Ministry admits irregularities in Dar Malta salaries

The foreign ministry has admitted to irregularities in the way it was paying non-Maltese nationals employed at the Permanent Representation, as alleged by Belgian national newspaper Le Soir this week.

According to documents seen by MaltaToday, for years several employees had their low salaries ‘topped up’ with fringe benefits while being paid salaries without any tax or social security deducted at source.

Employees concerned at what the Permanent Representation was declaring to the tax authorities told this newspaper that they risked compromising their pensions.

Annual returns seen by MaltaToday show annual gross salaries for the employees were several thousands of euros lower than their actual net salaries, because the Permanent Representation adopted a system of ‘deductable allowances’.

But the employees claim these fringe benefits are simply ‘en noir’ – undeclared allowances – as evidenced by the absence of paid overtime, which must be taxed, in their annual returns.

The employees also complained their overtime had not been refunded or recuperated at 150% of the hours worked as according to Belgian law.

The ministry this week claimed the irregular conditions had been introduced back in 1997 but that it was now accelerating their “phasing-out”. “Engaged personnel with the Embassy and the Permanent Representation of Malta are now in line with Belgian law… Certain elements of these conditions had started to be phased out as from 1 January 2006on instructions from the Permanent Representative,” the ministry said.

There are 13 non-Maltese nationals employed with the Permanent Representation, namely eight secretaries, three drivers, and two cleaners. Le Soir claimed ‘tens of thousands’ of euros in Belgian taxes “are passing undeclared to the authorities”.

This is how Le Soir described the situation: “During most months, the net salary is higher than the gross by some hundreds of euros, but all in all remaining relatively low at €1,200 net. This is thanks to certain ‘deductable allowances’ that are nothing else but undeclared payments. The gross salary ends up exceeding the net salary by just €200. Not exactly the kind of thing you end up declaring to the ONSS and the tax department.”

The source said the extra money was being paid ‘en noir’ – undeclared and untaxed. “The employees can’t know because they don’t receive payslips and the money is deposited directly in their bank accounts.”

Employees are also reported to have worked overtime, without ever being compensated. “They are paid only if they reach say, 50 hours of overtime in total during the month.”

A spokesperson for the Permanent Representation confirmed that the administration applies a system of time-off in lieu for extra hours performed. “Payment of time-off in lieu applies once the hours on a monthly basis exceed a certain benchmark,” Jean-Pierre Schembri said.

But the annual returns show that the overtime, which is taxable according to the employees, is not declared by the Permanent Representation.

In May 2007, the employees demanded a meeting with the head of administration at Dar Malta, demanding that they be paid overtime, have a standard payslip, and reimbursement of their transport costs. But the administration only agreed to pay their transport costs and an overtime rate that was “lower than the legal tariff”.

“Over five years, these work practices have encouraged a score of employees to leave their employment. Those who stay on want real working conditions, reason enough to come out in the open on their situation,” Le Soir reported.

“We know we are risking but we want to have the situation regularised,” an employee is reported as saying. “I don’t care if the inland revenue realises the situation and demands that I pay tax arrears. I want to be in line with the law and live with dignity. “I want to be able to claim my pension serenely… I cannot understand how an EU member state acts in this manner – in defiance of the law and treating its employees badly.”

Government agencies in Maltahave also employed clerks on similar self-employed contracts, even though the Nationalist government had previously pledged this practice would stop. The general secretary of the Union Ħaddiema Magħqudin, Gejtu Vella, had denounced the practice, which did not provide job security and deprived workers of their basic rights, which full-time employees are entitled to.

Vella has said the excuse often made by government officials was that such contracts normally covered ‘management’ or ‘consultancy roles’ required for definite periods. But in some cases, government agencies had even contracted clerks on a self-employed basis.