The private sector will have to pay more national insurance contribution for all employees – 0.3 per cent of basic wages – to build up a fund from which the 14-week maternity leave will be paid.
The fund was promised in the Budget 2015 speech after Malta extended the maternity leave to 14 weeks, prompting entities representing the private sector to complain about the financial burden it would represent.
Currently, employers pay 14 weeks of maternity leave at full wages for every pregnant employee who gives birth provided that the employee stays in employment for at least six months following her return to work.
The Malta Employers’ Association had warned in 2013 that the burden was discouraging companies from employing women of child-rearing age – even if this stopped just short of discrimination.
To overcome this, the proposal was for all companies in the private sector to pay slightly more national insurance contributions, which would go into a trust fund from which maternity leave would be paid. The trust fund created will be administered through a board of trustees and overseen by the social partners, and will become effective as soon as the legal notice is issued – envisaged by year end.
The Ministry for Social Dialogue has advised that the premium contribution would be 0.3 per cent of the basic wage of all employees, calculated by taking the number of employed females, the annual basic wage, probability of maternity, probability of females who stop working before/during/after pregnancy and the number of female employees working in the public sector.
The MEA has welcomed the scheme but has reservations about a few points
The contribution rate may be revised after two to three years. This has raised a red flag at the Malta Chamber of Commerce, Enterprise and Industry which is concerned that it could increase in the event that the fund was insufficient to cover the full cost of maternity leave in Malta.
According to the GRTU, which was briefed by the ministry, the public sector will not benefit from the fund and will continue to pay its employees on maternity leave directly.
The MEA has welcomed the scheme but has reservations about a few points. It suggested that to expedite reimbursements, the employer should submit an application on the day the employee goes out on maternity leave – as this would give 18 weeks for processing the application. It is also in favour of retaining the obligation for the mother to work at least six months following her return to work, but proposed solutions for when this is not possible.
“Should the employee not work the full six months, or simply not turn up for work, the employer will still be reimbursed. It will be up to government authorities to collect the maternity leave payments from the employee – to be returned to the trust fund. Employees who do not comply will be subject to a fine in addition to the reimbursement.
Maternity rights in the workplace
“There should also be an understanding that returning employees may, in agreement with the employer, distribute the hours to be worked during the obligatory six-month period over a longer period of time on a reduced-hour basis. Such arrangements, which are beneficial to both employer and employee, are currently prohibited by the Department of Industrial and Employment Relations,” the MEA said.
One of the major concerns for employers is that many industries – due to the nature of their work – have a very low, or non-existent female labour force.
Employers in female-dominated sectors would benefit at the expense of employers in male-dominated sectors
“The fund could consider exemptions for such companies where this is the case for a fairer distribution of the maternity leave burden,” the MEA said.
The GRTU was also concerned that employers in female-dominated sectors would benefit at the expense of employers in male-dominated sectors.
It also wants assurance that the system does not involve additional expenses, such as for payroll software.
The GRTU also stressed that the reimbursement system should be efficient to prevent unnecessary cash flow concerns.
“The GRTU will continue to stress that any form of repayment or reimbursement should be passed on to employers with immediate effect upon payment to the mother in question.”
The Malta Chamber of Commerce, Enterprise and Industry also praised the scheme as “a fair one”, especially with reference to employers who employ a balanced mix of males and females. But like the MEA and the GRTU, it is concerned that the scheme does not address the position of companies employing a majority of males, saying that it had raised this matter for discussion with the government.