Guest Blog Post by FHRD Member, RSM Malta
An employee asks what they are paid relative to the average for colleagues doing work of equal value, broken down by sex. The Equal Pay (Transparency and Reporting) Regulations, 2026 are already in force, so your written response is due within 8 days. Fail to answer fully within 45 days, and it becomes an offence. Most HR departments in Malta could not answer that today. Not because they discriminate, but because answering requires a defensible view of which roles are of equal value, why, and the data to prove it.
Gender-based discrimination is the Regulations’ central thrust, but the requirement to pay equally for work of equal value puts any pay difference that is not objectively justifiable – even an unintentional one – at risk. The Regulations explicitly require a compliant pay structure of every employer, regardless of size: fairness must be a system with reliable outcomes, not a feeling or an intention. And where the transparency obligations are not met, the burden of proof falls squarely on the employer.
Compliance is non-negotiable. A pay structure does not exist to be compliant, though. It exists to serve the business. It enables your talent strategy through clear and transparent pay progression, career mobility, and effective incentives. Transparency and fairness are the very foundation of employee engagement and a functioning meritocracy, and the right pay structure turns these values into a system which reliably produces intended outcomes. For most businesses in Malta, this is not a compliance project with an HR cost, but an HR project with a compliance dividend.
The compliance case
A compliant pay structure is the foundation for everything else. Several obligations require categories of workers grouped on non-arbitrary, gender-neutral, objective criteria – which is precisely what job evaluation produces.
Reporting
Employers with 100 or more employees must report gender pay gap data to the Monitoring Body – mean and median, fixed and variable pay, by category of worker and across quartile bands. The first report is due by 7th June 2027, or 2031 for those with 100 to 149 employees. All pay counts, in cash or in kind, and some sit outside payroll, requiring proactive identification.
Individual differentiation is legitimate and should exist within any healthy performance culture. But without disentangling justifiable from unjustifiable components, and providing qualitative context, even the fairest businesses may appear non-compliant. Perception can outweigh fact; accurate storytelling matters.
Pay information requests
Employees may request their own pay and the average pay, broken down by sex, for workers performing the same work or work of equal value. Again, unpolished facts without context can disengage employees who have every reason to believe they are treated fairly.
Transparency
Criteria for pay, pay levels and pay progression must be accessible to all workers in writing, though employers under 50 are exempt as regards progression. Recruitment is affected too: candidates are entitled to a pay range and pay-history questions are forbidden. Malta went further than the Directive here: what was a reporting requirement for larger employers is now a transparency requirement – gender pay gaps by category of worker, broken down by basic, fixed and variable components, provided to all workers and their representatives.
Enforcement
A historically underpaid employee may, through the Industrial Tribunal, recover the full value of lost pay. Claims must be brought within three years from when the employee knew or could reasonably have known, and the Regulations appear to set no cap on how many years can be recovered. Fines exist, but the retroactive claims are the real driver.
A gender pay gap of more than 5% in any category, left unjustified and unremedied for six months, triggers a Joint Pay Assessment with your employees’ representatives, in which the pay structure and the tools behind it are examined – and created, if absent. Where no categorisation of workers exists, a Tribunal can appoint its own expert to do it for you. The real choice is not whether your structure becomes compliant, but whether you do it at your discretion or under duress.
The people case
The payoff extends well beyond compliance. A structure built on the value of the role – its skills, effort, responsibility and working conditions – is what lets you tell a candidate what a job pays and why, without negotiating from scratch or seeding an inequity you inherit three years later. Fairness cuts both ways: incumbents are paid what the role is worth, and the business pays no more. The overpaid, mediocre outlier is no longer a silent cost.
Trust follows, and so do engagement, attraction and retention – material contributors to competitiveness in a market as talent-scarce as Malta’s. The same work yields the job architecture that underpins workforce planning and succession. Fair, documented pay is also the operating condition for a meritocracy: without it, merit is asserted rather than evidenced, and employees can tell the difference.
The catch: justification has to be evidenced
Not every pay difference is a problem. Performance, overtime, tenure increments, market scarcity and genuine differences in competence can all justify paying two people in the same category differently. But with the burden of proof reversed, a justification is only as strong as its evidence.
If performance is the reason, your performance management must survive cross-examination: consistent criteria, applied comparably across managers, documented at the time rather than reconstructed afterwards. If competence or experience is the reason, selection and promotion decisions need the same discipline. Loose appraisals and informal hiring judgements are about to become the weakest link in your defence.
Where HR should start
Confusion about what makes a pay structure compliant remains. “We don’t discriminate” and “we already have a salary grading system” are common retorts that demonstrate a false sense of security. Try a litmus test.
- Do our pay practices cluster roles into defined categories?
- Are those categories determined by the skills, effort, responsibility and working conditions the role requires?
- Are those criteria documented and applied consistently to every unique job, through evaluation rather than judgement?
- Were those judgements made with gender-neutral tools, objectively and at a granular level?
- Could we evidence all of this under scrutiny from opposing counsel before the Industrial Tribunal?
If any answer is no, the order of work is the same for everyone. Define what value means in your business. Evaluate every job against that definition, mechanically and independently, using a process built to mitigate bias and human error. Cluster the results into categories and set a salary band for each. Then map payroll against it, investigate every outlier, and justify or address it.
Expect it to surface things: many existing structures inherit the exact historical assumptions the Regulations are designed to address. A robust structure remains employers’ only reliable inoculation, but it must still let the business compete for talent and incentivise people through real progression.
At RSM Malta, we build pay structures that are compliant by design and still fit for the business – and the people – they serve.
More information can be found here.
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The Author
Yashar Dominic Klipp, Consultant, Organisational and People Advisory at RSM Malta
