered by the WRO, the benefit is 2 weeks paid sick leave per year.
  • After the 2 weeks, an employee may be entitled to a sickness benefit through Social Security.
  • A medical certificate must be provided to use sick leave.

Maternity Leave

Maternity leave in Malta is 18 weeks and starts 4 weeks before the expected due date. At least 6 weeks after the birth must be taken.

The employer is responsible for paying 100% of wages for the first 14 weeks.

Paternity Leave

There are no provisions in the law regarding paternity leave.

Parental Leave

Parents are entitled to 4 months paid leave for the birth of a child, adoption, fostering, or general care until the child reaches the age of 8.

To be eligible, the employee must have been employed for at least 12 consecutive months.

Other Leave

None.

Marriage Leave

In Malta, 1 working day for employees not covered by the Wage Regulation Order.

Bereavement Leave

2 working days for employees not covered by the Wage Regulation Order.

Termination

Termination Process

In Malta, an employee can be terminated for just cause, redundancy, or due to reaching the age of retirement.

If requested by an employee who has completed at least 1 month of employment, the employer is obligated to provide an employment certificate stating dates employed and a description of duties.  If the employee requests, the reason for termination must also be included.

Notice Period

The notice period in Malta is:

  • Less than 1 month of employment – No notice required
  • 1- 6 months employment- 1-week notice
  • 6 months- 2 years of employment- 2 weeks’ notice
  • 2-4 years of employment- 4 weeks’ notice
  • 4-7 years of employment- 8 weeks’ notice
  • 7-8 years of employment- 9 weeks’ notice
  • 8-9 years of employment- 10 weeks’ notice
  • 9-10 years of employment- 11 weeks’ notice
  • 10+ years of employment- 12 weeks’ notice

It is possible to pay the employee in lieu of notice. However, if an employee is on notice and chooses not to work during this period or resigns without giving notice, they are obligated to pay the employer 50% of the wages that would have been earned during the notice period.

Severance Pay

There are no statutory laws on severance pay.

Probation Period

The probation period is 12 months. During this time, an employee may be dismissed with 1 weeks’ notice if they have completed at least 1 month of employment.

An employee and employer can agree on a shorter probation period; however, the agreement is binding and must be upheld.