Employment 2021

Last Updated September 07, 2021

Cyprus

Law and Practice

Author



Chrysostomides Advocates & Legal Consultants advises on appointments, terminations, redundancies, employee rights in mergers and transfers of undertakings, employee share option schemes, matters related to maternity leave, advice on HR issues, equality and diversity, anti-discrimination legislation, disciplinary proceedings, data protection and provident/pension funds. It assists employers and employees with the development and management of pension programmes that meet all the relevant legislative and regulatory requirements, while at the same time taking into consideration any tax repercussions. The team works closely with the tax and banking and finance practices to provide integrated advice on large-scale pension projects, such as asset-backed financing and insurance transactions. The firm provides assistance when non-EU citizens are to be employed in executive positions with companies of foreign interests, guiding them through the procedures leading to the grant of the relevant permits, and family reunification. It also assists EU employees in registering and obtaining permits, albeit under a more simplified procedure.

Other than the legislative initiatives mentioned in 1.2 COVID-19 Crisis, the only main change in employment law enacted in the last 12 months relates to the regulation of minimum wage in a number of occupations within the tourist industry. However, there are a number of pending bills expected to be enacted by the end of 2021, concerning whistle-blower protection and bribery and corruption.

The Extraordinary Measures Taken by the Ministry of Labour, Welfare and Social Insurance for Dealing with the COVID-19 Pandemic Law of 2020 (L. 27(I)/2020) empowers the Minister of Labour, Welfare and Social Insurance to determine conditions and issue schemes for the following:

  • “special sickness allowance”: intended to cover vulnerable groups and COVID-19 patients that cannot go to work or work remotely because of their condition;
  • an allowance for “special childcare leave”: intended to cover individuals that have to stay home to take care of their children, because of closure of schools, but cannot work remotely; and
  • “special unemployment allowance”: government-sanctioned furlough leave scheme intended to cover categories of employees temporarily unemployed during the lockdowns, such as retail sector employees.

The same law also empowered the same minister to issue plans subsidising the payroll in industries particularly hit by the pandemic, such as hotels, other operators in the tourist industry and connected businesses, as well as the retail sector, in exchange for the undertaking of the subsidised employer not to dismiss any employees (with certain limited exceptions).

Τhe above law expires on 31 October 2021, but given the course of the pandemic, as it currently stands, it is possible that the House of Representatives may approve an extension.

In addition, extensions of deadlines in payment of social insurance contributions and tax have been approved as temporary relief.

Measures have also been taken from a health-and-safety-at-work perspective, including the obligation on the employer to check whether all employees have the so-called “Safepass” (ie, vaccination certificate, or a 72-hour PCR or rapid antigen test, or a certificate that the employee has been infected with and recovered from COVID-19 within the six preceding months).

Finally, no permanent measures have been taken, but only temporary ones, extended from time to time, as it is assumed that once the COVID-19 pandemic is over, all pertinent initiatives will be withdrawn.

There is no statutory distinction between blue-collar and white-collar workers.

The only distinction is between employed and self-employed individuals for social security purposes.

Fixed-term employees and part-time employees have a legal framework to prevent abuse vis-à-vis indefinite-term employees and full-time employees, respectively, but do not constitute separate statuses.

Employers have a statutory obligation to provide their employees with specific information about their terms of employment within one month from the commencement of the employment, provided that the employment exceeds one month. The information may be given in any of the following ways: (a) in a contract of employment; (b) in a letter of appointment, and (c) in any other document signed by the employer which contains at least all the information detailed below:

  • identity of the parties;
  • place of work and the registered address of the business or the home address of the employer;
  • the position or the specialisation of the employee, his or her grade, the nature of his or her duties and the object of his or her employment;
  • the date of commencement of the contract or the employment relationship and its anticipated duration if this is for a fixed time;
  • notice periods;
  • the duration of any annual leave to which the employee is entitled, as well as the manner and time in which it may be taken;
  • the time limits that must be observed by the employer and the employee in the event of a termination of the employment, either by consent or unilaterally;
  • all types of emoluments to which the employee may be entitled and the frequency of payment;
  • the regular duration of the employee’s daily or weekly employment; and
  • details of any collective agreements that govern the terms and conditions of the employment, if applicable.

The only distinction between written contracts for fixed-term and indefinite-term employees is that fixed-term contracts need to also state the anticipated duration.

Otherwise, the legal framework for fixed-term contracts does not mandate any additional terms in writing, but it is intended to prevent abuse and discrimination. For example, where successive fixed-term contracts exceed 30 months of continuous employment, the employee may then be assumed to be an indefinite-term employee, unless certain objective circumstances apply, as provided by law.

Working hour legislation provides that the number of weekly working hours should not exceed 48, including overtime, over a four-month reference period. However, in certain sectors (such as the hotel industry) different limitations may apply. Employees are also entitled to a minimum of 11 continuous hours of rest per day, 24 continuous hours of rest per week and either two rest periods of 24 continuous hours each or a minimum of 48 continuous hours within every 14-day period.

Night workers should not, on average, exceed eight working hours per day within a period of one month or any other period specified in a contract. Night workers whose work is hazardous or physically or mentally demanding should not exceed eight hours of night work (certain derogations are allowed).

Managing executives or persons with autonomous decision-making powers, family staff, and employees in religious institutions are exempted from limitations on working hours, provided general health and safety principles are followed.

Flexible arrangements are possible, provided working hours restrictions are followed.

There are no specific overtime regulations, and overtime is usually regulated by individual or collective agreement (with few exceptions regulated by law, such as the retail sector), provided that the 48-hour working week ceiling is followed.

Finally, there are no specific additional terms that need to be mentioned in a part-time contract, over and above those mentioned in 2.2 Contractual Relationship. However, the legal framework on part-time contracts is intended to prevent abuse by guaranteeing certain minimum rights, such as the number of statutory leave days and right of access to collective employee representation.

In general, salary is not regulated by law and can be negotiated by the employer and the employees (or their representatives) through individual or collective agreements.

However, for certain occupations, a minimum wage is set annually by decree of the Council of Ministers. The occupations covered by the minimum wage provisions are:

  • clerks;
  • shop assistants;
  • school assistants;
  • childcare workers;
  • nursing assistants.

Currently, employees in the categories above are entitled to at least EUR870 per month, which increases to EUR924 after six months of continuous employment.

Security guards and cleaners of business or corporate premises are also covered by minimum wage provisions. The minimum wage for security guards was revised to an hourly rate of EUR4.90, and upon completion of a six-month period of employment at the same employer is increased to EUR5.20. The hourly rate of pay for newly recruited cleaners is EUR4.55, and upon completing six months of employment at the same employer is increased to EUR4.84.

There is also an additional decree concerning minimum wage for different job positions within hotels. Depending on the job position, these vary between EUR870 and EUR1.070 per month and/or between EUR5.28 and EUR6.32 per hour.

Overtime pay is not generally regulated by law in Cyprus and it is usually regulated by individual or collective agreement. There are a few exceptions regulated by law, such as the retail sector.

There is also no general regulatory requirement or limitations for executive compensation in Cyprus. It is possible, however, in the financial industry that contracts of executives may be subject to approval by the Central Bank of Cyprus or the Cyprus Securities and Exchange Commission, depending on the type of financial institution.

Annual Leave

The minimum holiday entitlement per year is 20 working days for employees working five days a week and 24 working days for employees working six days a week, provided that the employee has already worked for at least 48 weeks within the year, which shall be paid through the Central Holiday Fund to which each employer contributes 8%.

When employers opt to pay the annual leave directly to the employees and provide more beneficial terms than the law – ie, at least 21 or 25 days respectively - they are exempted from contribution to the Central Holiday Fund.

An employee is not entitled to be paid annual leave if he or she has worked for less than 13 weeks in the year. If the employee had worked for a period more than 13 weeks then he or she would be entitled to the pro rata amount of holiday. The annual leave may be accumulated, for two years, only if this is agreed between the employer and the employee. The above are only the statutory minimums, and the parties are free to agree to more generous terms for the employee.

Sick Leave

The number of sick leave days, and whether this will be paid or unpaid by the employer, is a contractual matter. If there is no different provision within the contract of employment (or collective agreement), a sickness allowance is in any case payable by the Social Insurance Fund for any period of more than three days in which an employee is unable to work. The weekly entitlement is 60% of the weekly average of basic insurable earnings within the previous year and is increased by one third for the employee’s first dependant (including a spouse, whether or not in employment) and one sixth for each child or another dependant. The maximum number of days for which sick pay is payable is 156 days for every period of interrupted employment. This can be extended for a further period of 156 days during the same period of interrupted employment, provided that the insured is eligible to receive an incapacity pension but is not expected to remain permanently incapacitated from working.

Maternity Leave

Apart from paid annual leave and sick leave, employees may also take maternity leave up to 18 continuous weeks. Female employees who are about to adopt a child under the age of 12 years are entitled to 16 continuous weeks starting immediately from the date on which they begin to have the care of the adopted child. In addition to maternity leave, for nine months after childbirth, a female employee is entitled to take one hour off for breastfeeding or for the increased needs of child-raising. In accordance with the law, that time must be considered and paid as normal working time.

Whether the above is paid or unpaid by the employer is a contractual matter. If there is no different provision within the contract of employment (or collective agreement), a maternity allowance is in any case payable by the Social Insurance Fund.

Paternity Leave

An employee, the spouse of whom has given birth or got a child by surrogacy or jointly adopted with the spouse a child under 12 years old, has a right to paternity leave of two continuous weeks at a time during the period that starts from the week of the childbirth or adoption and ends after 16 weeks. During the paternity leave, the employee is entitled to a paternity allowance from the Social Insurance Fund.

Whether the above is paid or unpaid by the employer is a contractual matter. If there is no different provision within the contract of employment (or collective agreement), a paternity allowance is in any case payable by the Social Insurance Fund.

Parental Leave

Employees of either gender who have completed six months or more of continuous employment with the same employer can claim unpaid parental leave for up to 18 weeks in total on the grounds of childbirth or adoption. In the case of natural parents, parental leave is taken after the end of the maternity leave and before the eighth birthday of the child. In the case of adoption, within eight years from the date of adoption of the child, provided that the child has not reached 12 years of age.

Parental leave has a one-week minimum and five-week maximum per calendar year for one or two children, and a seven-week maximum for three children and more if, with the employer’s consent, the maximum leave may exceed those limits. Provisions that are more favourable to the employee than the provisions of the law may be applied through collective agreement or by agreement between the employer and the employee.

Force Majeure

The employee is entitled to seven days’ leave per year without pay on the grounds of force majeure. These grounds must be related to urgent family reasons in the case of sickness or accident to a dependant member of the employee’s family (child, spouse, sister, grandfather, grandmother), which makes the employee’s presence indispensable.

Confidentiality

There is an implicit duty of confidentiality on employees which arises from common law and can be further regulated by contract. The duty of confidentiality may implicitly and contractually extend beyond the term of the employment relationship, unless the disclosed information has come to the public domain by other means and without the input or fault or unlawful action of the employee. Employers can pursue their rights and claim damages through civil action for breach of confidence.

Statutory trade secrets law also protects employers against the unlawful obtainment, use and disclosure of trade secrets (including against employees), unless use of this information takes place within the rights to expression and information (including respect to freedom of mass media), in case of offence or tortious behaviour or illegal activity by the employer (provided that the employee acted in protection of general public interest), or where mandated in the course of lawful exercise of duties according to EU or Cyprus law (where disclosure was necessary for the exercise of such duties), or where the disclosure happened in protection of recognised lawful interests under EU or Cyprus law.

Non-disparagement

There is no explicit duty of non-disparagement, but this may be regulated contractually, as well as dealt with through defamation/libel actions.

Under Cypriot law, employees owe an implied duty of loyalty and fidelity to their employer. Employees should offer their services in a trustworthy and faithful manner. This means, that, during employment, employees are restrained from providing services to competitors or competing directly with their employer, from soliciting clients/customers and/or suppliers and acting in a manner that is prejudicial to their employer’s interests.

With regard to post-termination restrictions on competition, the position under Cyprus Law is the following:

Under section 27 of the Cypriot Contract Law - Cap 149, (“Cap 149”), any agreement which restricts the freedom to conduct a legitimate profession, trade or business is void. The exceptions are the following:

  • one who sells the goodwill of a business may agree with the buyer to refrain from carrying on a similar business, within specified local limits, as long as the buyer or any person deriving title to the goodwill from him, carries on a like business therein, provided that such limits appear to the court reasonable, regard being had to the nature of the business;
  • partners may, upon or in anticipation of a dissolution of the partnership, agree that some or all of them will not carry on a business similar to that of the partnership within such local limits as are referred to in the preceding sub-section;
  • partners may agree that one or all of them will not carry on any business, other than that of the partnership, during the continuance of the partnership.

Given the above, post-termination restrictive covenants of this kind in employment contracts are, in most instances, considered to be an unlawful restraint from exercising a lawful profession, trade or business of any land, and to that extent they are declared as void and unenforceable.

Case law in Cyprus is relatively scarce to this effect, and we cannot fully evaluate how a Cypriot court would assess the said circumstances about post-termination non-competition covenants. However, section 2 of Cap 149, as amended, provides that Cap 149 should be interpreted in accordance with the principles of legal interpretation in England, and expressions used in it shall be presumed to be used with the meaning attached to them in English law. In view of the above, the Cypriot Courts may be guided by English case law on this issue.

There were instances where English courts ruled that, in the circumstances, post-termination restrictive covenants with limited duration and within very limited geographical borders were reasonable and enforceable. Therefore, it may be assumed that a Cypriot court may possibly rule such a clause enforceable in some instances, but the limitations have to appear reasonable under the circumstances. In examining the reasonableness of a restrictive covenant, the court will take into consideration all the circumstances of the specific case, particularly the geographical area, duration, level of importance of the position of the employee and access to information, and type of restriction.

Concerning independent consideration, we note that for any agreement to constitute a contract, lawful consideration is necessary. Such consideration may consist either of some right, interest, profit, or benefit accruing to the one party, or some forbearance, detriment, loss or responsibility, given, suffered or undertaken by the other. If the restrictive covenant is a clause in the employment contract, anything that forms the consideration for the entire contract may also be a consideration for the restrictive covenant. If, however, the restrictive covenant is a separate agreement, this will also require consideration, but the employment itself usually constitutes the consideration for such restrictions.

See 3.1 Non-competition Clauses.

Consent

Processing of personal data of the employee by an employer is allowed without consent, provided that the processing is necessary for the performance of the employment contract or in order to take steps at the request of the employee prior to entering into the contract and/or provided that processing is necessary for compliance with legal obligations to which the employer is subject.

Special Categories of Personal Data

Special categories of personal data (sensitive data) may also be processed, where processing is necessary for the purposes of carrying out the obligations and exercising specific rights of the employer or of the employee in the field of employment and social security and social protection law in so far as it is authorised by domestic law or collective agreement pursuant to domestic law providing for appropriate safeguards for the fundamental rights and the interests of the employee.

Employer Obligations

Employers are obliged to inform employees (ideally via a privacy policy or internal circular or any other document) of: (a) the identity and the contact details of the employer and, where applicable, of the employer’s representative; (b) the contact details of the data protection officer, where applicable; (c) the purposes of the processing for which the personal data is intended as well as the legal basis for the processing; (d) the recipients or categories of recipients of the personal data, if any. There are also specific rules on data transfers to third countries. In addition, the employer shall, at the time when personal data is obtained, provide the employees with the following further information necessary to ensure fair and transparent processing: (a) the period for which the personal data will be stored, or if that is not possible, the criteria used to determine that period; (b) the existence of the right to request from the employer access to and rectification or erasure of personal data or restriction of processing concerning the employee or to object to processing as well as the right to data portability; (c) the existence of the right to withdraw consent at any time, without affecting the lawfulness of processing based on consent before its withdrawal; (d) the right to lodge a complaint with a supervisory authority; (e) whether the provision of personal data is a statutory or contractual requirement, or a requirement necessary to enter into a contract, as well as whether the employee is obliged to provide the personal data and of the possible consequences of failure to provide such data; and (f) the existence of automated decision-making, including profiling, and, at least in those cases, meaningful information about the logic involved, as well as the significance and the envisaged consequences of such processing for the employee. Where the employer intends to further process the personal data for a purpose other than that for which the personal data was collected, the employer shall provide the employee prior to that further processing with information on that other purpose and with any relevant further information. It is also noted that a record of processing activities needs to be maintained in the offices.

Employee Monitoring

Concerning any employee monitoring, such as monitoring of fax and emails of the employees, web browser history, recording of inbound and outbound calls (frequency, duration, time), closed-circuit video monitoring systems, and monitoring/recording position/movement of the employees and/or the work vehicle via GPS, the Cyprus Commissioner for Personal Data Protection issued a Directive on the Processing of Personal Data in the Sector of Employment Relationships. In particular, the below principles must be followed in instances of surveillance and monitoring of employees:

  • the employer may install electronic surveillance systems at the workplace for legitimate purposes which the employer pursues, provided that these purposes supersede the rights, interests and fundamental freedoms of the employees;
  • the means/monitoring systems that the employer chooses to install and the data collected every time must be proportionate to the objective pursued;
  • the employer must choose the least interventionist means of monitoring in order to satisfy the pursued aims;
  • the personal data of the employees collected during the stage of monitoring shall be used only for the purpose for which the monitoring is carried out;
  • the personal data of the employees collected during the stage of monitoring shall be destroyed/deleted once the purpose for which the monitoring is carried out has been fulfilled;
  • the employer must in all instances inform the employees before the monitoring begins, of the purpose, method, duration and the technical specifications of the surveillance;
  • continual monitoring in the workplace must be avoided;
  • secret surveillance is prohibited;
  • the employer may choose to prohibit employees from using the equipment of the company/organisation for personal purposes such as sending emails or making outbound telephone calls;
  • the employer must inform the employees of how they can use the equipment of the company/organisation, the electronic surveillance methods which will be used and the consequences on employees resulting from the use of such equipment for personal purposes;
  • the access of the employer to the content of personal emails and personal telephone calls of the employees is prohibited; and
  • the employees maintain the right to protection of their private life even in the workplace.

The employers must maintain the balance between this right and the degree to which the surveillance systems interfere with the private life of employees.

Finally, the protection of data and privacy of employees is also safeguarded by Article 15 of the Constitution (right to respect for private and family life), Article 17 of the Constitution (right to respect for and to secrecy of correspondence and other communication if such other communication is made through means not prohibited by law) and all international instruments to which Cyprus is a party that guarantee the right to privacy, such as the European Convention on Human Rights, the EU Charter of Fundamental Rights and pertinent ILO Conventions, as well as ECJ/CJEU and ECtHR jurisprudence.

The maximum period of stay for all third-country nationals for the purposes of employment is four years, except for the livestock farming and agricultural sectors, where the maximum period has been set to six years. This limitation does not apply in a few exceptional cases, such as highly skilled personnel employed in companies with a significant turnover, athletes, coaches of sports teams, researchers et al.

EU/EEA/Swiss nationals may work in the Republic of Cyprus, provided that they comply with a relatively simple and straightforward registration procedure, without any further restrictions. However, non-EU/EEA/Swiss nationals are required to obtain a residence and employment permit prior to any employment in Cyprus.

The main precondition for the granting of a permit for employment of third-country workers is the inability of the employer to satisfy the needs of their business with local workers (Cypriot or EU/EEA/Swiss nationals). This inability will be ascertained following an investigation conducted by the competent Department of Labour of the Ministry of Labour, Welfare and Social Insurance. The applications for the permit of the non-EU/EEA/Swiss national will be submitted to the District Labour Offices, which will have to confirm that the criteria for employment of foreigners are being met. Moreover, the interested employer is required to publish the available position via the employment services of District Labour Offices. In the case where there are no Cypriot or EU/EEA/Swiss citizens available and capable of filling the specific positions, the employer submits the special application form for employment of foreign workers.

Family members and dependants of citizens of EU/EEA Member States and Switzerland who are not EU/EEA/Swiss citizens themselves generally enjoy the same rights, but in order to work, they need a visa and a work permit. Third-country nationals who reside legally within the areas controlled by the government of the Republic for at least two years, are holders of a residence permit valid for at least one year, and who have reasonable prospects of obtaining the right of permanent residence, can apply for family reunification.

The terms and conditions of employment must be the same for all individuals, either foreign or Cypriot nationals.

As stated in 5.1 Limitations on the Use of Foreign Workers, EU nationals may work in the Republic of Cyprus provided that they comply with a relatively simple and straightforward registration procedure, without any further restrictions. However, non-EU nationals are required to obtain a residence and employment permit prior to any employment in Cyprus.

First, Article 21 of the Constitution of the Republic of Cyprus protects the right of association, including specifically the right to establish and join a trade union.

Secondly, Cyprus has a relatively high level of trade union organisation. The main national, multi-sectoral workers’ organisations are the Pancyprian Federation of Labour (PEO), the Cyprus Workers Confederation (SEK), the Democratic Labour Federation of Cyprus (DEOK), and the Pancyprian Federation of Independent Trade Unions (POAS).

Thirdly, other independent sectoral workers’ organisations are the Pancyprian Union of Public Servants (PASYDY), the Pancyprian Organisation of Greek Teachers (POED), the Organisation of Greek Secondary Education Teachers (OELMEK) and the Union of Banking Employees of Cyprus (ETYK).

Further, trade unions have the right to possess property under their legally registered name, to contract, to appear before courts either as plaintiff or defendant, and also to proceed with all necessary actions to accomplish their purposes. However, to enjoy the prior rights, a trade union has to be legally registered as such.

Further still, union elections take place in accordance with their articles of association and relevant rules.

In addition, where a registered trade union wishes to be recognised by the employer for the purposes of negotiating the conclusion of a collective agreement, but the employer refuses to recognise it, the trade union may apply, under certain conditions, to the Registrar of Trade Unions for issuance of an order of recognition, forcing the employer to recognise it as the lawful representative of the employees for the said purposes.

Moreover, in cases of undertakings employing at least 30 employees, a company has a general obligation to inform the employees and/or their representatives and consult them by exchanging views and establishing a dialogue between the employees and/or employee representatives and the employer. In particular, such information and consultation shall cover: (a) information on the recent and probable development of the undertaking's or the establishment's activities and economic situation; (b) information and consultation on the situation, structure and probable development of employment within the undertaking or establishment and on any anticipatory measures envisaged, in particular where there is a threat to employment; and (c) information and consultation on decisions likely to lead to substantial changes in work organisation or in contractual relations. Failure to comply with the said law may lead to criminal prosecution and imposition of a fine.

Finally, Cyprus law provides for the establishment of European Works Councils for the purpose of safeguarding and improving employees’ rights to information and consultation in EU-scale undertakings and EU-scale groups of undertakings. However, at the time of writing, there are no particularly active European Works Councils in Cyprus.

See 6.1 Status/Role of Unions.

In relation to collective bargaining agreements (CBAs), there is no general legislative framework regulating the manner in which they are conducted nor is there a minimum of terms that need to be contained therein (other than, of course, minimum statutory obligations). CBAs constitute one of the main policy instruments in Cyprus used to shape labour policy and, as a matter of practice, the negotiations are conducted in a tripartite manner between employers’ organisations, the Ministry of Labour, Welfare and Social Insurance, and the trade unions. We note that CBAs in Cyprus do not have erga omnes effect nor are they legally binding, therefore non-compliance per se may not be the subject of a judicial process, even though the provisions of applicable CBAs in any given case, together with any other existing practices concerning terms and conditions of employment, are taken into consideration by Cyprus courts as evidence of such terms and conditions. CBAs are only subject to the provisions of the 1977 Industrial Relations Code, a not legally enforceable “gentlemen’s agreement” between the main employers’ associations and trade unions, which lays down the procedures to be followed for the settlement of employment disputes, arbitration, mediation and public inquiry in disagreements over interests and rights. However, given the high level of unionisation in Cyprus and the possibility of strike action, employers, as a matter of practice, have almost always voluntarily adhered to both the Industrial Relations Code and CBAs.

There is a default statutory probation period for the first 26 weeks of employment, but it may be extended up to a maximum of 104 weeks with the consent of both parties. Throughout the duration of the probationary period, the statutory provisions relating to notice and protection from termination of employment do not apply, and the employee may be dismissed for any reason and without notice, save where more favourable provisions for the employee are stipulated within the contract of employment.

After the lapse of the probationary period, employees are protected from dismissals. More specifically, a dismissal that cannot be justified under any one of the grounds below is considered unlawful per se:

  • unsatisfactory performance (excluding temporary incapacitation owing to illness, injury, and childbirth);
  • redundancy;
  • force majeure, act of war, civil commotion, or act of God;
  • termination at the end of a fixed period;
  • conduct rendering the employee subject to summary dismissal;
  • conduct making it clear that the relationship between employer and employee cannot reasonably be expected to continue; and
  • committing a serious disciplinary or criminal offence, indecent behaviour, or repeated violation or ignorance of employment rules.

Concerning dismissals due to redundancy, the following circumstances constitute specifically lawful grounds for dismissal due to redundancy:

  • the employer has ceased to carry on the business that employs the employee;
  • the employer has ceased to carry on the business at the place where the employee was employed; or
  • due to any of the following grounds relating to the operation of the business: (a) modernisation, automation or any other change in the methods of production or organisation which reduces the number of required employees; (b) changes in the products or the production methods or the necessary expertise of the employees; (c) abolition of departments; (d) difficulties in placing products on the market or credit difficulties; (e) lack of orders or raw materials; (f) shortage of means of production; or (g) reduction of the volume of work or the business.

Further, an employer may never lawfully terminate the employment agreement for any of the following reasons:

  • membership of trade unions or a safety committee established under the Safety at Work Law of 1988;
  • activity as an employees’ representative;
  • the filing in good faith of a complaint; or
  • the participation in proceedings against an employer involving an alleged violation of laws or regulations, civil or criminal.

It is noted that there is a rebuttable presumption that any dismissal is unlawful until the employer proves the contrary on the balance of probabilities.

Further, an employer must always give to the employee a written notice of termination, outlining the grounds for dismissal, with the applicable notice period or pay in lieu of notice.

The notice period is calculated on a graduated scale, according to length of prior service, as follows:

  • zero days for 26 continuous weeks’ employment;
  • one week for 26-52 continuous weeks’ employment;
  • two weeks for 52-104 continuous weeks’ employment;
  • three weeks for 104-156 continuous weeks’ employment;
  • five weeks for 156-208 continuous weeks’ employment;
  • six weeks for 208-259 continuous weeks’ employment;
  • seven weeks for 260-311 continuous weeks’ employment;
  • eight weeks for 312 continuous weeks’ employment or more.

However, where the grounds of termination are either conduct rendering the employee subject to summary dismissal, or conduct making it clear that the relationship between employer and employee cannot reasonably be expected to continue, or committing a serious disciplinary or criminal offence, indecent behaviour, or repeated violation or ignorance of employment rules, no notice period is applicable and the employee may be terminated with immediate effect.

In addition, in cases of foreseeable dismissals due to redundancy, the employer is obliged to notify the Minister of Labour, Welfare and Social Insurance at least one month in advance before the anticipated date of termination, including the number of possible redundant employees, the affected sector of the business, the professions and, where possible, the names and family obligations of the affected employees, and the grounds of redundancy. The notice is given by the filing of an official template form (Form YKA 608) with the Social Insurance Services.

Employers who intend to proceed with a collective dismissal due to redundancy are additionally obliged to consult in good time with the workers’ representatives to reach an agreement. The employer shall notify the Minister of Labour and Social Security in writing of any intended collective redundancies as soon as possible. Any intended collective redundancies which have been notified to the Minister of Labour, Welfare and Social Insurance shall be valid only after the expiry of the period of 30 days accruing from the day of the provision of such a notification.

For purposes of collective redundancy legislation, the term “collective redundancies” means redundancies made by an employer for one or more reasons not connected with the employees, provided that the number of employees dismissed within a period of 30 days is:

  • at least ten, in undertakings which normally employ more than 20 and fewer than 100 employees;
  • at least 10% of the number of employees in undertakings that normally employ at least 100 and fewer than 300 employees; and
  • at least 30, in undertakings that normally employ at least 300 employees.

The consultations should, at least, cover the following:

  • ways and means of avoiding collective redundancies or reducing the number of employees to be affected and of mitigating the consequences of collective redundancies;
  • the employer must supply, in good time, the employees’ representatives with all relevant information to enable them to make proposals during the consultations. The employer has to give in writing, inter alia, the following information: (a) the reasons for the planned redundancies; (b) names and occupation of employees to be made redundant; (c) names and categories of employees normally employed by the employer; (d) the period over which the redundancies are to be effected; (e) the criteria to be used for selecting the employees to be made redundant; and (f) the method of calculating any redundancy payments to the affected employees.

If the termination due to redundancy is genuine, then the employee(s) will receive payment from the state-administered Redundancy Fund to which all employers contribute, according to their length of service, as mentioned above, provided that the employee(s) has/have completed 104 weeks’ continuous employment with the same employer. In particular, the redundancy pay is calculated as follows:

  • two weeks’ wages for each year of service up to four years;
  • two-and-a-half weeks’ wages for each year of service from five to ten years;
  • three weeks’ wages for each year of service from 11 to 15 years;
  • three-and-a-half weeks’ wages for each year of service from 16 to 20 years; and
  • four weeks’ wages for each year of service beyond 20 years.

The Minister of Labour, Welfare and Social Insurance imposes a maximum compensation per week by decree.

In the case where an employee is simultaneously entitled to payment out of the Redundancy Fund and payment from the employer by reason of custom, law, collective agreement, contract or otherwise, the employee is paid the whole amount from the Redundancy Fund, and from the employer any difference between the two payments, if the whole amount of payment from the employer is higher than the amount received from the Fund.

In the event that the application for payment from the Redundancy Fund is rejected because the grounds for redundancy were deemed not genuine, the employee has the right to take action against the Fund, as well as against the employer in the alternative, for unfair dismissal and to seek damages.

Finally, concerning internal and appeal procedures, there is no obligation for the employer to follow internal disciplinary rules in the private sector (unless the employment contract provides otherwise). However, disciplinary proceedings are required regarding employees of governmental and semi-governmental bodies or organisations. Nevertheless, even without internal discipline procedures, according to case law, dismissal of an employee should always be necessary, reasonable and must be treated as an employer’s "last resort”. Given this, before dismissing an employee, the employer should bring to his or her attention any complaints regarding his or her efficiency or unsatisfactory conduct or behaviour and the employer should warn the employee accordingly to give him or her the chance to express his or her views and improve.

Notice

The minimum statutory notice which the employer has to give to the employee varies according to the employee’s period of continuous employment as follows:

  • 0 days for 26 continuous weeks’ employment;
  • one week for 26-52 continuous weeks’ employment;
  • two weeks for 52-104 continuous weeks’ employment;
  • three weeks for 104-156 continuous weeks’ employment;
  • five weeks for 156-208 continuous weeks’ employment;
  • six weeks for 208-259 continuous weeks’ employment;
  • seven weeks for 260-311 continuous weeks’ employment;
  • eight weeks for 312 continuous weeks’ employment or more.

A dismissal without notice or payment in lieu of notice can take place only when: (a) the employee’s conduct indicates that the relationship between employer and employee cannot reasonably be expected to continue under the circumstances; (b) the employee committed a serious disciplinary or criminal offence; (c) the employee behaved indecently; or (d) repeatedly violated or ignored employment rules.

An employee who intends to resign should give the employer a minimum period of notice depending on the period of prior service as follows:

  • 0 days for 26 continuous weeks’ employment;
  • one week for 26-52 continuous weeks’ employment;
  • two weeks for 52-260 continuous weeks’ employment;
  • three weeks for 260 continuous weeks’ employment or more.

Severance

Minimum statutory compensation for unlawful dismissal payable by the employer depends upon the period of continuous employment and is calculated in the same way as the compensation for redundancy, as follows:

  • two weeks’ wages for each year of service up to four years;
  • two-and-a-half weeks’ wages for each year of service from five to ten years;
  • three weeks’ wages for each year of service from 11 to 15 years;
  • three-and-a-half weeks’ wages for each year of service from 16 to 20 years; and
  • four weeks’ wages for each year of service beyond 20 years.

The Industrial Disputes Tribunal will also take into account, at its discretion, the wages and earnings of the employee, length of service, loss of career, circumstances of the termination of employment and the age of the employee.

It is noted that the compensation to which the employee is entitled cannot exceed the equivalent of two years’ wages and is payable by the employer insofar as it does not exceed the employee’s annual wages and from the Redundancy Fund to the extent that such compensation exceeds the employee’s annual wages. The employer is thus exposed to the payment of damages up to a maximum of one year’s wages.

As also stated above, the employee is not entitled to any compensation from the employer when the dismissal takes place for any of the following reasons:

  • unsatisfactory performance (excluding temporary incapacitation owing to illness, injury, and childbirth);
  • redundancy;
  • force majeure, act of war, civil commotion, or act of God;
  • termination at the end of a fixed period;
  • conduct rendering the employee subject to summary dismissal;
  • conduct making it clear that the relationship between employer and employee cannot reasonably be expected to continue; and
  • committing a serious disciplinary or criminal offence, indecent behaviour, or repeated violation or ignorance of employment rules.

Of course, it is possible for the employer to still pay severance at their discretion or if pre-agreed contractually.

There is no precise definition of “serious cause”, but the following serious causes constitute lawful grounds of dismissal without notice and without compensation, as outlined earlier:

  • conduct rendering the employee subject to summary dismissal (which may be connected to committing theft, fraud, damage to company property, serious breach of health and safety regulations, violence, discrimination or harassment against another employee);
  • conduct making it clear that the relationship between employer and employee cannot reasonably be expected to continue; and
  • committing a serious disciplinary or criminal offence, indecent behaviour, or repeated violation or ignorance of employment rules.

Only a letter of termination outlining the circumstances/facts that led to this decision to terminate is required be given to the employee.

However, prior disciplinary procedures or otherwise giving the employee the opportunity to respond would constitute best practice and would be looked at favourably by the court, in the case of a labour dispute.

Under Cypriot law, it is permissible to obtain releases in connection with termination agreements, but case law suggests that the right to bring a claim can be waived only if such a waiver is clear and unequivocal. In addition, consideration would be necessary for a termination agreement to be valid and enforceable per se.

There are no specific procedures or formalities or specific statutory requirements, but it is a matter of negotiation between the parties to the employment relationship.

No other limitations are applicable.

Maternity

In the case of maternity, there is an express protection from dismissal ranging from the start of the pregnancy until five months after the end of the maternity leave. During the said period, the employer is not allowed to give any notice of termination or proceed with other actions aiming at the final dismissal of the said employee, unless she is guilty of serious misconduct or the business has closed down or the contractual period of employment has ended (apart from instances where non-renewal of the contract relates to the pregnancy, childbirth or maternity).

Paternity

In the case of paternity, there is a statutory protection from termination of employment or granting notice of termination during the period commencing from the date of written notice by the employee of the intention to exercise the right to paternity leave and expiring at the end of the paternity leave (except cases of serious offence/misconduct or behaviour which warrants the termination of the employment relationship, or where the undertaking concerned ceased operations, or termination of a fixed-term contract).

Parental Leave or Leave on Grounds of Force Majeure

There is a statutory protection from dismissal in case of parental leave or leave on grounds of force majeure, except if the employee is guilty of a serious offence or misconduct, or the undertaking ceased operations, or the employment contract duration has expired.

Sickness Leave

In the case of an employee being absent from work on sick leave due to incapacity, during the period of absence plus one quarter of that period upon return (but up to a maximum of 12 months' absence plus one quarter = 15 months), s/he may be served a notice of termination only on the basis of the following grounds:

  • conduct rendering the employee subject to summary dismissal;
  • conduct making it clear that the relationship between employer and employee cannot reasonably be expected to continue, committing a serious disciplinary or criminal offence, indecent behaviour, or repeated violation or ignorance of employment rules.

Whistle-Blowers

Whistle-blowers are not protected by general comprehensive legislation, but by their constitutional right to freedom of expression and right of access to courts. Of course, as noted earlier, there is an exhaustive list of lawful grounds of dismissal, and dismissal on any other grounds is considered unlawful per se.

It is also noted that, at the time of writing, there is a pending bill concerning express protection of whistle-blowers reporting breaches of European Union law in public procurement, financial services, consumer protection, public health, protection of the environment, animal welfare, the security of network and information systems, data privacy, money laundering, as well as breaches affecting the financial interests of the Union, the internal market (including competition and state aid), and corporate tax law.

Anti-discrimination

Anti-discrimination legislation provides for certain protected characteristics, which include gender, community, language, colour, religion, political or other beliefs, age, sexual orientation, nationality, racial or ethnic origin, disability (please see 8.2 Anti-discrimination Issues).

Protected categories include both private and public sector employees.

Other

Any dismissal premised on (a) trade union membership, (b) membership of a safety committee under the Safety at Work legislation, or (c) submission of a complaint or participation in proceedings against an employer because the latter is involved in alleged violation of laws or regulations, or (d) recourse to a competent administrative authority, is considered unlawful per se.

The most common remedy available for unlawful dismissal is a claim for damages. A dismissed employee can bring a claim for damages for unlawful or wrongful dismissal at the Industrial Disputes Tribunal which has exclusive jurisdiction to determine matters arising from the contract of employment and its termination. Minimum statutory compensation for unlawful dismissal payable by the employer depends upon the period of continuous employment and is calculated in the same way as the compensation for redundancy (see 7.2 Notice Periods/Severance). The maximum amount of compensation the Industrial Disputes Tribunal is entitled to award amounts up to two years of the claimant’s salary.

Depending on the circumstances of the case, the tribunal may award any amount between the minimum (that is the amount that is calculated in the same way as the compensation for redundancy) and the maximum (two years’ wages). Before deciding, the tribunal considers an employee’s age, family situation, career prospects and all the circumstances of termination. In the latter case (that is, when the maximum amount is awarded), any payment in excess of one year’s wages is payable to the employee by the state-administered Redundancy Fund and not by the employer.

Alternatively, an employee has the right to file a claim for breach of contract at the District Courts, if the claim exceeds the equivalent amount of two years’ salary (which is the maximum amount of compensation that can be ordered by the Industrial Dispute Tribunal).

Also, the employee who was illegally dismissed is entitled to payment in lieu of notice, which is calculated on the basis of the scale mentioned in 7.2 Notice Periods/Severance.

Depending on the circumstances, the employee may also claim general damages for breach of contract, loss of career prospects and any special damages suffered because of the termination.

In cases of unlawful termination of employment, and provided that the employer’s total staff exceeds 19 persons, the court is further empowered to order the employer to re-employ the employee. However, this discretionary power is very rarely exercised.

First, Cyprus has a multitude of anti-discrimination laws dealing with different forms of discrimination in different sectors; there is no single comprehensive equality statute). Law 42(I)/2004 and Law 58(I)/2004, which have some overlapping provisions, prohibit any direct or indirect discriminatory treatment or conduct, provision, term, criteria or practice in both private and public sector activities on grounds of race, community, language, colour, disability, religion, political or other beliefs, national or ethnic origin, or sexual orientation, including in relation to (a) access to employment, self-employment and work, including selection criteria and appointment terms, regardless of sector of activity at all levels of the professional hierarchy, including promotions, (b) access to all kinds and levels of professional orientation, training, education and re-orientation, including obtaining practical professional experience, (c) conditions and terms of employment, including provisions on dismissals and remuneration, (d) capacity of a member and participation in an employees’ or employers’ organisation or any organisation the members of which exercise a particular profession including advantages granted by such organisations, and (e) social protection, social security, and healthcare.

Secondly, Law 177(I)/2002 and Law 205(I)/2002 prohibit discrimination in the public and private sectors on the basis of gender, including in relation to terms and conditions of remuneration for the same work or work of equal value, ensure equal criteria for men and women, conditions of employment or access to employment or criteria, further protection of maternity, protection from harassment, and ensure active participation and representation. The preceding laws also have certain exceptions pertaining to residency requirements of third-country nationals and stateless persons or objectively justified discrimination on certain grounds of religion or age, and affirmative action. They also include pertinent administrative sanctions, criminal sanctions on perpetrators, enforcement mechanisms, and whistle-blower protection.

Thirdly, we note additional anti-discrimination laws pertaining to discriminatory treatment of fixed-term employees vis-à-vis employees of indefinite duration, full-time vis-à-vis part-time employees, persons with disabilities, as well as Law 3/1968 ratifying the International Labour Organisation Convention No. 111 concerning Discrimination in Respect of Employment and Occupation of 1958.

Further, in relation to potential claims, it is noted that a prima facie discrimination claim shifts the burden of proof onto the employer.

Even further, in the event of discrimination being found, employees are entitled to claim:

  • compensatory damages;
  • any special damages suffered because of the discrimination;
  • reinstatement/re-employment;
  • attorney’s fees.

See also 7.2 Notice Periods/Severance on minimum damages and 8.1 Wrongful Dismissal Claims on said claims.

In addition, employees may pursue administrative proceedings before the ombudsman, which may impose a fine where it identifies discrimination on the grounds of gender, religion or beliefs, age, sexual orientation and racial or ethnic origin.

Finally, according to the provisions of the various statutes protecting employees from direct or indirect discrimination, discriminatory behaviour may also constitute a serious criminal offence punishable with imprisonment and/or a fine.

The Industrial Disputes Tribunal has exclusive jurisdiction to hear and decide any disputes arising from the application of the law relating to the termination of employment. However, the employee has the right to apply to a district court in relation to a dispute concerning his or her employment where the claim is greater than the maximum amount that may be ordered by the Industrial Disputes Tribunal (two years’ salary) or for any claim arising during the first 26 weeks of employment (statutory probationary period). Recourse to one court excludes the jurisdiction of the other.

There are only two levels of instances in the Cypriot judicial system – ie, Industrial Disputes Tribunal or District Court at first instance (as explained above) and Appeals Court/Supreme Court at second instance.

There is no provision for class or collective action within the employment statutes and regulations. However, the Civil Procedure Rules provide that where several persons have the same interest in one cause or matter, one or more of them may be authorised by the court to pursue or defend an action on behalf or for the benefit of all interested persons.

So far, employment claims are filed on an individual basis, and it has not been tested yet whether class or collective actions will be allowed by the relevant provision contained in the Civil Procedure Rules.

In the case of private dispute between employer and employee that relates to termination of employment, annual paid leave, protection of maternity, independent claims arising from the employment contract and alike claims, the Industrial Disputes Tribunal has exclusive jurisdiction (with the exception of District Court jurisdiction on dismissals where claims exceed two years’ wages), so agreement for arbitration on these matters is unenforceable.

In the case of dispute between employer and trade union(s), under the Industrial Relations Code, non-binding mediation by the Department of Labour Relations is possible, but the parties’ rights to apply to the court may be reserved. Binding arbitration is also possible where employer and union(s) agree that the arbitrator’s decision will be binding.

The general rule is that orders as to litigation costs will usually burden the unsuccessful party to the action. Therefore, a prevailing employer may be awarded attorney’s fees.

Dr. K. Chrysostomides & Co LLC

1 Lampousas
Street 1095 Nicosia – Cyprus

+357 22 777 000

+357 22 779939

a.efstathiou@chrysostomides.com.cy www.chrysostomides.com
Author Business Card

Law and Practice

Author



Chrysostomides Advocates & Legal Consultants advises on appointments, terminations, redundancies, employee rights in mergers and transfers of undertakings, employee share option schemes, matters related to maternity leave, advice on HR issues, equality and diversity, anti-discrimination legislation, disciplinary proceedings, data protection and provident/pension funds. It assists employers and employees with the development and management of pension programmes that meet all the relevant legislative and regulatory requirements, while at the same time taking into consideration any tax repercussions. The team works closely with the tax and banking and finance practices to provide integrated advice on large-scale pension projects, such as asset-backed financing and insurance transactions. The firm provides assistance when non-EU citizens are to be employed in executive positions with companies of foreign interests, guiding them through the procedures leading to the grant of the relevant permits, and family reunification. It also assists EU employees in registering and obtaining permits, albeit under a more simplified procedure.

Compare law and practice by selecting locations and topic(s)

{{searchBoxHeader}}

Select Topic(s)

loading ...
{{topic.title}}

Please select at least one chapter and one topic to use the compare functionality.