Employer of Record in Malta

Expanding your team into Malta offers access to a skilled workforce and a strategic European location. However, establishing a local entity can be a complex and time-consuming process, requiring significant investment in understanding local labor laws, payroll, and compliance regulations. Navigating these requirements can be a barrier for companies looking to quickly and efficiently hire talent in the country.

For companies considering hiring in Malta in 2025, there are several pathways to engage local talent, each with its own considerations regarding legal obligations and operational overhead.

Hiring Options in Malta

• Establishing a Local Entity: This involves setting up a subsidiary or branch office in Malta, which requires registration with local authorities, obtaining necessary licenses, and handling all aspects of payroll, tax, and HR compliance internally.
• Utilizing an Employer of Record (EOR): Partnering with an EOR service like Rivermate allows you to hire employees in Malta without establishing your own legal entity. The EOR acts as the legal employer, managing all local employment responsibilities.
• Hiring Independent Contractors: Engaging individuals as independent contractors offers flexibility, but it's crucial to ensure compliance with Maltese classification rules to avoid misclassification risks, which can lead to significant penalties.

How an EOR Works in Malta

An Employer of Record (EOR) service simplifies international hiring by taking on the legal and administrative burdens of employment. In Malta, an EOR handles critical functions, allowing your company to focus on managing your remote team. Specifically, the EOR takes care of:

• Legal Employment: Serves as the legal employer for your Maltese workforce.
• Payroll Processing: Manages local payroll, including salary disbursements, tax withholdings, and social security contributions.
• Tax and Social Security Compliance: Ensures adherence to all Maltese tax laws and social security regulations.
• Benefits Administration: Administers local employee benefits, such as health insurance, pension contributions, and leave entitlements, in line with Maltese standards.
• HR and Labor Law Compliance: Drafts compliant employment contracts, manages termination processes, and ensures all HR practices align with Maltese labor laws.

Benefits of Using an EOR in Malta

Engaging an EOR service provides a streamlined and compliant solution for companies looking to expand their presence in Malta without the overhead of entity establishment. Key benefits include:

• Rapid Market Entry: Hire employees in Malta quickly, often within days or weeks, without the lengthy process of setting up a local entity.
• Reduced Risk and Compliance: Mitigate the risks associated with navigating complex Maltese labor laws, tax regulations, and payroll compliance.
• Cost Efficiency: Avoid the significant financial and administrative costs involved in establishing and maintaining a local subsidiary.
• Access to Top Talent: Recruit and retain talent across Malta, expanding your reach to a diverse pool of skilled professionals.
• Operational Simplicity: Outsource the complexities of international HR, payroll, and legal compliance, freeing up internal resources.

Rivermate's transparent pricing model eliminates complexity with a single, competitive monthly fee per employee. Unlike traditional PEO providers, our pricing in Malta includes comprehensive HR support, benefits administration, compliance management, and access to our proprietary dashboard for real-time workforce analytics. No hidden costs, no setup fees—just straightforward pricing that scales with your business needs while ensuring full legal compliance in Malta.

Malta's tax system distinguishes residents, taxed on worldwide income, from non-residents, taxed only on Maltese-sourced income. Employers must contribute approximately 10% of employees' gross wages to social security, with both employer and employee contributions capped annually. There are no additional payroll taxes beyond social security and income tax withholding.

Employers are responsible for withholding income tax via the Final Settlement System (FSS), with progressive rates based on income and marital status. Monthly FSS returns are due by the 15th of the following month, and annual reconciliation must be filed. Employees may need to submit an annual tax return by June 30th, claiming deductions such as pension contributions, life insurance, and charitable donations, supported by documentation.

Foreign workers and companies must consider residency rules, tax treaties, and special incentives like Malta's HQP scheme, which offers reduced tax rates for highly qualified professionals. Corporate tax stands at 35%, with exemptions and incentives available, and VAT is levied at 18% on goods and services. Non-compliance can lead to penalties, fines, and interest charges.

Malta's salary landscape in 2025 varies by industry, role, and experience, with typical annual salaries ranging from €22,000 for entry-level manufacturing roles to €70,000+ for senior IT and financial positions. Key salary ranges include:

The statutory minimum wage in 2025 is €835.27/month (€192.73/week) for those 18 and over, with lower rates for younger workers. Employers often supplement base salaries with bonuses such as performance bonuses, 13th and 14th-month payments, and allowances for housing, transportation, meals, and health insurance. Payroll is typically processed monthly via bank transfer, with payslips detailing earnings and deductions.

Salary trends are expected to rise, especially for specialized roles in IT, finance, and gaming, driven by skills shortages and industry growth. Companies should consider inflation, skill demand, and regulatory changes when planning compensation strategies.

Malta's employment laws guarantee various leave entitlements to support employees' well-being and family responsibilities. Full-time employees working 40 hours weekly are entitled to at least 24 days (192 hours) of annual paid leave, with pro-rata adjustments for part-time workers. Leave accrues throughout the year and can typically be carried over with employer agreement. Malta observes 14 public holidays annually, with paid days off; if a holiday falls on a weekend, an additional day is added to annual leave.

Employees are entitled to sick leave, with the first three days typically unpaid unless specified otherwise; longer absences may qualify for government benefits, contingent on social security contributions. Sick leave requires medical certification, and employees must notify employers promptly.

Parental leave includes 14 weeks of maternity leave for women, paid via social security, and 10 days of paid paternity leave for fathers. Adoptive parents generally receive similar benefits, subject to conditions. Additional leave types such as bereavement, study, and sabbatical are available but vary by employer policies.

Malta's employee benefits in 2025 are governed by legal requirements and market practices. Mandatory benefits include a minimum wage of €835.52/month for employees over 18, 25 days of annual vacation, sick leave (covered by social security), 14 weeks of fully paid maternity leave, 10 days of fully paid paternity leave, 14 public holidays, and social security contributions from both employer and employee. Employees are also entitled to termination notice and severance pay based on service duration.

Employers often enhance compensation with optional benefits such as private health insurance, occupational pension schemes, life and disability insurance, company cars, mobile allowances, training, flexible working, and Employee Assistance Programs. Private health insurance covers inpatient/outpatient care, with costs and tax implications varying. Occupational pensions are typically defined contribution plans, offering tax benefits and compliance with regulations.

Benefit offerings vary by industry and company size, with financial services and gaming sectors providing comprehensive packages, including health, retirement, and perks. Tech firms focus on flexible work and development, while SMEs may offer basic mandatory benefits with select extras. Large corporations tend to have broader, more attractive benefits programs.

Employment agreements in Malta are essential for defining the employer-employee relationship, ensuring legal compliance under the Employment and Industrial Relations Act. They must specify key elements such as parties involved, job role, start date, work location, hours, remuneration, leave entitlements, termination procedures, and references to collective agreements if applicable. These contracts help prevent disputes and promote transparency.

Malta recognizes two main contract types: fixed-term, which automatically ends on a specified date and may be renewed, and indefinite, which provides ongoing employment until terminated with valid reasons and notice periods. Probation periods typically last six months, during which employment can be terminated with shorter notice, and clauses on confidentiality and non-compete are common, with enforceability depending on reasonableness and compensation.

Contract modifications must be in writing and mutually agreed. Termination requires valid reasons, adherence to notice periods based on service length, and may involve severance pay, especially in redundancy cases. Employers should ensure compliance to avoid legal disputes and maintain positive employment relations.

Malta has become an attractive hub for remote work due to its strategic EU location and expanding digital infrastructure. While there is no specific remote work legislation, existing labor laws apply, requiring clear employment contracts, health and safety measures, adherence to working time regulations, and data protection compliance (notably GDPR). Employers must define remote work terms explicitly and ensure compliance with health, safety, and data security standards.

Flexible arrangements available in Malta include full-time remote work, hybrid models, flextime, compressed workweeks, and job sharing. Key considerations for employers involve establishing policies on equipment provision, expense reimbursement, and home office setup, alongside ensuring reliable internet, effective communication tools, and cybersecurity measures. Data protection remains critical, with protocols for data security, breach management, and staff training.

Overall, Malta offers a flexible, compliant environment for remote work, emphasizing clear policies, data security, and robust technological support for employers aiming to implement or expand remote work arrangements in 2025.

In Malta, employee termination must follow the Employment and Industrial Relations Act (EIRA), emphasizing proper procedures, documentation, and adherence to legal requirements. Notice periods vary based on service length, ranging from no notice for less than 6 months to 8 weeks for employees with over 8 years of service. Severance pay is applicable mainly in redundancy cases, calculated as one-third of the employee's weekly wage multiplied by years of service, with exceptions for dismissals for just cause.

Key grounds for termination include misconduct (with cause) or operational reasons (without cause). Termination with cause requires evidence of serious misconduct and no obligation for notice or severance, while without cause mandates proper notice and severance pay. Procedural fairness involves written notices, consultations in redundancy cases, opportunities for employees to respond in disciplinary dismissals, and thorough documentation. Employees are protected against wrongful dismissal, with remedies available through the Industrial Tribunal if procedures are not properly followed.

Malta is an appealing destination for businesses seeking flexible talent through freelancing and independent contracting, particularly in digital and financial services. The strategic location and supportive economic environment make it ideal for global expansion without establishing a full local entity. Key considerations for employers include navigating legal frameworks, ensuring proper worker classification, and structuring contracts to manage tax obligations and intellectual property rights effectively.

Correct classification between employees and independent contractors is crucial to avoid legal and financial penalties. Maltese law evaluates factors such as control, integration, dependency, substitution, tools provision, risk, exclusivity, and payment structure. Contracts should clearly define the relationship, scope of work, payment terms, confidentiality, and intellectual property rights. Misclassification can lead to back payments and claims related to employment rights.

Independent contractors in Malta must register as self-employed, obtain a Tax Identification Number, and possibly register for VAT, depending on turnover. Income tax is progressive, with rates ranging from 0% to 35% based on income brackets. Social Security Contributions are mandatory, funding benefits like pensions and healthcare. Professional indemnity and public liability insurance are recommended, especially in consulting and IT sectors. Common industries using contractors include iGaming, financial services, IT, creative and marketing, consulting, and tourism, leveraging contractors for specialized skills and project-based work.

Malta offers various work permits tailored to different categories of foreign workers, with the Single Permit being the primary option for non-EU/EEA nationals intending to work longer than three months. Other permits include the ICT Permit for intra-company transfers, KEI for highly skilled professionals, and the EU Blue Card for qualified non-EU nationals. The application process involves employer requirements such as a business license, job advertisement, and justification for hiring a foreign worker, alongside employee documents like a passport, CV, and medical certificate. Applications are submitted to Identity Malta, with processing times typically between 4 to 6 months, though KEI applications are faster (~4 weeks). Fees vary depending on the permit type.

Employers must ensure compliance with sponsorship obligations, including reporting changes and adhering to labor market assessments, to avoid penalties. Employees must follow visa conditions, renew permits timely, and report personal changes. Foreign workers can qualify for permanent residency after five years of continuous residence, requiring proof of stability and integration. Dependents, such as spouses and children, may apply for visas but often face restrictions on employment unless they obtain separate work permits.