Revised Wage Supplement Scheme launched in 2021

Reece Delia  -  8/January/2021

The COVID-19 pandemic has left its mark on every aspect of people’s lives and business owners have certainly not been spared from the difficulties that the pandemic has given rise to. The government introduced the Wage Supplement Scheme in 2020 with the primary objective of incentivising businesses to retain their workers while at the same time preventing a rise in the unemployment rate and assisting economic recovery.

The updated Wage Supplement Scheme (hereinafter referred to as the “revised Scheme”), launched earlier on this week and which is to be implemented until at least March 2021, is considered to be a fairer alternative when compared to the previous programme. As will be explained hereunder, the revised Scheme will primarily seek to assist businesses who are in greater difficulties through an increased investment from the Government so as to ultimately save jobs, with 60% of applicants retaining the current amount of the Wage Supplement or higher.

Replacement of Employees

The revised Scheme covers replaced employees in Summer 2020 to be paid as from October 2020. Businesses who have engaged new employees to replace those employees that resigned on a voluntary basis will become eligible for a wage supplement. However, businesses must meet the following conditions to be eligible for this Scheme:

  • The number of employees benefiting from the wage supplement should not increase beyond the number of employees on a wage supplement as of 29th May 2020;
  • The wage supplement for those employees replaced will be paid as from October 2020;
  • The applicant has to provide a written declaration, signed by the legal representative of the applicant, that the termination was on a voluntary basis;
  • The legal representative of the applicant has to declare that employment conditions for the employee being replaced are not less favourable than those of the employee that has been replaced.

Amendments to the Wage Supplement Scheme

As mentioned earlier, the revised Scheme will be amended to assist those businesses which were most impacted by the COVID-19 pandemic. To this end, instead of providing assistance that corresponds to their respective NACE code, businesses will now be given assistance according to the losses that have been incurred during the pandemic.

One should note that the revised Scheme will remain open for those businesses that were eligible to date. Moreover, businesses are not required to re-apply as Malta Enterprise will be using the same applications that had been originally submitted. In addition, one should also note that wage supplements will continue to be paid on a monthly basis.

Given that the revised Scheme being based on VAT returns, a data sharing agreement was reached between Malta Enterprise and the VAT Department, with the latter providing all the necessary data related to the applicant’s VAT Number. More concretely, the level of support provided to businesses will be calculated according to the difference in turnover declared over six months between March and October 2019 in the VAT Returns submitted, vis-à-vis the turnover declared over six months between March and October 2020 in the VAT Returns submitted.

Depending on the percentage drop in sales as per the difference determined through the comparison aforementioned, the wage supplement amounts to be provided are as determined as follows:

Percentage drop in sales

Monthly Wage Supplement Rate (gross) – full timers

Monthly Wage Supplement Rate (gross) – part-timers and casuals

55% or greater



45% up to 54%



35% up to 44%



25% up to 34%



10% up to 24%



Increase in revenue up to 9% drop in sales




Final Points

Businesses that are VAT Exempt will be following the original Wage Supplement Scheme, where the level of support was determined according to the NACE code categorisation. These businesses will be classified under Annexes A, B, and C as there is no basis of comparison for them. Moreover, businesses which had to close down following the issuance of Legal Notices by the Superintendent of Public Health will continue to receive the wage supplement at the maximum support level.

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