As provided for in our Constitution, the “State recognises the right of all citizens to work and shall promote such conditions as will make this right effective”. [1] The right to work is further safeguarded by the Employment and Industrial Relations Act (Chapter 452 of the Laws of Malta) (hereinafter, ‘the EIRA’), being the main piece of legislation regulating the employment industry in Malta. The EIRA, together with its various subsidiary legislations, covers a wide array of matters, including, amongst others, the protection of employees’ wages.
Definition
‘Wages’ are defined under the EIRA as any kind of “remuneration or earnings, payable by an employer to an employee”.[2] One can appreciate that this definition is quite generic, covering any earnings, other than any bonus or allowance related to the employee’s performance, furnished by the employer to the employee during the latter’s period of employment.
Such earnings in fact enjoy both local and EU-wide protection. As to the latter, Principle 6 of the European Pillar of Social Rights stipulates the below:
Workers have the right to fair wages that provide for a decent standard of living.
Adequate minimum wages shall be ensured, in a way that provide for the satisfaction of the needs of the worker and his / her family in the light of national economic and social conditions, whilst safeguarding access to employment and incentives to seek work.[3]
In relation to the local scenario, wages are particularly safeguarded under PART III of the EIRA.
Payment of Wages
The same duties of employment entail the same rate of pay for all the employees involved, who thereby remain free to dispose of their wage in any manner they deem fit. In essence, “every employer shall pay or cause to be paid wages to his employees at regular intervals which shall not exceed four weeks in arrears”[4], and such payment is to be made in money being legal tender in Malta.
Wages are to be paid directly to the employee concerned, unless instructed otherwise by the employee himself / herself, or by any law or in virtue of an order made by a competent court. This shall also apply to statutory bonuses and any other income supplements which the employee may be entitled to.
The employer is prohibited from effecting any deductions and computations of any other benefit or income to his / her employees’ wages, unless however the employer is expressly authorised to do so by any law or in virtue of an order made by a competent court. In addition, an employee's wage cannot be decreased when their status changes from part-time to full-time employment or vice versa, provided that the same duties are performed by the employee regardless of such change.
Insolvency of Employer
Employees’ wages are furthermore safeguarded if the employer becomes insolvent. In such eventuality, the employee’s claim covering a maximum of three months wage, compensation for leave and any other compensation due in consideration for his / her termination from employment, shall constitute a privileged claim over the employer’s assets and shall thus be paid in preference to any other claims. There is however a limit to such protection since such privilege “shall not exceed the equivalent of the national minimum wage payable at the time of the claim over a period of six months”[5].
This protection is further safeguarded by the State through Article 21 of the EIRA, providing for the establishment of a Guarantee Fund guaranteeing the payment of any unpaid wages of those employees whose employment with their respective employer is terminated due to the latter’s state of insolvency when such wages cannot be paid out of the latter’s assets.
Subsidiary Legislations
Subsidiary legislations which further protect employees’ wages shall include, albeit not limited to:-
- The Wage Increase National Standard Order (S.L.452.65), covering the addition to wages to which an employee is entitled due to the cost of living adjustments and which applies to whole-time employees who are not covered by a collective agreement; and
- The National Minimum Wage National Standard Order (S.L.452.71), stipulating the applicable minimum wage payable in Malta and which applies to all employees except those covered by the various sectoral Wages Council Wage Regulation Orders, in which case the relevant sectoral regulation order applies.
For the year 2022, the national minimum wage per week of whole-time employees is as follows[6]:
Age 18 years and over | €182.83 |
Age 17 years | €176.05 |
Under 17 years | €173.21 |
About the Author
This update has been authored by Dr Bjorn Camilleri, Regulatory & Business Advisor and Dr Luana Agius, Junior Associate. For additional information kindly contact us on [email protected].
[1] Article 7 of the Constitution of Malta
[2] Article 2 EIRA
[3] 'The European Pillar Of Social Rights In 20 Principles' (European Commission - European Commission, 2017) <https://ec.europa.eu/info/strategy/priorities-2019-2024/economy-works-people/jobs-growth-and-investment/european-pillar-social-rights/european-pillar-social-rights-20-principles_en#chapter-ii-fair-working-conditions> accessed 17 October 2022.
[4] Article 22(1) EIRA
[5] Article 20 EIRA
[6] 'National Minimum Wage' (Dier.gov.mt, 2022) <https://dier.gov.mt/en/Employment-Conditions/Wages/Pages/National-Minimum-Wage.aspx> accessed 17 October 2022.
