Year-end HR checklist

Your essential guide

November 05, 2024

As the year draws to a close, key management is gearing up to finalise critical tasks before the end of the year. HR professionals play an important role in ensuring a smooth year-end process by making sure that the organisation stays compliant with payroll taxes and employment laws, obtaining the necessary renewals and documentation, and monitoring upcoming changes to regulations.

So, what key tasks should HR teams focus on as 2024 wraps up?

Payroll and End of year FSS reporting documents
Maltese social security contributions (SSC)
Exercise of shares/share award
Renewals of tax programmes
Renewals of work permits
Vacation Leave Reconciliation
Reconciliation/health check of employment-related documentation
Directive on adequate wages

Payroll and End of year FSS reporting documents

In-house payroll teams should ensure that all salaries, bonuses and overtime are accurately calculated with the correct tax and social security contributions deducted and paid to the Maltese tax authorities. It is also critical to verify that the authorities properly allocate these payments within their system.

Payroll teams should also confirm that the required information is correctly reported in the monthly FS5 forms and the annual FSS forms (i.e., FS3s and FS7 forms), ensuring that the disclosed figures reconcile. As part of year-end procedures, it is recommended that employees verify the validity of their Maltese income tax and social security numbers.

Changes in an employee's marital status, the applicable tax rate (e.g. from single to parent), or qualification under part-time rules (amongst other factors) may affect the payroll tax to be withheld. Payroll teams should monitor and adjust payroll deductions as necessary by year-end.

The final FS5 payment for the December payroll should be submitted to the Maltese tax authorities by 31 January 2025, and the FS7 forms for the 2024 tax year should be filed by 14 February 2025.

Maltese social security contributions (SSC)

HR professionals should make sure that the A1 certificates or exemption letters for employees who opt to continue paying their contributions in their home country are obtained from the foreign jurisdictions and processed by the Maltese Social Security Department.

The team should ensure that the exemption letters authorising employers not to pay social security contributions in Malta (e.g. in case of disability or carers) are issued and held on file to support any future inquiries.

Exercise of shares/share award

Challenges may occur when the 15% tax on the exercise of share options or the transfer of share awards is not fully deducted by year-end through FSS, possibly as a result of the 50% cap imposed by the FSS Rules. HR professionals should find solutions to comply with these rules while ensuring that the online FSS year-end submissions are made.

Additionally, HR teams should ensure that all share option awards are accurately documented and communicated to the recipients of such schemes. Any changes or updates to these awards should also be properly recorded and communicated to the relevant parties.

Renewals of tax programmes

The eligibility of the 15% tax rate for beneficiaries under certain tax programmes (after the initial qualifying period or the first extension period has expired) depends on submitting a renewal application to the relevant authority.

Failure to submit this application may risk losing eligibility for the 15% rate in the respective year. Monitoring expiry dates and ensuring that the qualifying period does not lapse is key.

Vacation Leave Reconciliation

Companies should ensure that employees are making use of their annual leave entitlements, particularly in instances where companies have specific policies relating to the carrying forward of leave entitlements from one year to the next. In addition, in terms of Maltese law, payslips should include the number of hours of annual leave availed of and any remaining balance. HR professionals are encouraged to keep adequate records on file of the different types of leave utilised by their employees.

Reconciliation/health check of employment-related documentation

HR professionals may take the opportunity to review their employment-related documentation and ensure that such employment-related documentation such as promotions or increases in salary which have been received during the year have been properly documented and recorded, shared with the respective employee and copies of such communication are being kept on file. If you don’t have a remote working policy that is sensitive to non-Maltese tax risks (both personal and corporate), the suggestion is to prepare one.

Directive on adequate wages

In accordance with Directive 2022/2041 on adequate minimum wages in the EU, employers may expect to see changes and updates relating to minimum wages in Malta. The directive should be transposed by EU Member States by 15 November 2024 and therefore, employers should be on the lookout for updates in this regard.

These are some key tasks that HR professionals should prioritise on their year-end checklist. A proactive and organised approach to these year-end tasks will ultimately contribute to the company's operational success and employee satisfaction.