Legal Notice 270 of 2023 has introduced the Employment Agencies Regulations (referred to as "the Regulations"), which will specifically target recruitment agencies, temporary work agencies, and outsourcing agencies. This update replaces the outdated 1996 Employment Agencies Regulations and aims to enhance the regulation of licensing operations pertaining to the business model of employment agencies.

The amendment addresses growing local apprehensions, particularly regarding the influx of migrant workers, necessitating adequate regulation of employment agencies. This ensures that the attraction of high-quality workers across transparent and efficient sectors remains a top priority for businesses and their employees.

The new changes aim to standardize the conditions governing employment agencies, establish transparent procedures, enforce licensing conditions, and ensure the commitment of qualified and competent individuals to these standards. These regulations will take effect on April 1, 2024.

The Regulations do not extend to the following people:

1. Employers conducting recruitment activities solely for positions within their own enterprises;
2. Recruitment conducted on behalf of employers whose identities are explicitly stated in employment advertisement;
3. Outsourcing agencies offering professional services by certified professionals, technical services for equipment and machinery installation, maintenance, and repair, and surveying services for machinery and vessels; and
4. Jobsplus when performing the duties of an employment agency.

As per the Regulations, an entity defined as an "Employment Agency”, or "Employment Business" must engage in an "employment service" through the operations of either a temporary work agency or an outsourcing agency. Such service may encompass the following activities:

1. Maintaining a register of job seekers or referring them to potential employment opportunities;
2. Facilitating the placement of job seekers into suitable positions;
3. Advertising job vacancies on behalf of employers;
4. Conducting interviews and selecting candidates for employment;
5. Extending employment offers or contracts to job seekers, either directly or on behalf of employers; and
6. Assigning employees to client enterprises, whether undertaken by the employment agency or employment business.

As aforementioned, the Regulations make a clear distinction between temporary work agencies and outsourcing agencies. Both involve a natural or legal person engaging in an employment contract. However, temporary work agencies establish an employment relationship with temporary agency workers to assign them to user undertakings on a regular or irregular basis. These workers operate temporarily under the supervision, direction, and control of the temporary work agency.

Conversely, outsourcing agencies establish an employment relationship with employees whom they assign, whether regularly or irregularly, to user undertakings. These assignments may involve physical presence at the user undertaking's premises or remote work, and the employees operate under the supervision, direction, and control of the outsourcing agency. In both cases, whether the activity is the primary or ancillary focus of the agency is immaterial.

An employment agency must obtain a license to conduct its respective business activities. Each license is designated for a single activity. Therefore, the license will be granted either for recruiting individuals for employment within or outside Malta, or for engaging in the operations of a temporary work agency and/or outsourcing agency.

The mandatory licensing procedure for agencies and businesses engaged in relevant employment agency activities commenced on January 1st, 2024. The Department of Employment and Industrial Relations (DIER) is responsible for accepting applications for an employment agency license. The Regulations outline the necessary information that must be included in the application for the employer to obtain a valid employment agency license.

According to the Regulations, the duration of the license will not exceed two (2) years, although the Director retains discretion over its validity period. Applications for license renewals must be submitted at least two (2) months before the expiration date, accompanied by a signed declaration confirming the ongoing conduct of the relevant activities, evidence of the bank guarantee, and any additional information requested by the Director. Additionally, prior to license issuance, the employment agency must furnish a guaranteed fee.

Furthermore, a licensed entity must employ at least one (1) competent individual on a full-time basis, who is always available to oversee the operations of the employment agency. This competent person must be an EU citizen, approved by the Director, and must be a resident of Malta.

Finally, according to Article 9 of the Regulations, the director reserves the right to decline or withdraw a license based on specified grounds outlined in the Regulations, including but not limited to:

1. Non-compliance with the Regulations or the conditions specified in the license, with a possible remediation period of thirty (30) days depending on the severity of the breach;
2. Conducting activities that are inconsistent with the defined purpose of an employment agency; and
3. Failure to notify the Director of any changes in the agency's operations or procedures.

As aforementioned, the regulations will come into force on the 1st April 2024. This implies that all businesses or enterprises operating as temporary employment agencies within the Regulations' purview must obtain proper licensing by June 2024, as the legislation grants initial applicants a two-month transitional period to meet their licensing requirements. Temporary employment agencies encompass both temporary work agencies and outsourcing agencies, as well as recruitment agencies.

Individuals aged twenty-five (25) or older, as well as companies or legal entities, are eligible to apply for the agency license as per the law.

For further information or assistance kindly contact Dr Cherise Abela Grech.