New 0.3% contribution due from 6 July

As announced in the last budget, the government introduced the Maternity Leave Fund to address concerns related to discrimination based on gender at hiring stage.

Government was concerned that employers might have preferred employing men rather than women so as not to incur wage costs covering the 14 weeks of maternity leave.

With the new system of the Maternity Leave Fund, every employer will be paying a 0.3% contribution on the basic wage of every employee irrespective of the sex.

Contributions are due from 6 July. If an employee is already on her maternity leave during this time, employers will start paying the contribution from this date and so they will be entitled for a reimbursement for those weeks of maternity leave availed of after 6 July. Unfortunately the system still foresees for employers to continue also paying maternity leave directly to their employees and then apply for a refund.

GRTU believes this is an unnecessary burden on employers and is meeting government to address its concerns.

Here are some examples of how this new contribution is calculated:

Example 1: A Financial Services company employing a female worker in a managerial role with a basic pay of €35,000 and other allowances/fringe benefits amounting to €5,000. In this case the employer will be paying a contribution in accordance to the maximum capped amount of €65 per year. The average basic pay amounts to €673.08 per week. The full amount that will be refunded to the employer, through this Trust fund, will amount to €9,423.12 during the 14-week period of maternity leave.

Example 2: A retail outlet employs a sales assistant with a basic pay of € 12,000. In the case, the employer will be paying a contribution of 0.3% over the 10% NI paid by the employer which will approximately amount to €36 annually. The average basic pay will amount to €230.77 per week. The full amount that will be refunded to the employer, through this Trust fund, will amount to €3,230.77 during the 14-week period of maternity leave. Private sector employers are obliged to pay a contribution for each employee to the maternity fund as shown in the table below. This contribution is to be paid every month to the Inland Revenue Department through the FS5 form. Consequently a new line has been added in the FS5 form, indicating the amount paid by the employer towards this fund. A copy of the new FS5 is downloadable from the Inland Revenue Department's website https://ird.gov.mt/downloads/dlindex.aspx. If you have any questions about this fund, one can contact Elaine Schembri on [email protected].