Statutory bonus and COLA in Malta, explained
Two separate payments sit on top of every Maltese employee's agreed salary, and both are easy to leave out of a hiring budget because neither one shows up as a line item during salary negotiations. This guide covers what each one is, how much they add up to, and how they are taxed.
The statutory bonus
Every full-time employee in Malta is entitled to a government-mandated bonus of €512.52 per year, paid in four fixed instalments rather than as a single lump sum:
This is not a discretionary Christmas bonus or a performance reward — it is a legal entitlement set by the Department for Industrial and Employment Relations (DIER), payable regardless of company performance, and it cannot be negotiated away or folded into the base salary in a way that reduces it. Part-time employees receive it pro-rated to their hours.
How the bonus is taxed
The statutory bonus is taxable income in the employee's hands, added to their chargeable income for the year like any other salary payment. It is, however, exempt from social security contributions — Class 1 SSC in Malta is calculated on the basic weekly wage only, so the bonus instalments do not increase either the employee's or the employer's social security bill.
What is the cost-of-living adjustment (COLA)?
COLA is a separate, annual increase to the basic wage itself, applied every January and calculated from the previous year's Retail Price Index movement. Unlike the statutory bonus, COLA is not a fixed extra payment — it permanently raises the wage it is added to, which means it also raises the base that social security, tax and the following year's bonus calculations are built on. For 2026 the COLA increase is €4.66 per week, roughly €242 over the year.
COLA applies to every employee, from minimum wage up through higher salaries — see the minimum wage guide for how it interacts with the statutory floor.
Bonus vs COLA: the key differences
| Statutory bonus | COLA | |
|---|---|---|
| What it is | Fixed annual payment, €512.52 | Permanent increase to the wage itself |
| How it's paid | Four instalments a year | Folded into every payslip |
| Social security | Exempt | Included in the SSC base |
| Income tax | Taxable | Taxable, as part of wage |
| Changes over time | Amount is fixed by DIER | Recalculated every January |
What this means for your hiring budget
Both amounts are legal entitlements, not negotiable extras, so both need to be in a hiring budget from day one — not added later once an employee points them out. Run a salary through the employee cost calculator to see the bonus applied automatically alongside social security and the Maternity Leave Trust Fund levy, giving you the full statutory cost in one number.
Frequently asked questions
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