Managing Hybrid & Remote Work: Legal Pitfalls for Employers in Malta

Authors: Ann Bugeja & Matthew Grech

Remote and hybrid work are no longer exceptional arrangements within Malta’s labour market. What began as a pandemic-driven necessity has since evolved into a permanent feature of modern working practices across many sectors. While Malta has not enacted a single comprehensive law governing remote work, remote working arrangements are regulated by the Telework National Standard Order (the Order), alongside a wider body of employment legislation. Consequently, employers managing remote or hybrid employees must navigate a range of overlapping legal obligations, including employment protection rules, working-time requirements, data protection obligations, anti-discrimination provisions, and, in some cases, cross-border tax considerations.

The Governing Legal Framework

Remote work in Malta is principally regulated through:

• The Employment and Industrial Relations Act (EIRA)[1];
• The Telework National Standard Order (the Order)[2];
• The Organisation of Working Time Regulations[3]; and
• The Data Protection Act[4].

Remote workers retain full employee status under the Employment and Industrial Relations Act (EIRA). Their statutory rights and protections, including protection against unfair dismissal, entitlement to leave, notice periods, and equal treatment, apply regardless of where the work is carried out.

In practice, remote work is not recognised as a separate category of employment. Rather, it is simply an alternative way of performing employment duties, subject to the same legal rights and obligations that govern traditional workplace arrangements.

Telework Under S.L. 452.104: Consent, Structure, and Equality

The Order represents the principal piece of legislation specifically addressing remote working in Malta. Although essentially the title is Telework, this is merely a term that is no longer used and has recently been replaced with remote working.[5] The concept of remote work is founded on the principle of mutual consent. As a general rule, remote working arrangements must be agreed upon by both employer and employee.

Moreover, the Order requires that remote working arrangements be regulated in writing. Essential terms typically include:

• The place of work
• Working time structure
• Supervision and reporting mechanisms
• Equipment provision and maintenance
• Data protection and confidentiality obligations

The Order also regulates practical aspects of remote working. In particular, employers generally remain responsible for providing, installing, and maintaining the equipment necessary for remote working unless the parties agree otherwise. Employers must also take appropriate measures to safeguard data security, respect employees’ privacy, and ensure that remote workers receive the same employment opportunities as comparable on-site employees.

Remote workers must enjoy equal treatment and must not be treated less favourably than on-site employees. This includes equal access to training, career progression, and employment conditions.

From a risk perspective, the most common failure is informality: the absence of clear, written arrangements governing remote and hybrid work. Employers who operate hybrid arrangements without contractual documentation or other formal written agreements reflecting such arrangements risk disputes over overtime, availability expectations, expense reimbursement, equipment maintenance responsibilities, data security obligations, or even jurisdictional questions relating to the place of work. The Order seeks to minimise such disputes by requiring clear written arrangements that define the respective rights and obligations of both parties.

Working Time Compliance and the Absence of a “Right to Disconnect”

The Organisation of Working Time Regulations transpose EU working time standards into Maltese law, imposing:

• A maximum average forty-eight hour working week (including overtime)
• Minimum daily and weekly rest periods
• Statutory annual leave entitlements

These obligations apply identically to remote workers.

Malta has not enacted a general statutory “right to disconnect” applicable across the workforce.[6] A right to disconnect generally refers to an employee’s ability to disengage from work-related communications and tasks outside normal working hours without adverse consequences. Such rights are designed to safeguard statutory rest periods and working-time limits in the context of increased digital connectivity.

Although a right to disconnect has been introduced within the public service through an administrative remote working policy, no equivalent legislation currently exists for private employment relationships.[7] This absence does not relieve employers of working time duties. Arrangements that encourage or implicitly require employees to remain constantly available outside working hours may breach statutory rest requirements or generate overtime liabilities, thereby exposing employers to legal claims.

Compliance may require employers to monitor workloads and working patterns. Any such monitoring must itself comply with data protection and privacy law, thereby creating a potential regulatory tension between the enforcement of working-time standards and the protection of employees’ personal data.

Data Protection and Employee Monitoring

Hybrid and remote work also raise important data protection considerations under the GDPR and Malta’s Data Protection Act (Chapter 586)[8]. Employers who monitor remote employees must ensure that any processing of personal data has a lawful basis, is transparent, necessary, and proportionate. Monitoring arrangements should be clearly communicated through remote working agreements or workplace policies, as excessive or unjustified surveillance may breach data protection obligations, infringe employees’ privacy rights, and undermine the enforceability of disciplinary action.

Cross-Border Remote Work and Permanent Establishment Risk

One of the most legally complex dimensions of remote work arises in cross-border contexts. Malta’s Income Tax Act[9] offers no comprehensive standalone definition of permanent establishment. Instead, the concept derives primarily from international tax law principles. An important source of reference is the Commentaries on the Model Tax Convention on Income and Capital published by the Organisation for Economic Co-operation and Development (OECD) and Malta’s extensive double-tax treaty network.[10]

The concept of a permanent establishment is important because it determines whether a foreign enterprise becomes subject to corporate income tax obligations in Malta. A permanent establishment finding may trigger registration, reporting, and income tax obligations on profits attributable to Malta-sourced income for the enterprise.

As per OECD principles, the concept of a permanent establishment is generally defined as a fixed place of business through which the business of an enterprise is carried on. Important considerations include whether:

• the place of business is at the disposal of the enterprise (i.e., that the enterprise has sufficient control), and
• the enterprise has a sufficient degree of permanence in the jurisdiction in which it is not established.

A Maltese home office may constitute a permanent establishment. However, work-from-home arrangements do not automatically create a permanent establishment for the enterprise, as homes are typically under the control of the employee. Determining whether a home constitutes a permanent establishment for the enterprise would generally consider aspects such as whether:

• the employee is carrying on preparatory or auxiliary activities,
• the activities of the employee go beyond incidental or occasional work, and
• the work-from-home arrangement is of an intermittent nature.

Recent guidelines by the OECD introduce a “50% threshold”. That is, where an employee spends less than 50% of his work hours working from home over a 12-month period, that home would not generally be considered as a place of business for the enterprise. However, if the “50% threshold” is met, it would need to be determined whether the enterprise has a commercial reason for allowing such individual to work from home for that amount of time.

For example, where an employer requires an employee to work from Malta on a continuous basis and effectively treats that location as an operational base, the “at the disposal” criterion may be satisfied. Conversely, where remote work is genuinely voluntary and not mandated or controlled by the employer, permanent establishment risk is typically reduced, although it is never eliminated entirely.

Foreign enterprises with employees habitually working from Malta must therefore conduct a case-by-case analysis.

The issue is not limited to foreign employers with personnel working from Malta. Maltese employers permitting employees to work remotely from another jurisdiction may similarly create permanent establishment exposure abroad.

Long-term cross-border remote working arrangements should therefore not be approved without fact-specific legal and tax advice.

Discrimination, Disability, and Reasonable Accommodation

Remote work frequently engages anti-discrimination obligations, particularly where employees have a disability or a medical condition.

In Christopher Zammit Dimech v Cherry Limited, the employee was employed as a creative web designer with the defendant company. Following medical advice relating to a heart condition, he was advised to work from home, which the company initially agreed to. After approximately one month, the company requested that he return to the office. The employer offered him the possibility of returning with reasonable adjustments or, alternatively, resigning from his employment and continuing to provide certain services to the company on a freelance basis. The employee did not resign and failed to provide the requested details regarding his return to office-based work. As a result, the company treated his conduct as an abandonment of employment.

The Industrial Tribunal examined the employer’s obligation to provide reasonable accommodation to an employee with a disability. In particular, it considered whether allowing the employee to continue working from home would cause prejudice to the employer. The Tribunal found that the employer had failed to demonstrate sufficient prejudice arising from the employee’s continued home working and therefore had not established a sufficient justification for refusing the accommodation.

The Tribunal consequently found that the termination of employment was both unjust and discriminatory and awarded the employee a total of €30,000 in compensation, comprising €20,000 for unfair dismissal and €10,000 for discrimination. However, the Tribunal did not order reinstatement, taking into account the employee’s abandonment of his employment. The case is particularly significant because it demonstrates that, where an employee’s medical condition amounts to a disability, working from home may constitute a form of reasonable accommodation, and an employer cannot simply refuse such an arrangement without demonstrating sufficient prejudice or other justification.

Conclusion

Remote and hybrid working arrangements carry significant legal implications. They alter the factual circumstances through which employment rights, tax obligations, data protection requirements, health and safety responsibilities, and regulatory duties are assessed.

Malta’s legal framework governing remote work is relatively mature but remains fragmented. Employment protections, working-time regulations, privacy obligations, anti-discrimination duties, and international tax considerations frequently intersect, creating complex compliance challenges for employers.

A common mistake is to regard remote work as merely an operational arrangement. In reality, it has important legal consequences that may affect contractual rights, regulatory compliance, workplace monitoring, discrimination obligations, and corporate tax exposure.

Employers who adopt clear contractual frameworks, maintain robust compliance procedures, and assess cross-border risks proactively will be better positioned to manage remote work effectively. On the other hand, reliance on informal arrangements may expose organisations to employment claims, discrimination awards, regulatory enforcement action, and unexpected tax liabilities.

The careful legal structuring of remote and hybrid working arrangements is therefore not optional: it is an essential component of risk management and of the effective protection of both employers’ and employees’ rights.

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[1] Chapter 452 of the Laws of Malta.

[2] Subsidiary Legislation 452.104.

[3] Subsidiary Legislation 452.87.

[4] Chapter 586 of the Laws of Malta.

[5] Remote work vs Telework – remote work and telework are often used interchangeably, but they carry a subtle distinction rooted in how much flexibility is involved within the nature and scope of the working arrangement. Telework typically refers to an arrangement where an employee still has a designated office or default place of work they belong to, but works from home or another location for some or all of the week under a formal policy set by the employer, often with defined schedules, specific eligible roles, and equipment or security requirements tied to that employer’s premises. Remote work, by contrast, usually describes a broader and more flexible arrangement where the employee may work from any location other than their default workplace, sometimes even across countries or time zones, with the role itself designed around location independence.

[6] https://gvzh.mt/insights/right-to-disconnect-new-reality/

[7] chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://www.maltachamber.org.mt/wp-content/uploads/2023/03/ef70b2e5-c26e-41f9-9bad-9ac26b64673f.pdf

[8] chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://idpc.org.mt/wp-content/uploads/2020/07/CAP-586.pdf

[9] Chapter 123 of the Laws of Malta.

[10] OECD (2019), Model Tax Convention on Income and on Capital 2017 (Full Version), OECD Publishing, Paris, https://doi.org/10.1787/g2g972ee-en. Kindly note that the OECD MTC/Commentaries have been amended recently.