Through the publication of Legal Notice 270 of 2023 in November 2023, the Employment Agencies Regulations (“the Regulations”), the need for employment agencies to be regulated in a more transparent and efficient manner was addressed, with the Regulations targeting specifically sectors of employment agencies which act as recruitment agencies, temporary work agencies and outsourcing agencies. The Regulations shall come into force on the 1st of April 2024, thereby repealing the now outdated 1996 Employment Agencies Regulations.
Essentially, the law provides a transitional period of two (2) months for first time applicants to fulfil their licencing obligations. In this regard, all temping agencies falling within the scope of the Regulations, i.e. temporary work agencies and outsourcing agencies as well as recruitment agencies, as shall be defined below, must be adequately licensed by June of 2024.
Scope of the Regulations
As defined in Regulation 2 of the Regulations, an “employment agency” or an “employment business” must carry out “any relevant activity in Malta (a) for the recruitment of persons for employment in Malta or outside Malta; (b) as a temporary work agency; or (c) as an outsourcing agency”.
A distinction therefore needs to be made between a temporary work agency and an outsourcing agency. Essentially, a temporary work agency, whether a natural or legal person, enter into an employment relationship with temporary agency workers and assign, “whether on a regular or on an irregular basis, the temporary agency workers to user undertakings to work there temporarily under their supervision, direction and control”. On the other hand, an outsourcing agency, whether a natural or legal person, enter into an employment relationship with employees and assign, “whether on a regular or irregular basis, the employees to user undertakings to work there temporarily, by being physically present at the premises of the user undertaking or working remotely, under the supervision, direction and control of the outsourcing agency”.
Therefore, the crucial difference between a temporary work agency and an outsourcing agency lies in the fact that for the former, the employee would be a temporary agency worker offering his/her services to a user undertaking for a temporary period of time, under the direct orders of the user undertaking, whereas for the latter, the employee would be assigned to a user undertaking for a temporary period of time, under the direct orders of the agency.
It is important to point out however that the Regulations shall not apply to:
- Employers carrying out recruitment activities within their own enterprises;
- Recruitment activities provided by an employment agency on behalf of any employer whose identity is specified in an advertisement inviting applicants for employment;
- Outsourcing agencies offering professional services by certified professionals, technical services for equipment and machinery installation, maintenance, and repair, and surveying services for machinery and vessels; and
- Jobsplus while carrying out the duties of an employment agency.
The Employment Agency Licence
For the employment agency to carry out its business, it must be granted a licence by the Department of Employment and Industrial Relations (“DIER”). Notably, the licence may be granted for one activity only, either for (i) the recruitment of persons for employment in or outside Malta or else (ii) for the rendering of the activities of a temporary work agency and/or the activities of an outsourcing agency.
Essentially, the Regulations allow any person of twenty-five years of age or any legal person to apply for the agency licence. Notably, before lodging an application for a licence with the DIER, the applicant must physically display on the premises a notice of the application for twenty-one days and advertise the application in two daily local newspapers. For the agency to be granted a valid licence, an application with the DIER must be submitted, containing all the information listed down in the Regulations, such as the applicant’s general details, income tax registration number, VAT number, amongst others.
Moreover, prior to the issuance of a licence, the employment agency must also provide a guarantee fee for the amount of twenty thousand Euro (€20,000) for agencies having less than twenty employees. For agencies having more than twenty employees, the amount is set for twenty thousand Euro (€20,000) and a sum equivalent to two per cent (2%) of the total annualised wages of all employees, up to a maximum of three hundred thousand Euro (€300,000).
The Regulations also require the presence of a full-time employee on the premises to be classified as the ‘competent person’, to be approved by the DIER. Such competent person must be an EU citizen residing in Malta and qualified and/or experienced in managing human resources as defined by the Regulations, who would be entrusted with managing the employment agency.
The fees applicable in this regard include a licence fee of three thousand Euro (€3,000) for a new licence or else a one thousand five hundred Euro (€1,500) fee for renewal, and shall be valid for one year. The licence can then be renewed for further periods of one year or for a more extended period that cannot exceed two years.
Refusal or Revocation of a Licence
The DIER may refuse, revoke or vary the conditions of a licence on any of the grounds specified under Regulation 9 of the Regulations, including for instance a scenario where the agency fails to comply with the Regulations or the conditions laid down in the licence, or where the agency fails to inform the Director of any changes in the nature of its activities, amongst others.
About the Author
This article has been authored by Dr Luana Agius, Legal Advisor. Contact us here or on [email protected] for more information.
