Malta’s business leaders discuss implications of EU Pay Transparency Directive

The European Union’s new Pay Transparency Directive is set to take effect in 2026, with Malta required to transpose it into national law by June of that year.

By 7th June 2027, Maltese employers will need to submit their first pay gap report under the directive. This new regulation introduces stricter pay transparency obligations, even for companies with just one employee in Malta.

At the Employment 360 Conference, organised by Shireburn Software and Fenech & Fenech Advocates, industry leaders and experts gathered to discuss the implications of this directive. The discussion centred around the challenges and opportunities that businesses, HR professionals, and senior management will face as they navigate this significant shift.

A catalyst for cultural change

Yasmin De Giorgio, CEO of Shireburn, emphasised the transformative potential of the directive. “Culture shift is one of the hardest things to manage in business, but sometimes we need the law to drive that change,” she remarked.

She noted that many HR professionals express a desire for cultural change, yet struggle to secure buy-in from the C-suite. With the new directive, senior executives will be compelled to act. “Happiness is the best productivity. A fair and transparent workplace is crucial for ensuring that employees feel valued and motivated.”

HR leaders also see this directive as a long-awaited opportunity to push for fairer and more structured pay systems.

Stefania Curmi, HR Director at LeoVegas Group, reflected on her company’s internal experience, explaining that their employee engagement surveys revealed concerns about career progression and pay fairness. “We undertook a massive clean-up of job titles and responsibilities to align our internal structures,” she shared. “This directive provides a clear starting point for similar conversations with leadership.”

Elevating HR to a strategic role

Economist and consultant Lawrence Zammit argued that the directive will finally give HR a strategic role within organisations.

“HR is still seen by many as an administrative function or a disciplinary board. This is an opportunity to shift the focus and put HR practices at the core of business strategy,” he stated. Rather than seeing compliance as a burden, he encouraged businesses to view it as a chance to modernise and implement best practices.

Addressing employer concerns

Diane Vella Muscat, Director General at the Department for Industrial and Employment Relations (DIER), acknowledged the anxiety surrounding the directive.

“There is a lot of fear. I urge employers, particularly those who are members of business chambers, to voice their concerns now while we are in the initial stages of discussion.” She encouraged companies to engage with trade unions and internal employee representatives to prepare for the upcoming changes.

The directive not only mandates transparent pay structures but also introduces internal complaint mechanisms to address discrepancies. Ms Vella Muscat highlighted a recent case in Malta where a company had a transparent pay structure but lacked clarity on allowances, leading to disputes.

The role of technology and consultants

HR professionals and consultants agree that adopting technology will be crucial for ensuring compliance. “We need to upskill our HR teams on this topic and review policies and practices accordingly,” Ms De Giorgio advised. “Technology can facilitate this process and provide the necessary data insights to maintain compliance.”

Mikela Fenech Pace, HR Consultant and Trainer, stressed the importance of building trust in the process. “The initial reaction from some executives is resistance –  ‘How dare you tell me who I pay what?’ But we must approach this with an open mind. This isn’t just about compliance; it’s about building a fairer workplace.”

For businesses operating internationally, the directive will bring added complexity. Ms Curmi highlighted the challenges of aligning pay structures across different jurisdictions, citing an example where a Senior Vice Manager in the UK had the same responsibilities as a Manager in Malta. “Bringing everything together is a challenge, but this directive will push companies to ensure greater consistency.”

While businesses still have time to prepare, speakers at the conference urged organisations not to delay. “Let’s not wait until 2026,” Ms De Giorgio cautioned. “The earlier we start, the better prepared we will be.”

As Malta moves closer to implementing the directive, businesses will need to take proactive steps, from conducting internal audits to adopting HR technology and engaging with employees.