The Maltese government's recent issuance of the Employment Agencies Regulations 2023 is a welcome change by those of us who have been advocating tighter and more comprehensive rules for some time now. This legislation is seen as a significant step towards establishing a more equitable playing field.

Set to be enforced from April 1, 2024, these regulations impose stringent standards for the operation of both temporary and permanent employment agencies in Malta. This Act supersedes the Employment Agencies Regulations (Subsidiary Legislation 594.18) and the Temporary Agency Workers Regulations (Subsidiary Legislation 452.106), consolidating them into a unified and modern framework.

A fundamental aspect of the Act is the licensing requirement, compelling all employment agencies and businesses to secure a valid license from the Director of the DIER. This measure, pivotal for maintaining market integrity, will hopefully be enforced rigorously to permit only legitimate and well-managed agencies to operate.

Significant provisions of the new Act include:

  • Prohibiting exclusive arrangements between agencies and employers. This is a new provision that will surely increase fees for clients. The reason for this is that exclusive contracts between agencies and clients usually carry lower fees.
  • Mandating employers and companies to only engage with registered agencies.
  • Empowering the Director General of the DIER to deny applications from agencies lacking compliance with tax and social security obligations.

Three major aspects of the Act warrant special attention:

  • Agencies Guarantee Fund: Protecting Employees - The establishment of the Agencies Guarantee Fund is a much welcomed aspect of the 2023 regulations. Managed by an Administration Board, this fund is primarily financed through mandatory bank guarantees from agencies. The size of the agency dictates the amount of the guarantee. This fund acts as a financial safety net for employees impacted by agency closures or regulatory non-compliance. In cases where an agency's license is revoked or not renewed, the bank guarantee is forfeited to the fund and distributed among affected employees.
  • Prohibition of Deceptive Practices - The Act addresses the issue of deceptive practices robustly. It specifically outlaws agencies from misleading employees into incurring debts that limit their employment mobility or applying coercion to prevent employees from terminating their employment. These measures are vital for safeguarding employee rights, especially for those susceptible to exploitative practices.
  • Prohibition on Candidate Payments - The Act upholds the stance of previous regulations on prohibiting agencies from charging fees to candidates. Importantly, it expands on this by also forbidding local agencies from receiving payments from third-parties (typically these would be agencies based in other countries), which have been proven to charge, sometimes exorbitant, fees to candidates. This practice has been a common occurrence in the market. By encompassing this broader scope of financial transactions in its prohibition, the Act effectively closes a loophole that previously allowed charging the candidate indirectly. This comprehensive approach is a critical step in ensuring a fair and ethical treatment towards job seekers.

Conclusion

The Employment Agencies Regulations 2023 signifies a substantial advancement in the regulation of employment agencies in Malta. By introducing measures for transparency, fairness, and employee protection, the Act promises to improve the employment services sector significantly. However, its success hinges on effective enforcement. Ensuring compliance, particularly where it concerns candidate payments and the operation of unlicensed agencies, is crucial. These important aspects, despite being core to the old legal framework, were weakly enforced. A renewed focus is required to guarantee the rights of employees and job seekers are upheld and the integrity of the employment market is maintained.