Pay Transparency Act: How Will it Affect Employers in Malta?

The Pay Transparency Act comes into effect as of 27th August 2025. It will subject employers in Malta to new pay transparency obligations introduced through Legal Notice 112 of 2025, which amended the Transparent and Predictable Working Conditions Regulations.

These measures represent Malta’s first step toward implementing the EU Pay Transparency Directive, which aims to reduce pay inequalities and the gender pay gap across the European Union. As salary disclosure, employee pay transparency, and cross-border compliance move to the forefront, organizations must review their policies now.

The Pay Transparency Act: What HR Leaders Need to Know

Pay Transparency Act background and HR compliance

The new rules grant important rights to both job applicants and existing employees.

For job applicants, employers will now need to provide information about the initial salary or salary range attached to the position prior to when their employment begins. In cases in which a role is governed by a collective agreement, applicants must also be given access to the relevant pay related provisions of that agreement.

Guidance issued by Malta’s Department for Industrial and Employment Relations (DIER) further indicates that applicants may request a written breakdown of their wage structure, including fixed and variable pay components.

For current employees, the legislation introduces a right to request information regarding their own individual pay level; and the pay levels applicable to categories of workers performing the same work. Consequently, employers in Malta are required to respond to such requests within a reasonable time and no later than two months from the date of the request. The term “pay level” refers to the employee’s gross annual and gross hourly remuneration and is understood to mean the salary band or range associated with the role.

The reforms are intended to improve transparency in recruitment and employment practices. To wit, employers in Malta are encouraged to review their remuneration structures, ensure compliance with the new disclosure requirements, and prepare for the wider obligations that will arise when the EU Pay Transparency Directive is fully transposed into Maltese law by 7th June 2026. The changes signal a move toward greater accountability, fairness, and consistency in pay practices across all workplaces in Malta; and by extension the European Union (EU).

What the Pay Transparency Act Changes for Employers

Employer duties under the new pay transparency rules

The Pay Transparency Act will definitely reshape how employers set, explain, and report pay, with major implications for HR compliance, employee pay transparency, and cross-border compliance across the European market. For HR leaders, the message is clear: compensation can no longer be treated as an internal black box; it must be defensible, documented, and consistent.

The overarching objective of the Pay Transparency Act is built around equal pay for equal workor work of equal value. It applies to public and private employers, including many international employers with EU operations, as it expands the principle of equal pay by adding transparency obligations at hiring stage and during employment.

For HR teams, this means that more structure and attention are demanded in order to remain compliant with the law. Crucially, the Act should lead to aligning recruitment, job architecture, payroll data, and performance criteria in order for wage decisions to be explained under more scrutiny. In practical terms, the Act pushes organizations toward cleaner employment structuring and more consistent employee onboarding communications around pay.

The biggest shift is that employers must be ready to disclose pay information earlier and more openly, including salary ranges in job postings or before interviews. Employers are also restricted from asking candidates about salary history, a rule that changes long standing hiring habits in many markets. As a result, this Act will bring about a broad change to recruitment, payment structure, and internal communication practices.

Those companies with 250 or more personnel will begin annual reporting from 7 June 2027, while 150–249 worker employers will report every three years, and 100–149 worker employers will report from 7 June 2031. If a reported gap is at least 5% and cannot be justified by objective, gender-neutral criteria, a joint pay assessment may be required.

 

Business Impact and Case Examples

The Pay Transparency Act

For international employers, the Pay Transparency Act will affect workforce solutions, compensation strategy, and EU compliance administration at once. Companies must reassess pay bands, variable pay, promotion rules, and manager training so compensation decisions are consistent across countries and business units. This is especially important for groups operating in the European market where local laws, works council obligations, and privacy rules may overlap.

Taking cross-border employment and hiring, case studies show that a Swiss company with EU based employees must still prepare for the Act, and align obligations when its workforce touches the EU.

Another practical scenario is a multinational organization that uses different salary ranges across countries but cannot clearly justify the differences with objective criteria. In such a case, under the Directive, that company may need to rebuild its grading and pay progression logic before reporting begins. As a result, HR leaders should treat this as a data, policy, and governance project, not just a legal update.

Aeroates Are Your HR Experts of Choice

How Aeroates supports pay transparency compliance

For organizations navigating the Pay Transparency Act, Aeroates is a practical HR business partner for cross-border compliance, employment structuring, and employee onboarding support. Needless to say, businesses small and large across the EU will need help translating legal obligations into workable HR processes. Likewise, international employers based outside the EU which benefit from hiring cross-border employees from the EU to grow their products and services, will need to be compliant with EU legislation.

Specialized HR Experts will now be in demand more than ever. Workforce solutions, and especially HR compliance, should be at the top of EU employers’ agenda, given the legal intricacies of the new Act. Furthermore, engaging a true HR partner can help employers move from reactive compliance to a controlled, auditable pay strategy that pays off in the long run.

Aeroates CEO Giovanna Mirabile adds: “Aeroates has robust experience in supporting companies with policy design, compensation alignment, and EU compliance administration. When employing HR experts like us, employers are sharing or even shifting the legal risks associated with compliance”.

 

Closing Guidance

In this new regulatory environment, employers that act early will be best placed to reduce risk, build trust, and stay ahead of enforcement deadlines. The Pay Transparency Act will require policy adjustments and practical expertise in employment structuring, workforce solutions, and EU compliance administration.

Aeroates is well positioned to support businesses through this transition with tailored HR guidance and cross-border compliance support. If your organization is preparing for the next stage of employee pay transparency, Aeroates can help you build a compliant, efficient, and future ready HR framework.