Agreement on Late Payments Directive reached

The EU institutions have brokered an agreement on the recast of the Late Payments Directive which regulates the timeframes within which pending bills should be settled by the debtors in favour of their creditors.

The main highlight of the political agreement is the inclusion of business-to-business transactions within the scope of the Late Payments Directive. In brief, the agreement foresees a standard rule of 30-days payment limit in both public-to-business and business-to-business transactions. From a business perspective, it is evident that the directive will be beneficial for those companies embattled with long lists of pending payments.

In Malta, this is the prevalent case with the healthcare sector, where millions are owed by Government. A 60-day exemption applicable to public healthcare authorities is foreseen in the provisional text, which will dent the positive impacts that the recast directive should yield.

With regards to business-to-business transactions, the agreement safeguards the principle of contractual freedom since the 30-days limit is only applicable in the absence of a contractual agreement between the creditor and the debtor.

Despite this general principle, the local market shows that there is need for a maximum capping regulating the settlement of invoices. This is especially relevant for the construction and the hospitality industry. Several hoteliers complain that tour operators well exceed their agreed contractual payment terms.

In this regard, the establishment of a maximum payment cap would be a welcome solution in such circumstances where the payment timeframes are blatantly abused to the considerable detriment of the creditors. This would help companies manage their internal cash-flow through a greater element of predictability when concluding sales and services contracts. This is particularly relevant for businesses in the tourism industry whose revenue streams are subject to seasonal fluctuations in demand.

European Commission adopts new strategy on gender equality

The European Commission has recently adopted a new strategy aimed at promoting equality between men and women. In practical terms, the objectives should translate into EU initiatives to get more women into the labour market and to help reach the European 2020 target employment rate of 75 per cent overall for women and men. The strategy also includes targeted initiatives to improve women’s access to senior positions in economic decision-making as well as the promotion of female entrepreneurship and self-employment.

The strategy lays out broad monitoring and reporting activities on the transparency of pay in the context of equal-pay arrangements in relation to part-time work and fixed-term contracts. European Justice Commissioner Viviane Reding has also stated the Commission’s intention to consider taking initiatives at the European level on mandatory quotas for women in senior business posts.

To this end, a Commission-led dialogue with industry will be established in spring 2011, whereby meetings will be held with chief executives of major publicly-listed European companies to determine the scope for self-regulation. Depending on the outcome of these discussions, the Commission will then consider whether it will table legislative initiatives on gender quotas in 2012. Such a dialogue at corporate-level is bound to underestimate the cost implications of small businesses to adopt gender-quotas at managerial level and ultimately deliver on the targets without jeopardising their inbuilt operational flexibilities.

On the issue of gender pay-gap, the Commission will support equal-pay initiatives at the workplace such as equality labels, ‘charters’ and awards as well as the development of tools for employers to correct unjustified gender pay gaps.

From a Maltese business perspective, such initiatives will lead to cumbersome and occasionally-costly administrative compliance costs. Although Malta still has a low female labour market participation rate, it is an acknowledged fact backed by Eurostat statistics that Malta also has a low gender pay gap for those in employment. Indeed, Malta has always compared well to other member-states with regard to gender pay-gap statistics.

The gender pay-gap is estimated to be at approximately 17.8 per cent in the EU as a whole, however, the percentage gap varies considerably from a low of 4.9 per cent in Italy to a high of 26.2 per cent in the Czech Republic. Malta comes in at a highly-reputable fifth best in terms of lowest pay-gap at around nine per cent.

For more information on EU affairs related to business, one may contact the Malta Business Bureau on 2125 1719 or via email on info.mbb.org.mt. One may also visit the business portal www.mbb.org.mt