Regulation of Employment Agencies in Malta

by , on Apr 02, 2024 08:57:29 AM

Regulation of Employment Agencies in Malta

The Regulations on Employment Agencies (Legal Notice 270 of 2023), set to be enacted from April 2024, ushers a new framework overseeing the operations of employment agencies, which have previously operated with minimal oversight. These Regulations specifically target agencies involved in recruitment, temporary work, and outsourcing services.

Certain activities, such as in-house recruitment by employers, recruitment through clearly identified marketing agents, and outsourcing of professional services, fall outside the purview of these Regulations.

Who does this regulation effect? 

  • All staffing firms engaged in recruiting candidates for employment by external organizations;
  • All agencies providing labor services, including temporary work agencies or employers of record, that assign employees to other client enterprises, with those employees being managed and directed by the client enterprises;
  • All service providers supplying services to client enterprises, and who deploy employees to those client enterprises as part of the service provision, even though these employees continue to be supervised and controlled by the service providers;
  • Additionally, this regulation indirectly impacts all businesses utilizing subcontractors or the aforementioned entities to provide labor or supplement their existing workforce.

What are the licensing requirements? 

Central to the Employment Agencies Regulations is the requirement for mandatory licensing. User entities are also obligated to engage only with licensed employment service providers. Applications for licenses will be accepted by the Department of Employment and Industrial Relations (DIER) starting January 1st, 2024.

The vetting process, conducted by the police, assesses the fitness and propriety of the applicant and other involved individuals against criteria outlined in the Regulations. A Working Committee oversees the results of this vetting process.

Some of the requirements to apply for a license:

  • A qualified individual must be designated:
    > Maltese/EU citizen or possess equal entitlement to Maltese citizens in employment matters or due to familial ties;
    > must demonstrate either 6 years of experience in human resources management OR 3 years of experience along with a related university degree;
    > Individual must possess a valid VAT number, Income Tax registration number, and business address.
  • Agencies engaged in temporary or outsourcing activities must provide a bank guarantee, the amount of which depends on the number of employees.
  • Applications must detail the type of agency service to be offered and the proposed activities.
  • Initial license applications incur a fee of €3,000, while renewal applications cost €1,500.

The New Employment Agencies Administration Board

The aforementioned guarantees must be provided to the Employment Agencies Administration Board before their license becomes valid. In the event of license revocation or non-renewal leading to employee termination, affected employees are entitled to compensation from the Agencies Guarantee Fund, administered by the Administration Board.

Public disclosure of sanctioned individuals, along with details of their breaches and penalties, will be made by the Department. Additionally, this information will be shared with the Department of Contracts to prevent participation in public tenders, Identity Malta Agency for application refusals, and the Malta Police Force.

Violations of these Regulations may result in fines ranging from €5,000 to €30,000, depending on the nature of the offense.

How can novolegal assist?

We can assist you with the application process and any other queries you may have in relation to this regulation! Reach out to ensure compliance with these newly established regulations.