Changes in store for 2019 Payroll – are your payroll systems & personnel ready? | Malta Corporate Services Provider | CSB Group

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Changes in store for 2019 Payroll – are your payroll systems & personnel ready?


2019 has brought various new changes and challenges for Payroll processing. Payroll is a critical financial responsibility for businesses who need to accurately pay their employees and comply with government regulations. Payroll processing errors result in employee frustration, disputes and monetary fines. Outsourcing the payroll to a professional team who utilise a reliable payroll system will safeguard employers and put their mind at rest. Employers can then have more time to focus on the operational areas and main drivers of the business.

  • Different Systems are available for payroll processing, the main differentiation between them is being cloud based or otherwise. Both can be catered for when outsourcing payroll depending on client’s preferences.

Cloud based systems

A cloud based payroll system provides a cloud platform for payroll processing, leave management and other HR functions that can all be integrated within one payroll system. This system simplifies work, automates as many processes as possible, and provides employers with a toolset to better manage their HR and payroll workflow. It is accessible from anywhere requiring only an internet connection and using the latest web technologies that are practical and easy to use.  This system has a functionality that allows one to set the organisational hierarchy for leave approval processes. A unique Employee Portal allows employees access to their portal whereby they can manage their leave, view their payslips, past FS3s and more. With Payroll and Leave management consolidated into one system one does not need to worry about discrepancies and can enjoy the benefits of less administrative work.

Server based systems

If one prefers a server based system, this also provides all the functions required for processing the payroll. Having certain limitations, given employees would not have their own portal access and the leave system very often would need to be a separate system, nonetheless, it still caters for all the basic payroll processing requirements with the added advantage that the data is all stored on the server rather than being cloud based on an external server in a foreign jurisdiction.

  • New legal notices came into force in 2019 which every employer needs to abide by as these affect Payroll processing. Outsourcing payroll would ensure that new regulations are always adhered to by employers as your payroll provider will notify you of these in advance so that one is prepared and any changes are addressed in time.

1. Itemised Payslip (Amendment) Regulations, 2018

In August of 2018, Legal Notice 274 of 2018 was published introducing the itemised payslips.  This legal notice was suspended for a period of time and through Legal Notice 439 of 2018, the initial legal notice came  into force, with some amendments, with effect from 1st January 2019.  It binds an employer to provide all employees with an itemised payslip either before or on the date when wages become due.  The payslip must include the following items;

  • Name and address of employer
  • Name of employee
  • Employee’s designation
  • Total wages paid and the breakdown thereof
  • Period in respect of which the contents relate to
  • the  number  of  normal  hours  worked  including those worked on Sunday or on a public holiday when this is part of the scheduled normal hours;
  • the number of hours entitled at overtime or special rate broken down into those in excess of normal daily or weekly hours, hours worked on a Sunday or on a public holiday;
  • the number of hours of annual leave availed of and any remaining balance;
  • the basic wages received;
  • a  breakdown  of  any  bonuses,  allowances  or commissions received; and
  • any  deductions  effected,  including  national insurance contributions, tax and others.

The amendments made to the existing provisions include the cancellation of an obligation which had been imposed on the employer to include the sick leave availed of by the employee in the payslip and instead adds a right for the employee to request, up to a maximum of four times a year, the sick leave entitlement balance.  The employer is obliged to divulge this information in writing within five working days from the request.

If an employer fails to give an itemised payslip, it shall be the employer who must present proof which beyond reasonable doubt exculpates him from any liability.  Moreover, where there are two different payslips relating to the same period, the payslip which prevails shall be the more favourable payslip for the employee concerned.

2. Organisation of Working Time (Amendment) Regulations, 2018

Legal Notice 444 of 2018 was issued in December 2018 amending the organisation of working time regulations.  This legal notice introduced an extra eight hours of paid leave, bringing the total annual leave entitlement to all full time working employees to 208 hours as from 2019.

The 208 hours of leave is calculated on the basis of a 40-hour working week, and an 8-hour working day. If the average normal hours (excluding overtime) calculated over a period of 17 weeks is below or exceeds 40 hours per week, the vacation leave entitlement in hours should be adjusted accordingly.  If an employee is in employment for less than twelve months, s/he shall be entitled to a proportionate amount of annual leave.

By mutual agreement with the employer, leave can be taken in hours. Otherwise, if there is no agreement between the employer and the employee, leave has to be availed of as a whole day.

3. Annual Leave (Amendment) National Standard Order, 2018

 Legal Notice 440 of 2018 entitled Annual Leave (Amendment) National Standard Order, 2018  came into force as from 1st January 2019. This legal notice amended the principal regulations and brought the Standard Order into force.

Shutdown and Forced Leave

Unless otherwise agreed to, the employer may only utilise up to the equivalent in hours of twelve working days from the annual leave entitlement of the employees for the purposes of any type of shutdown, including a temporary closure of whole or part of the premises by the employer for bridge holidays or any other short periods of shutdown.

An employer is also bound to provide a written statement with justified reasons to the employee before an employee is made to avail himself/herself of forced leave. In such a situation, the utilisation of forced leave which exceeds the annual leave entitlement does not give rise to a civil debt in favour of the employer. However, any leave requested by the employee and taken in excess of the annual leave entitlement shall give rise to a civil debt in favour of the employer upon termination of the employee’s employment.

Cancellation of leave

Once leave from the annual leave entitlement has been agreed to by the employer and the employee, such leave cannot be cancelled unilaterally but can only be cancelled if both the employer and the employee are in agreement.

Leave entitlement during maternity leave

Annual leave shall continue to accrue in favour of an employee during the period when she is on maternity leave.   Any balance of annual leave unavailed of by the end of the calendar year shall be automatically transferred to the next calendar year when it has not been possible for the employee to avail herself of such leave during the same year when the maternity leave commenced.

When a public or national holiday falling on a day of work or on a weekly day of rest not being a Saturday or a Sunday falls within a period of maternity leave, such employee shall be entitled to the equivalent in hours of an additional day of annual leave.

Leave entitlement during sick and injury leave

Annual leave shall continue to accrue in favour of an employee during the period when he is on sick leave or injury leave, irrespective of whether the sick leave or the injury leave is fully paid, partially paid or unpaid.  Any balance of annual leave unavailed of by the end of the calendar year shall be automatically transferred to the next calendar year when it has not been possible for the employee to avail himself of such leave during the same year when the sickness or injury leave commenced.

Any period of pre-arranged leave coinciding with a period of maternity, sickness or injury leave shall be considered as not having been availed of but shall be availed of after the return to work or shall be carried on to the subsequent year if such leave could not be availed of during the same year when the maternity, sickness or injury leave commenced.

About the Author

Grace Psaila is a Payroll & Accounts Officer and is part of the Payroll Team at CSB Group. For any assistance required please contact us on [email protected]

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CSB Group
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