Employment Wages & Incentives

Protection of Wages

The principal form of remuneration that is payable by an employer to an employee is the wage, which must be paid by the employer to the employee in money being legal tender in Malta and in an amount that corresponds at least to the statutory minimum wage applicable to such employee.

The law sets out various rules relating to the protection of wages. Wages must be paid at regular intervals which, as a general rule, may not exceed four weeks in arrears. An employer is also required to pay his full-time employees statutory bonuses in such amounts and at such intervals as may be prescribed from time to time. The law precludes an employer from imposing any terms restricting the manner in which an employee may spend or use any wages, and any such terms will be null and void. The law also prohibits the assignment of wages and limits the attachment of wages to certain specified instances.

An employee’s wage constitute a privileged claim over the assets of the employer and must be paid in preference to all other claims, whether privileged or hypothecary, if an employee makes a claim in respect of a maximum of three months of the current wage payable by the employer to the employee, and compensation for leave to which the employee is entitled to, together with any compensation due to the employee in consideration of termination of employment, or any notice thereof.

The law also prohibits deductions from wages, except in certain limited circumstances that are permitted by applicable law. By way of example, an employer may deduct fines where the terms of a signed written employment contract or statement specify in detail the fines to which the employee may become liable in respect of an act or omission, and provided that such terms have been previously approved by the Department for Industrial and Employment Relations (or DIER).

Where an employee fails without just cause to give to his employer the total number of hours of work as bound by the terms of the employment contract, an employer may deduct wages from the total wages due to the employee, corresponding to the work so lost, rather than giving him a fine.

Other Incentives for Employees

Apart from paying wages to his employees for their services, an employer may also offer other incentives to his employees. Such incentives may take various forms, and may be driven by a number of priorities and considerations on the employer’s part, such as to further incentivise the workforce and to instil employee loyalty.

Such incentives may take the form of revenue sharing arrangements, bonuses, pension schemes, share option arrangements, insurance coverage, and various forms of discounts or other benefits in kind.

In such cases, it is important for the terms regulating the enjoyment of such incentives or benefits to be clearly set out, whether in the employment contract or in any other agreement or document as may be appropriate.