On June 5, 2026, Malta fully enacted Legal Notice 173 of 2026 (the Equal Pay Transparency and Reporting Regulations), bringing the EU Pay Transparency Directive into immediate effect.
For many Small and Medium Enterprises (SMEs) in Malta, this marks an important compliance shift.
- Headcount matters
The new Pay Transparency law is tied to company size. While larger companies face heavy public reporting obligations, SMEs have several exemptions to prevent administrative overload. For example, for companies who employ less than 49 employees, there are no formal gender gap reporting requirements, while for companies of 100+ employees, formal gender gap reporting is required.
| Company Size (Headcount) | Formal Gender Pay Gap Reporting? | Accessible Formal Pay Progression Policy? | Right to Information (RTI) & Hiring Rules? |
| 100+ | Yes
(Phased rollouts) |
Yes | Yes |
| 50 – 99 | No | Yes | Yes |
| 25 – 49 | No | No
(Basic internal pay criteria documented) |
Yes |
| Under 25 | No | No | Yes |
- Immediate obligations for all Maltese SMEs
Regardless of size, several transparency requirements are mandatory:
A. End of salary history questions
During interviews, HR and hiring managers can no longer ask candidates about the salary they earned in their previous jobs. This means that salary negotiations must be based entirely on the market value of the role and the candidate’s skills. Managers should be given training accordingly.
B. Recruitment stage
At recruitment stage, the salary range should be provided to the candidate before an interview or the conclusion of the recruitment process. This can be listed directly on the job advertisement or disclosed before the official interviews. All vacancies must advertise gender-neutral job titles. Employers are now legally barred from asking for employees’ salary history.
C. Right to Information
Employees have the Right to Request Information: a breakdown of their individual pay, alongside the average pay levels of colleagues doing the same work or work of equal value (i.e. of their specific worker category) broken down by sex. Employers now have 8 days to respond to a written Right to Information request.
D. Managing pay differentials
Pay transparency legislation does not mean that every employee at the same level must be paid exactly the same amount. The law permits pay differentials, provided that these are free from gender bias and that the employer can justify such a gap using objective, gender-neutral and bias-free criteria that are applied consistently to men and women. Employers are legally required to keep internal records of the objective criteria used to determine pay scales. Examples of justifiable reasons for pay differences:
-
- Experience & Qualifications: A senior accountant with 10 years of post-qualification experience can be paid more than a junior accountant.
- Performance & Competence: Documented, objective performance reviews that justify bonuses.
E. Transparency of pay setting and progression policy
Employers must have accessible written policies setting out the objective, gender-neutral criteria used to determine pay, pay levels, and pay progression. Thresholds are linked to company size.
F. Additional protections
Employers must remind all workers annually of their right to request information and the process of how to request it and they cannot prevent workers from disclosing their own pay to authorities, representatives, or a chosen union, for enforcement purposes. Any worker or representative who exercises their right to request information, cannot be retaliated against. Employers must retain all relevant data for at least five years.
G. Single source comparisons
Comparisons are not limited to workers employed by the same employer. Where a single source exists that determines pay conditions across multiple entities, a worker can compare themselves to workers in those other entities.
Summary of Action Points for Maltese SMEs
Pay transparency is not an option, and infringement of the Pay Transparency law can lead to heavy fines (ranging between €2,500 to €7,000).
Key action points:
- Carry out a structured Job Evaluation to group all workers into categories (i.e. groups of employees doing the same work, or work of equal value). Different systems are available. The Point-Factor system, for example, grades roles (not people) by using objective and gender-neutral evaluation criteria (skills including soft skills, effort, responsibility and working conditions).
- Build a salary structure around the categories of workers who are grouped together because their role entails work of ‘equal value.’ Salaries should be organised into structured bands and include basic salary, bonuses and commissions, allowances such as mobile phone allowance, benefits such as health insurance or fuel allowance and variable pay such as shift allowance.
- Ensure that all active vacancies have a defined, documented salary range.
- Remove salary history questions from interview scripts and give interviewers/managers the required training.
- Prepare to answer any employee requests for information. This entails providing a breakdown of their individual pay, the average pay levels of colleagues doing the same work or work of equal value (i.e. of their specific worker category) broken down by sex.
- Build a spreadsheet mapping out roles, responsibilities, and the objective reasons behind current compensation. Alternatively, use a Job Evaluation tool by a reputable provider to support the mapping and recording process.
What the Pay Transparency law means for employees working with Maltese SMEs
The new regulations guarantee more fairness and give employees more insights when it comes to job hunting and career progression. Employees should look out for:
- Job postings: May not initially display salary range but an employee can ask for the range before sitting down for an interview.
- Anonymity in salary discussions: Employers can no longer include “pay secrecy” or confidentiality clauses in Maltese employment contracts.
- Right to Request information: About own salary, and average pay levels of colleagues in the same worker category, broken down by gender.
- Understanding the Burden of Proof: If an employee discovers a pay disparity that cannot be explained by objective, gender-neutral criteria, the legal burden shifts to the employer. The employer must prove to the Department of Industrial and Employment Relations (DIER) or an industrial tribunal that they did not discriminate.
Why the new Pay Transparency legislation is beneficial
Pay transparency comes with multiple benefits.
For employers, it requires auditing data, refining job architecture, and training managers to explain compensation decisions objectively.
For employees, the new law is a way to build long-term organisational trust due to transparency obligations, to drive operational efficiency and to offer a roadmap of how performance correlates with financial advancement and career progression.
When properly implemented, transparency creates a fair playing field for all.
Contact us for more information
Stay up to date
Recent News & Insights
Stay up to date with the world of business and tax with news, insights and articles from our expert editors, accountants, and advisors. Our professionals provide valuable perspective on a range of topics that can help inform your business decisions and keep you informed about industry trends.
Simplified dissolution in Malta: a faster, cleaner way to close a company
Malta & the United States: A New Era of Connectivity & Opportunity
Tax Treatment of Highly Skilled Individuals Rules 2026
Mandatory Integration Course for Third-Country Nationals
Ordinary Residence (e-Residence) vs. TRP: Choosing the Right Route
