Pay Transparency in Malta: Are You Ready for the New EU Rules?

In recent years, and with increasing urgency, pay transparency has emerged as a critical issue for Maltese employers and employees alike. As companies across Malta strive to cultivate fair, equitable workplace environments and prepare for new EU-driven regulations, understanding the nuances of pay transparency is no longer optional—it's essential. This post from Ten Yards Legal explores what the upcoming changes mean for businesses in Malta, and how embracing transparency can positively affect your workplace culture and productivity.

For ongoing updates and detailed insights into the EU Pay Transparency Directive and its implications for Malta, Ten Yards Legal has launched a dedicated resource: https://genderpaytransparency.eu/. We encourage you to visit for the latest information.

Understanding Pay Transparency

At its core, pay transparency refers to the practice of openly sharing information about employee compensation within an organisation. This can range from disclosing salary bands for roles to providing clear criteria for pay progression. The primary intention is to foster fairness, build trust, and combat discriminatory pay practices. Studies consistently show that when pay transparency is implemented thoughtfully, it can lead to greater job satisfaction and loyalty. Indeed, many employees value a transparent pay structure as a key indicator of an employer's commitment to fairness.

Why Pay Transparency Matters for Maltese Businesses

With growing societal focus on income equality, pay transparency plays a pivotal role in creating genuinely equitable workplaces. Employees are significantly more likely to trust their employers and feel valued when they perceive that pay practices are fair and justifiable.

Transparency reduces the risk of pay discrimination

Moreover, in Malta's competitive talent market, transparency can be a powerful recruitment tool. Candidates increasingly seek out companies that champion fairness and equitable compensation, often using salary transparency (or lack thereof) as a key factor in their decision-making process.

Crucially, enhanced transparency helps reduce the risk of pay discrimination. By making pay structures and ranges more open, organisations make it significantly harder for unconscious biases to influence compensation decisions. This not only promotes fairness but also protects companies from potential legal repercussions under Maltese and EU anti-discrimination laws, which already uphold the principle of equal pay for work of equal value (as seen in the Employment and Industrial Relations Act and the Equality Act). The new EU rules will further strengthen these protections.

The EU Pay Transparency Directive (EU) 2023/970: What Maltese Employers Must Know

A significant driver for these changes is the Directive (EU) 2023/970 on strengthening the application of the principle of equal pay for equal work or work of equal value between men and women through pay transparency and enforcement mechanisms.

Malta, as an EU Member State, is obligated to transpose this Directive into its national law by 7 June 2026. Whilst specific Maltese legislation enacting these provisions is still anticipated, businesses in Malta must begin preparing now for the following key changes that will likely be introduced:

1. Pay Transparency Prior to Employment: Employers will need to provide information about the initial pay level or range in job vacancy notices or before the job interview.

2. Right to Information: Employees will have the right to request information from their employer on their individual pay level and the average pay levels, broken down by sex, for categories of workers performing the same work or work of equal value.

3. Pay Reporting: Companies in Malta exceeding certain employee thresholds (initially those with 150+ employees, with the threshold potentially lowering over time for reporting) will likely be required to report on their gender pay gap.

4. Joint Pay Assessment: If a pay report reveals a gender pay gap of at least 5% in any category of workers, and the employer cannot justify this gap with objective, gender-neutral criteria, a joint pay assessment will have to be carried out in cooperation with employees’ representatives.

5. Shift in Burden of Proof: In cases of alleged pay discrimination, the burden of proof will shift to the employer to demonstrate that there has been no discrimination.

6. Compensation for Discrimination: Employees who have suffered gender pay discrimination will have the right to claim full compensation.

The objective is clear: to promote fairness and significantly reduce the gender pay gap across the EU, including Malta. For the most current analysis and guidance, Ten Yards Legal invites you to consult our dedicated portal: https://genderpaytransparency.eu/.

Implementing Pay Transparency in Your Maltese Organisation: A Proactive Approach

For Maltese companies looking to get ahead of the curve and build a culture of trust:

1. Assess Current Pay Structures: Begin by thoroughly reviewing your existing compensation practices. Anonymously analyse pay rates across roles, genders, and functions to identify any unjustifiable disparities. This research is crucial.

2. Communicate Proactively: Inform your employees about the upcoming legal changes and your company's commitment to fair pay. Explain the "why" behind any shifts towards greater transparency.

3. Develop Clear Salary Bands: Establish justifiable salary bands for different roles based on objective criteria (e.g., skills, responsibility, experience).

4. Educate Managers: Train your managers on how to discuss compensation confidently and constructively with their teams, ensuring they understand the company's pay philosophy and the new legal landscape.

5. Establish Feedback Mechanisms: Create channels for employees to ask questions and provide feedback on pay policies, fostering an ongoing dialogue.

Potential Challenges

Introducing pay transparency can present challenges. Some employees might feel uncomfortable, or comparisons could lead to initial unease if not managed well. Ensuring data accuracy and consistently applying policies are ongoing commitments. Ten Yards Legal can help you navigate these sensitive aspects with strategic advice.

The Future: A More Transparent Workplace in Malta

As Malta transposes the EU Directive and awareness grows, pay transparency will become standard practice. Organisations that embrace these changes will not only comply with the law but will also gain a competitive edge in attracting and retaining diverse talent, fostering innovation, and building a reputation as ethical employers.

Individual Actions for Employees

Employees also have a role:

• Understand Your Worth: Research industry benchmarks for your role in Malta.

• Ask Questions Constructively: If you have concerns about your pay, prepare to discuss them with your manager, supported by data where possible.

• Stay Informed: Keep updated on your company's evolving pay policies and your rights under the upcoming legislation.

How Ten Yards Legal Can Help

The transition to full pay transparency requires careful planning and legal understanding. At Ten Yards Legal, we specialise in Maltese employment law and can assist your organisation by:

• Developing clear, legally sound pay policies and salary bands.

• Providing training for your HR teams and managers on the new Directive and its implications for Malta.

• Guiding you through the legal requirements for pay reporting and addressing any identified pay gaps.

Do not wait until the Maltese legislation is enacted. Proactive preparation is key. Stay informed through our dedicated website https://genderpaytransparency.eu/ and contact Ten Yards Legal today to ensure your business is ready for the future of pay transparency.