The Employment Agencies Regulations 2023

Authors: Ann Bugeja & Christine Borg Millo

The recruitment of persons for work through an employment business plays a crucial role in shaping the landscape between job seekers and employers. An employment agency, streamlines the employment process for those individuals who seek to avail themselves of opportunities for employment, by aligning the talents of prospective employees with the professional business or employer of choice that they opt to work for.

By virtue of Legal Notice 270 of 2023, the recently established Employment Agencies Regulations (Subsidiary Legislation 452.130 and hereinafter referred to as “the Regulations”), will target the sectors of employment agencies which act as recruitment agencies, temporary work agencies and outsourcing agencies. This introduction will repeal the now archaic 1996 Employment Agencies Regulations and pave the way for better conditions regulating licence operations which revolve around the business model of an employment agency. Due to increasing local concerns related mainly to over exploration of migrant workers,  there was the need  for employment agencies to be adequately regulated so that the attraction of quality workers within various transparent and efficient work sectors remains a high priority for businesses and their employees.

Understanding the role of Employment Agencies

An “Employment Agency” or an “Employment Business”, as described in the Regulations, must carry out, “through the activity of a temporary work agency or that of an outsourcing agency” an “employment service”.[1] The latter may include any of the following activities:

• the keeping of any register of applicants for employment or the referral of applicants for employment;
• the placing  in  employment  of  applicants  for employment; 
• the placing  of  advertisements  for  the  filling  of employment  vacancies;
• the interviewing  and  selection  of applicants  for  employment; 
• the offering  of  employment contracts for, or on behalf of any employer to applicants for employment;
• the assignment of employees to user undertakings, whether such assignment is made by the employment agency or employment business.

Moreover, the Regulations also distinguish between temporary work agencies and outsourcing agencies.They both feature the concept of a natural or legal person entering into an employment contract. However, with temporary work agencies, they enter into an employment relationship with the temporary agency worker to assign, on a regular or on irregular basis, workers to user undertakings  to  work  there  temporarily  under  their supervision, direction and control.

On the other hand, an outsourcing agency would enter into an employment relationship with employees, and they would assign, whether on a regular or irregular basis, the employees to user undertakings to work there temporarily, whether by being physically present at the premises of the user undertaking or working remotely, under the supervision, direction and control of the outsourcing agency.For both scenarios, it is irrespective as to whether the activity in question is the main or ancillary activity of the agency.

Hence, the main difference between temporary work agencies and outsourcing agencies lies between the fact that:

1. for temporary work agencies, the employee, as a temporary agency worker, would offer his services to a user undertaking for a temporary period of time, under the direct orders of the employer;
2. for outsourcing agencies, the employee would be assigned to a temporary work agency, to work under the direct control and supervision of the temporary work agency and not the outsourcing agency. The work carried out by the employee may be at the actual place of work, or else via remote working.

Possessing a Valid Employment Agency licence

An employment agency must be granted a licence to conduct its relative business. The licence may only be granted for one (1) activity only. Therefore, the licence will be granted, either for the recruitment of persons for employment in or outside Malta, or else for the rendering of the activities of a temporary work agency and/or the activities of an outsourcing agency.

The mandatory licencing process required for the agencies and businesses conducting the relevant employment agency activity will commence on the first (1^st) of January 2024, where it will be the Department of Employment and Industrial Relations (DIER) that will be accepting applications for an  employment agency licence. The Regulations lists what the application must contain for the employer to be granted a valid employment agency licence, and this includes the following information:

• General Details of the applicant;
• Income Tax registration number;
• A Certificate of Good Standing with respect to applying companies;
• VAT number of the applicant;
• Address of the place of activity of the applicant, including evidence that it is registered as a class 4a premises, which is permitted to conduct commercial activity;
• Details of activity to be undertaken;
• A tax compliance certificate dated one month prior to the date of the submission of the application;
• Any other requirement as requested by the Director.

The licence will be valid for a period of not more than two (2) years, yet the period of validity remains the decision of the Director. Renewals of licences applications must be submitted two (2) months prior to the expiry date of the licence along with a signed declaration stating that the relevant activity is still being conducted, evidence of the bank guarantee and any other information that the Director may request. Prior to the issuance of a licence, the employment agency must also provide a guarantee fee.

A licenced entity is also required to have in full-time employment, at least one (1) competent person who is always available to manage the employment agency. The competent person needs to be an EU citizen, approved by the Director and must reside in Malta.

Refusal or Revocation of a Licence

The Director may refuse or revoke a licence on specific grounds which are listed in the Regulations[2], such as:

• The employment agency fails to comply with the Regulations or the conditions laid down in the licence (even though there is a possible remedy period of the breach subject to the gravity of such a breach of thirty (30) days);
• The activities of the applicant are not compatible with the object outlined in the definition of an employment agency;
• The employment agency fails to inform the Director of any changes in the nature of activity or procedures of the agency.

Conclusion

Ultimately, the symbiotic relationship between job seekers and employment agencies contributes to a more dynamic and efficient job market. As technology evolves and due to the constant change of working industries, the role of employment agencies remains adaptive and indispensable. Selecting reputable agencies and leveraging their expertise wisely can significantly enhance the prospects of both job seekers and employers during work navigation and the Regulations in this sphere facilitates a refined local network of employment agencies.

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[1] Article 2 of the Regulations;

[2] Article 9 of the Regulations;

Update:

Following the publication of Legal Notice 270 of 2023, the Employment Agencies Regulations (hereinafter referred to as “the Regulations”) will enter into force on the 1^st of April 2024.

This shall mean that all business or undertakings which function as temping agencies within the scope of the Regulations must be adequately licensed by June of 2024 since the law allows first time applicants a transitional period of two (2) months to fulfil their licence obligations.

The temping agencies shall include both temporary work agencies and outsourcing agencies as well as recruitment agencies.

The law permits a person of eighteen (18) years of age or any company or legal person to apply for the agency licence.

The procedure to apply for the agency licence shall generally be as follows:

• Prior to the lodging of the application for a licence with the Department of Industrial and Employment Relations (the “DIER”), the applicant must physically display on the premises a notice of the application, for twenty-one (21) days. The applicant must also advertise the application in two (2) daily local newspapers.
• Once the application for an agency licence is lodged with the DIER, the latter will analyse whether the licence requirements have been adhered to, along with the examining the draft notice of intention of the agency. The applicant will proceed to pay the licence fee of three-thousand-euro (€3,000) for a new licence or else a three thousand (€3,000) fee as a renewal payment.