The Minimum Wage and Collective Bargaining Regulations, 2024 (‘Regulations’) were published on the 6th of December 2024, by means of Legal Notice 332 of 2024, transposing Directive (EU) 2022/2041 – known as the Adequate Wage Directive.

The Directive sets out a framework to achieve an adequate minimum wage across all EU Member States, by promoting collective bargaining for wage-setting, and enhancing workers’ access to minimum wage protection as provided in national law or collective agreements.

Given that Maltese law already provides for national minimum wages, sets overtime rates, a cost-of-living adjustment mechanism (resulting from a social pact established in the 90s) and facilitates collective bargaining, one might question the need for new domestic regulations to transpose this Directive. This, more so, considering that public sector employment is already largely regulated by collective agreement, and a modest percentage of private sector employers are bound by collective agreements.

Maltese law also establishes the Employment Relations Board (ERB), a body composed of government representatives, and representatives nominated from workers organisations as well as employers’ organisations sitting on the MCESD. The ERB is entrusted to propose sectoral agreements having legal force, of which we have several in the form of Wage Regulation Orders (WROs). Where there is no WRO for a sector, the law caters for minimum conditions, including minimum wages, subject to yearly COLA increases.

Nevertheless, the drive behind the EU Directive seems to be that of ensuring an adequate wage – which the national minimum wage might not be.

Therefore, even if WROs and National Standard Orders can be said to broadly fulfil the purpose of establishing minimum conditions, including minimum wages, for all sectors, it is also true that several organisations in the private sector are not covered by a collective agreement. In fact, there is no statutory mechanism which extends the terms of collective agreements to employers who did not sign them.

Accordingly, as mandated by the Directive, Malta has now introduced a minimum collective bargaining “coverage rate” of 80%, meaning that the share of workers at national level to whom a collective agreement applies must not be less than 80%. The share is to be calculated as a ratio of the number of workers covered by a collective agreement to the number of workers whose conditions may be regulated by collective agreements in terms of law and practice.

Public reports suggest that in 2014 Malta’s coverage rate was hovering around the 42% mark, whereas in 2019 it increased to circa 55-60%, still contrasting with countries such as Italy (97%), Austria (94%), Spain (91%), Finland, France (both 90%) and Sweden (89%). The new Regulations do not make any reference to the existing Wage Regulation Orders (WROs). Whether employees whose employment conditions are governed by a WRO are to be included within the 80% coverage rate even if there is no collective agreement, is an unknown – but seems not, as WROs are not collective agreements.

In any case, if the coverage rate is found to be less than 80%, the Minister responsible for employment must (shall) establish an ‘action plan’ to enable collective bargaining, either by law after consulting the social partners or by agreement with them. Measures must be implemented to promote collective bargaining and the Minister must (shall), with the social partners, promote the capacity of social partners in sector or cross-industry level. He must foster constructive, meaningful and informed wage negotiations, implement measures to (a) protect the right to collective bargaining on wage-setting and (b) to safeguard workers and trade union representatives from discrimination during collective bargaining.

Seemingly, the Regulations establish an obligation of “effort”, not of result per se. The action plan is to contain a timeline and targets to progressively increase the rate of coverage. One can only but speculate on the action plan that will be unveiled. Could this lead to the controversial proposal of mandatory union membership for all employees? Will it downgrade the ERB, and WROs? How will employer associations react to this? One wonders!

Of note is that the Minister must now also protect trade unions and employers’ organizations from “interference by each other or their agents/members” in their establishment, functioning, or administration.

Whatever this might mean in practice is yet to be seen, though this provision will most certainly be banded about by those unions who each claim representation at the same workplace or who desire segregation of the workforce.

The Regulations apply to all employees, excluding seafarers, who have an employment contract and/or employment relationship within the territory of Malta as defined by law, collective agreements, or practice with consideration to CJEU jurisprudence. They reiterate some already-existing protections from employees, including their right to minimum wages and recourse to the DIER in cases of breach, and protection from victimisation or dismissal if they complain due to an employer’s failure to pay minimum wages. The burden of proof in cases where employers fail to abide rests on the employers.

Aside from empowering the Minister, the DIER is now also entrusted with gathering data to determine the coverage rates in Malta. Trade unions and employers’ associations are required to keep up-to-date records and to provide information to the DIER upon request.  

Employers, on the other hand, must engage with ‘recognised unions’ once the latter make a request in writing to negotiate. In fact, an employer must now communicate its “acceptance of the request for negotiation” within 30 days from receiving the request.