What Malta’s new pay transparency regulations mean for employers

Published in May 2023, the EU Pay Transparency Directive was a meaningful step forward in addressing discrimination in pay. Though gender-based discrimination is its central thrust, the requirement to pay equally for equal work or work of equal value disciplines any pay difference – often unintentional – that is not objectively justifiable. Employers must proactively demonstrate they pay according to value. Learn more about RSM Malta's pay and reward advisory services.

In our experience, many businesses’ efforts to prepare have been underwhelming. Some were unaware of the Directive. Some still are. Others hoped it would be delayed or downscaled or waited for transposition. Others believed that having a pay structure at all was equivalent to having one designed to pay objectively according to value. It is not.

On June 5th, days before the transposition deadline, Maltese regulators published the Equal Pay (Transparency and Reporting) regulations, 2026. Retaining the Directive’s core thrust, it contains some notable nuances. Some timelines have contracted, putting employers under pressure to ensure their pay practices are objective, non-discriminatory, and sufficiently structured. A reactive approach is outright unfeasible, leaving many Maltese businesses more exposed than they realise. 

Notable changes

Reporting

Businesses with 100 or more employees must submit periodic reports to the Monitoring Body, including gender pay gap data in both mean and median terms, covering fixed and variable remuneration, categories of workers, and pay distribution across quartile bands. The first pay gap report must be submitted by 7th June 2027 (or 7th June 2031, for businesses with 100 to 149 employees), based on pay data from the previous calendar year. Subsequent reports must be submitted within 14 working days of the end of the calendar year – a far tighter window than it appears, for a few reasons. 

  • Possessing data which reflects “equal value” in a compliant manner requires a pay structure that is built on compliant foundations. Most are not. Inaccurate reporting presents risks.
  • All forms of pay, in cash or in kind, must be considered. Some reside outside payroll systems. Gathering and categorising this into fixed and variable components takes time. 
  • Some pay differences may be due to objectively justifiable reasons – performance bonuses, overtime hours worked, tenure-based increments, etc. Without discerning justifiable from unjustifiable components and supplementing the mandated datapoints with qualitative context, many businesses may erroneously appear non-compliant. Perception often outweighs fact. Accurate storytelling in reporting matters.    

Pay information requests

Employees have the right to request information on their individual pay and the average pay, broken down by sex, for workers performing the same work or work of equal value. The Directive granted employers up to two months to respond in writing. Now, they have 8 days. If the information has not been provided within 45 days of the request, it may become an offence under the Act. 

This will be exceptionally challenging for employers who do not have this data readily available. Employers who unwittingly categorise workers in non-compliant ways are also vulnerable, as a false sense of security may lead to complacency and inaccurate data. 

Enforcement

With respect to the principle of equal pay for equal work or work of equal value, historically underpaid employees may, after referring the matter to the Industrial Tribunal, be entitled to full back-payment of any lost pay. While claims must be brought within three years of the employee becoming aware (or being reasonably expected to be aware) of the breach, the Regulations appear to set no cap on how many years of back pay can be recovered.

Fines and penalties have been clarified under the regulations, but these retroactive compensation claims remain the real compliance driver. 

Transparency

Businesses with fewer than 50 employees will appreciate the waiving of the requirement to be transparent regarding pay progression criteria, as will those with fewer than 25 employees, which are additionally relieved of the requirement to keep written, accessible policies setting out the criteria on which pay and pay levels are based.

However, Malta’s Regulations subtly introduced a transparency obligation not required by the Directive. What was initially a reporting requirement for larger businesses is now a transparency requirement for all: the average pay, broken down by variable and fixed pay components and by sex, across all categories of worker, must now be provided to all workers and employees’ representatives. 

Opportunities amidst compliance pressures

Organisations that invest in structured, transparent and well-documented pay frameworks today stand to gain far beyond compliance. A fair, transparent approach to pay builds trust, reduces disputes, and strengthens engagement, attraction and retention. In Malta’s talent-scarce context, these are material contributors to competitiveness.

Creating these structures also fosters robust job architecture, which can support HR management and enable business growth. It strengthens governance, enhances resilience, and demonstrates a commitment to fair employment practices – the foundation of an effectively meritocratic culture.

The readiness of businesses

In our experience, confusion regarding the requirements for a pay structure to be compliant remains. “We don’t discriminate based on gender” and “we already have a salary grading system” are common retorts that demonstrate a false sense of security. You can submit your pay structure to a quick litmus test.

  • Do my pay practices cluster roles into grades or categories?
  • Are categories determined by the skills, effort, responsibility and working conditions associated with the role?
  • Are these criteria clearly defined and applied to all unique roles/jobs in the business (e.g., through job evaluations)?
  • Am I confident that the tools and process used are sufficiently objective, rigorous, and non-discriminatory-by-design to withstand granular scrutiny from opposing legal counsel in an Industrial Tribunal setting?     

A robust pay structure remains employers’ only reliable inoculation against the risks that the Regulations introduce. Robustness of design is crucial. Many existing pay structures inherit the exact historical assumptions the Regulations are designed to address. However, a pay structure does not exist to be compliant; it exists to serve the business. It must allow the business to compete for talent in a competitive market and incentivise employees through pay progression opportunities, within and across categories of value. A business’ talent strategy should be enabled by its pay structure, not hindered by it. 

If found wanting before the Industrial Tribunal, pay structures may be re-imagined at their foundations to enable a compliant categorisation of workers. If both parties cannot agree on an expert to assist in this process, the Tribunal will appoint one. The real choice is not whether you ensure that your pay structure is compliant, but whether you create one proactively and at your discretion, or reactively, under duress and with limited control.

How RSM Malta can help

We support organisations in assessing and ensuring their readiness for all pay transparency requirements. Through our proprietary tools and methodology, we create pay structures which are compliant by design while remaining fit-for-purpose and enabling of the reality within which businesses operate.

 

Article written by Yashar Dominic Klipp- Consultant, Organisational & People Advisory