For years, many organisations have relied on unwritten practices when determining pay. Managers knew why one employee earned more than another; HR understood the rationale; and employees complied. The reasoning existed, but often only in people’s heads.
That approach is no longer enough.
On 5 June 2026, Malta transposed Directive (EU) 2023/970, commonly referred to as the EU Pay Transparency Directive, through Legal Notice 173 of 2026, introducing the Equal Pay (Transparency and Reporting) Regulations, 2026.
This is not simply another employment law compliance exercise. It represents a fundamental shift in how employers must approach remuneration, recruitment and workplace transparency.
The objective is straightforward: to strengthen the principle of equal pay for equal work, or work of equal value, and to provide employees with greater visibility into how pay decisions are made.
For employers, however, the implications are far-reaching. Pay structures that have long been adopted, may now come under scrutiny. Decisions that were once accepted without question now need to be explained, documented and justified.
The question is no longer whether your organisation pays fairly. The question is whether you can prove it.
What Is Changing?
The new regulations apply across both the public and private sectors and introduce a wide range of obligations relating to:
- Pay transparency and pay-setting practices;
- Employees’ rights to access pay-related information;
- Recruitment and salary disclosure requirements;
- Gender pay gap reporting obligations for employers employing 100+ employees; and
- Joint pay assessments where significant pay disparities are identified.
While some reporting obligations will be introduced gradually over the coming years, several transparency requirements are already in force. Organisations that begin reviewing their pay frameworks now will be significantly better positioned than those waiting until reporting deadlines approach.
Equal Pay Is Not New. Transparency Is.
The principle of equal pay for equal work has long existed in Maltese and European employment law. What has changed is the level of transparency and accountability expected from employers.
The regulations do not require all employees performing similar roles to receive identical remuneration. Differences in pay remain lawful where they are based on objective, gender-neutral and bias-free criteria, such as:
- Skills and competencies;
- Qualifications;
- Experience;
- Performance;
- Responsibilities; and
- Other factors which are relevant to a specific job or position.
However, employers must now be able to demonstrate that these differences are objectively justified.
This requires organisations to move beyond simplistic job titles and salary bands and towards remuneration frameworks that can withstand scrutiny. In practice, employers should be able to explain not only what employees are paid, but why.
The End of “Because That’s What We’ve Always Done”
One of the most significant changes introduced by the regulations is the requirement for employers to clearly define and document how remuneration decisions are made. Employers will need to maintain clear criteria explaining:
- How pay is determined;
- How pay levels are established; and
- How employees progress within pay structures.
These criteria must be accessible to employees.
Although employers with fewer than 50 employees are exempt from maintaining a formal pay progression policy, employers with 25 or more employees must still retain internal documentation explaining the criteria used to determine pay, pay levels and pay progression.
The message from the legislator is clear: pay decisions should no longer be a mystery.
Is Your Organisation Ready?
Many organisations are focusing on the future reporting obligations. Yet the real challenge may lie elsewhere. The new rules require employers to critically assess whether their existing remuneration practices are structured, documented and capable of objective justification.
For some organisations, this will simply mean formalising processes that already exist. For others, it may require a more comprehensive review of pay frameworks, grading structures, recruitment practices and internal policies.
Don’t get lost in sophisticated pay structures, but those that can clearly explain, justify and document them – because under the new rules, having a reason for a pay difference is no longer enough. You must be able to demonstrate it.
Should you wish to discuss how these regulations may affect your organisation, or require assistance reviewing your remuneration framework and compliance obligations, please contact one of our team members at Camilleri Preziosi Advocates.
