Bonus Agreement Template (Malta) — Ftehim dwar Bonus
Updated on 13 August 2026
Malta has something almost no other market in this project's coverage has: a government-set statutory bonus, paid twice a year on top of ordinary wages regardless of performance, alongside a separate statutory weekly allowance (the cost-of-living adjustment). For 2026 the statutory bonus is set at a fixed amount payable by the end of June and again in December, with the weekly allowance paid alongside wages — figures set by government notice each year, not by the employer.
A discretionary or performance bonus agreement copied from a UK or US template says nothing about this, and risks being read — wrongly — as though it covers or replaces the statutory entitlement. This template keeps the two completely separate: the statutory bonus and allowance are acknowledged as a distinct, non-negotiable floor, and the discretionary or performance bonus this agreement actually creates sits on top of it.
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Bonus Agreement (Ftehim dwar Bonus)
- Date:
- Employer:
- Employee:
1. Statutory bonus and allowance
The Employee remains entitled to the statutory bonus and weekly cost-of-living allowance at the rates and on the dates the Government of Malta sets from time to time, paid through payroll in addition to, and unaffected by, the discretionary bonus described in this Agreement.
2. Discretionary bonus
In addition to the statutory bonus, the Employer shall pay the Employee an earned bonus on the conditions set out in this Agreement.
3. Targets
The targets for are:
4. Payment
Any discretionary bonus payable is paid on through payroll, subject to tax.
5. Clawback
The Employer may require repayment of the discretionary bonus, but not the statutory bonus, within months of payment for gross misconduct or materially inaccurate results.
6. General
This Agreement is governed by the laws of Malta.
For the Employer
Date:
Employee
Date:
Separate the statutory bonus from the discretionary one
Malta's statutory bonus and weekly allowance are paid to virtually all employees regardless of performance, at rates the government sets and updates — they are not something an employer can reduce, substitute with a discretionary scheme, or fold into a performance bonus without falling short of the legal minimum. This template states plainly that nothing in the discretionary or performance bonus it creates reduces or replaces the statutory entitlement, which continues to be paid through payroll on the government's schedule.
Set the discretionary scheme's own terms
Once the statutory floor is acknowledged, the rest of the agreement can set genuine performance terms: targets, calculation, payment date and good-leaver carve-outs — exactly as any performance bonus scheme should, in any market.
Get any clawback right
A clawback of a discretionary or performance bonus needs to be agreed clearly in the contract in advance and cannot reach into the statutory bonus, which is not part of the negotiated bonus scheme at all. This template's clawback is scoped to the discretionary payment only, with defined triggers and a bounded recovery window.
Clause-by-clause guide
- Statutory bonus and allowance
- Acknowledges the government-set statutory bonus and weekly allowance as a separate, non-negotiable entitlement paid through payroll on the government's schedule.
- Nature of the discretionary bonus
- States whether the scheme this agreement creates is discretionary or an earned entitlement, distinct from the statutory bonus.
- Targets and calculation
- The performance period and the formula or amount for the discretionary or performance bonus.
- Eligibility and leavers
- The active-employment condition plus good-leaver carve-outs for the discretionary bonus.
- Clawback
- Scoped to the discretionary payment only, with defined triggers and a bounded recovery window.
Malta compliance checklist
The statutory bonus and allowance sit alongside, and are unaffected by, any discretionary bonus scheme.
Pay the statutory bonus and weekly allowance on schedule
Malta's statutory bonus and weekly cost-of-living allowance are paid at government-set rates and dates, currently on a schedule ending in June and December for the bonus and weekly alongside wages for the allowance — regardless of company performance.
Buddy HR — Malta government bonus calculationsDo not substitute a discretionary scheme for the statutory bonus
A discretionary or performance bonus scheme cannot be used to reduce or replace the statutory bonus, which is a separate legal minimum.
Check the Wage Regulation Order for the sector
Some sectors have their own Wage Regulation Order setting additional minimum terms on top of the general statutory position.
WageIndicator — Malta minimum wage regulationsApply tax and social security correctly
The statutory bonus and any discretionary bonus are both treated as taxable emoluments — confirm the correct treatment with your payroll provider.
How to complete the bonus agreement
- Confirm the statutory bonus is unaffected. State the statutory bonus and weekly allowance continue on the government's schedule.
- Choose the discretionary bonus type. Decide whether the additional scheme is discretionary or an earned entitlement.
- Set the targets and payment date. Add the criteria and payment date for the discretionary bonus.
- Set the clawback. Scope any clawback to the discretionary payment only.
Frequently asked questions
Can a discretionary bonus scheme replace the statutory bonus in Malta?
No — the statutory bonus and weekly allowance are a separate legal minimum, paid at government-set rates and dates regardless of company performance. A performance or discretionary bonus scheme sits on top of it and cannot reduce or substitute for it.
When is the statutory bonus paid?
On the schedule the government sets each year — for 2026 that is a bonus instalment by the end of June and another in December, with the weekly cost-of-living allowance paid alongside ordinary wages throughout the year.
Is the statutory bonus the same for every employee?
The government sets the standard rate, though some sectors have their own Wage Regulation Order that can set different or additional minimum terms — check the WRO that applies to your sector.
Can a clawback apply to the statutory bonus?
No — this template scopes any clawback to the discretionary or performance bonus the agreement itself creates, not to the separate statutory entitlement.
Is the bonus taxed?
Yes — both the statutory bonus and any discretionary bonus are treated as taxable emoluments, and should be processed through payroll in the ordinary way.
Related templates
Disclaimer
This template and guide are for general information only. They are not legal or tax advice, and no Maltese-qualified lawyer or accountant has reviewed or approved them. Statutory bonus rates, weekly allowance figures and sector Wage Regulation Orders change annually — confirm the current figures before relying on this document.
