The Introduction of the Employment Agencies Regulations of 2023

The Employment Agencies Regulations of 2023, which will come into force as from the 1st April 2024, introduce a new regime for regulating the services provided by employment agencies, which were, until now, largely unregulated. These Regulations target employment agencies that provide recruitment services, temporary work services and/or outsourcing services. Certain activities such as recruitment performed by an employer for employment in its own business, recruitment by marketing agents on behalf of any employer whose identity is clearly specified in an advertisement and outsourcing agencies offering professional, technical and surveying services, are excluded from the scope of these Regulations.

The main pillar of the Employment Agencies Regulations is the mandatory licensing. A corresponding duty is imposed on user undertakings which will only be able to make use of employment services from licensed providers. Applications will start being accepted by the Department of Employment and Industrial Relations (‘the DIER’) as from the 1st January 2024. The application must specify the type of agency service to be provided and the activities proposed to be carried out. The licence fee has been set at €3,000 in the case of first-time applications and €1,500 in the case of application renewals. The application for a licence will include a vetting process undertaken by the police force whose task will be to verify if the applicant and other persons involved in the agency are fit and proper, and this against a list of criteria set out in the same Regulations. A Working Committee has also been established to then vet the results of the police’s vetting process.

A central figure of the employment agency will be the competent person – a full-time employee exclusively employed by the employment agency to manage the business of that agency. The competent person must be an EU/Maltese citizen residing in Malta with a set number of years of experience and qualifications as outlined in the Regulations.

Before the start date of the validity of the licence, agencies providing temporary work services or outsourcing services must provide a bank guarantee in favour of the Employment Agencies Administration Board. In the case of agencies employing less than twenty employees, the amount of the guarantee shall be that of €20,000, whilst in the case of agencies employing twenty or more employees, in addition to the €20,000, a further sum equivalent to 2% of the total annual payroll, up to a maximum of €300,000, needs to be provided as a guarantee. The bank guarantee becomes significant in the case of termination of employment by the temporary agency or outsourcing agency resulting from the revocation or non-renewal of a licence by the Director of the DIER. In this case, the terminated employee is entitled to compensation through the Agencies Guarantee Fund which is administered by the Administration Board. The latter must distribute the guarantee fund equally among all the employees of the employment agency.

On revocation or non-renewal, the Department will also publicly announce the name of the person/s subject to the sanction, the specific breach of the provisions of these Regulations and the penalty or measure imposed. Moreover, such information shall be shared with the Department of Contracts so as to bar participation in public procurements,with Identity Malta Agency which will refuse acceptance of applications by the agency in question and with the Malta Police Force. Apart from the risk of being blacklisted, any person who contravenes any provision of these Regulations shall be liable to a fine ranging from €5,000 to €7,000. If the offence consists in the operation of an employment agency without a valid licence, the fine ranges from €25,000 to €30,000.

Despite the introduction of the Employment Agencies Regulations, persons who, before the coming into force of this law, were engaged in any activity related to employment agencies which offer recruitment services, and are in possession of a valid license to carry out such operation, may continue to carry out such activities as authorised under the conditions of the existing licence until the expiry of such licence. Despite this, such persons must apply for a new licence at least two months before the expiry of the existing licence or, if the existing licence expires earlier than two months from the entry into force of these Regulations, they must apply for the new licence not later than one month from the entry into force of these Regulations. Any existing licence that expires during the said one month period shall be deemed to have been extended accordingly.