Malta: Trust fund for payment of maternity leave set up

A trust fund has been set up to help Maltese employers pay towards the new statutory 18 weeks maternity leave, after fears that businesses might discriminate against women when recruiting workers. The government will pay 4 weeks of the leave and has ordered employers to contribute to funding the remaining 14 weeks.

Until 2011, the statutory maternity leave in Malta was 14 weeks – one of the lowest in Europe – and was paid in full by the employers. The government had been unwilling to extend maternity leave to bring it in line with European standards because it felt that the additional financial burden on employers would harm the competitiveness of the Maltese economy.

Nevertheless, the Maltese government extended the leave to 16 weeks from 1 January 2012 and to 18 weeks from 1 January 2013 (Legal Notice 503 of 2011). It committed to paying the 4 extra weeks at a rate equivalent to the minimum wage, while the other 14 weeks were still to be paid in full by the employer.

How it will work

The Minister for Social Dialogue, Helena Dalli, announced on 11 August 2015 (Legal Notice 258/2015) the setting up of a central maternity leave fund to address the risk that employers would refuse to hire women because of the possible extra costs. Employers are to contribute 0.3% of the basic weekly pay bill for all their employees. The fund therefore spreads the financial burden of maternity leave across all employers, and employers can make small regular payments. However, they have to pay the 14 weeks maternity leave wages themselves and apply to the fund for reimbursement. The fund is supervised by a board of three employer representatives and one trade union representative together with the permanent secretaries of the Ministry of Finance and Employment Relations. A report on the administration of this fund is to be submitted every year to the Malta Council for Economic and Social Development (MCESD), Malta’s national tripartite institution for social dialogue. Estimates indicate that the fund will generate €8.5 million in maternity leave payments every year. 

Employers' reactions 

Employers have, by and large, approved the measure. The Chamber for Small and Medium Enterprises (GRTU), however, pointed out that the employers have to pay the 0.3% contribution while at the same time paying their female employees who are on maternity leave. Although the payment for maternity leave will be refunded by the trust fund, the process of applying for this reimbursement will entail extra paper work for the employer. The GRTU further stated that an impact assessment of the fund on business should have been conducted before its implementation. The Malta Employers Association (MEA) agreed in principle with the fund but reminded the government that employers still had to pay for the 14 weeks, which in other countries is paid by the state. Employers' associations also raised concerns that the system would result in an unfair subsidy by male-dominated sectors of female-dominated sectors. The system has not been changed to answer these concerns. The trade unions did not make any comment on this issue.

Commentary

Although Malta’s employment law prohibits discrimination, a subtle discrimination has probably been exercised by employers in their recruitment strategies and policies. This trust fund was set up with the aim, as stated by the minister, to eliminate the risk of any possible discrimination against women when they apply for a job. A leading Maltese economist, Karm Farrugia, has welcomed the fund, stating that ‘besides being refreshingly innovative, the new maternity leave trust fund could equally be looked upon as a solidarity gesture among employers'. 

 

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