Payment of Wages

Related legislation:

Employment & Industrial Relations Act, 2002

1. What does the ‘protection of wages’ mean?

Protection of wages means that the entire amount due to the employee has to be paid in legal tender and cannot be paid in kind. Moreover no deductions can be made from wages unless authorised by a Court or by the Director of Industrial and Employment Relations.

2. Can an employer decide on the method of payment of wages (e.g. cash, direct credit, cheque etc)?

The proviso to Art 11 of the EIRA stipulates that payment of wages by cheque on a bank in Malta or payable to the Bank account of an employee shall be deemed to be payment in legal tender in cases in which payment in this manner is customary or necessary or is consented to by the employee concerned.

3. Can an employer decide on the frequency of payment of wages?

Article 22 (1) of the EIRA states that every employer shall pay or cause to be paid wages to his employees at regular intervals which shall not exceed four weeks in arrears prived that the employer may enter into an agreement with trade union representatives of the employees concerned fixing other intervals for the payment of wages.

4. (a) Is it a legal obligation to issue an itemised payslip to employees?

As of the 1^st January 2019 there is a legal obligation on employers to issue payslips with each wage/salary.

4. (b) What should the payslip include?

As a minimum a payslip should include the following:

(a) 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;

(b) 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;

(d) the basic wages received;

(e) a breakdown of any bonuses, allowances or commissions received; and

(f) any deductions effected, including national insurance contributions, tax and others.

4. (c) Is there an obligation to include sick leave hours in the payslip?

There is no legal requirement to include the number of hours of sick leave availed of during a calendar year in the payslip. Nevertheless, the employee may, up to four times during a calendar year, request from the employer the sick leave entitlement and the number of hours of sick leave availed of.

4. (d) When does this information have to be provided to the employee by the employer?

The employer has to provide this information within 5 working days from the date of the request.

4. (e) What happens if two payslips relating to the same period are presented to the Director for the Employment and Industrial Relations Department or before a court of law? Which one prevails?

That payslip which is more favourable to the employee will prevail. Whosoever is found to be in breach of the Regulations shall be liable to a fine ranging from five hundred euros (€500) to one thousand, one hundred and sixty- five euros (€1,165).

5. Under what circumstances can wages be deducted?

Deductions cannot be made from wages with the exception of a superannuation or thrift scheme or for any purpose in the carrying out of which the employer has no beneficial financial interest, direct or indirect.

The Director of Industrial and employment relations can authorise deductions which cannot be retroactive.

6. Can there be a set-off against wages due in case of:

Unworked notice?
Overutilization of leave?
Unworked portion of a definite period contract?
Other dues to the company (e.g. loans, penalty clauses)?

No deductions from wages can be made in the above mentioned instances since deductions are expressly prohibited by the EIRA

7. Can a wage rate be unilaterally reduced by an employer?

No. Conditions of employment cannot be changed unless there is mutual agreement.

8. Are commissions or other forms of performance related pay considered to be part of wages?

The EIRA defines wages as remuneration or earnings, payable by an employer to an employee and includes any statutory bonus or allowance but excludes performance or production related bonuses.

9. Can a commission scale be unilaterally changed by an employer?

If this is a condition of work agreed to by both parties and the employer did not reserve the right to amend or repeal then no it cannot be changed.

10. How far back can claims for unpaid wages go?

Failure by an employer to pay wages to an employee carries a one year period of prescription.

11. In case of termination of employment, can a company protect itself from further claims from employees?

Whenever there is a termination of employment the ex-employee has the right to file a suit before the Courts. Thus if an amicable settlement is reached it is best that the parties sign an agreement renouncing to any proceedings against each other.

12. What is the Guarantee Fund?

The Guarantee Fund is a fund guaranteeing payment of unpaid wages due by an employer to those employees whose employment is terminated because of the employer’s proved insolvency.

The employee shall be entitled for up to a maximum equivalent to thirteen weeks’ national minimum wage payable at the time of the termination of employment of such employee, any unpaid overtime, arrears for any leave entitlement for the current and preceding calendar year, and any notice money payable