Cyprus, with its thriving economy and diverse talent pool, has become an attractive destination for businesses seeking to expand their operations and tap into a new workforce. Acquiring the services of an Employer of Record (EOR) in Cyprus can be a game-changer for employers looking to navigate the complexities of local employment laws, compliance, and talent acquisition.

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Expand your team effortlessly in the captivating Republic of Cyprus. Gloroots' global Employer of Record (EoR) service takes care of compliance, payroll, tax, and benefits management, freeing you to focus on your employees and business growth. With Gloroots as your partner, navigate the intricacies of the Cypriot labor market seamlessly and empower your business to thrive.

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Misclassification of employees refers to the improper classification of workers by their employers. It occurs when an employer labels a worker as an independent contractor, thus excluding them from certain employment laws and benefits, even if the nature of their employment relationship resembles that of a full-time employee.

Engaging a PEO/EOR in the Republic of Cyprus helps mitigate the risks associated with misclassification. These reputable providers assist in creating compliant employment contracts, ensuring adherence to labor laws, accurate payroll processing, and access to comprehensive benefits. By partnering with a PEO/EOR, employers can navigate the complexities of worker classification and maintain compliance with the regulations in the Republic of Cyprus.

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Employment contract

While employment contracts in Cyprus are not legally required to be in writing, it is considered best practice to provide new employees with a comprehensive written employment contract that clearly outlines the specific terms of their employment. In cases where a written employment contract is not utilized, employers are obligated to furnish new employees with a written statement containing essential details, including:

•  Identification of both parties, including the registered company office
•  Commencement date (and employment duration for temporary contracts)
•  Workplace location
•  Job description, duties, and responsibilities
•  Basic salary, along with any additional compensation or benefits
•  Working hours
•  Total number of holidays
•  Notice periods for termination of employment

Ensuring clear communication of these terms establishes a solid foundation for the employment relationship and helps to avoid any potential misunderstandings or disputes.

Overtime

Any work exceeding the regular weekly working hours is considered overtime and is subject to payment at an overtime compensation rate as specified in the employment contract or collective bargaining agreements. The maximum number of hours allowed during a workweek is 48, and this limit is averaged over a 4-month period.

When an employee works more than 40 hours in a week, the additional hours are considered overtime and are remunerated at the agreed overtime compensation rate outlined in the employment contract or collective bargaining agreements. This ensures that employees are fairly compensated for their extra efforts beyond the standard working hours.

Minimum Wage

The prescribed National Minimum Wage stands at 940 EUR per month. However, for the initial six months of employment, it is adjusted to 885 EUR per month. This temporary variation applies during the initial phase of employment and ensures a gradual transition to the standard National Minimum Wage.

Annual leaves

In Cyprus, employees are granted a minimum of 20 days of annual leave, with an extended entitlement of 24 days for those working a six-day week. Furthermore, Cyprus observes a range of 14 to 17 public holidays annually. These provisions ensure that employees have ample opportunities to take time off and enjoy a healthy work-life balance.

Maternity Leave and Paternity Leave

Female employees are granted a maternity leave period of 18 weeks in Cyprus. In cases of multiple births, such as twins, the leave is extended to 22 weeks, while for triplets it is further increased to 26 weeks. Out of the total maternity leave duration, 11 weeks are mandatory and typically taken two weeks before the expected due date, with the remaining weeks taken after the birth. To qualify for maternity leave, pregnant employees must provide a medical certificate confirming their pregnancy and expected due date.

In addition, fathers in Cyprus are entitled to a two-week consecutive paid paternity leave, which can be taken within the 16 weeks following the birth of their child. This leave is paid by the Social Insurance Fund and amounts to 75.20% of the employee's regular salary. These provisions aim to support the well-being of both parents and facilitate their active involvement in the early stages of parenthood.

Sick Leaves

Employees in Cyprus have the right to paid sick leave starting from the fourth day of sickness, with the costs covered by the Social Security system. To avail of sick leave benefits, the employee is required to provide a medical certificate to the Social Security Administration within 48 hours from the start of the sick leave.

Under the social insurance scheme, sick pay is provided for up to 312 days at 60% of the employee's salary. It's worth noting that the percentage of salary may increase in cases where the employee has a dependent spouse and children. These provisions aim to support employees during periods of illness, ensuring financial protection and assisting in their recovery.

INCOME TAX

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Other Tax And Social Security contribution

Employer Payroll Contributions

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Employee Payroll Contributions

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Employment Termination and Severance

Termination Process

Employers in Cyprus have the authority to terminate employment based on lawful justified reasons, which include factors such as unsatisfactory performance, redundancy, force majeure, termination at the end of a fixed period, commission of a serious disciplinary or criminal offense, indecent behavior, or repeated violation of employment rules.

When it comes to fixed-term contracts, employers have the flexibility to terminate them for reasons related to business needs, personal reasons, or instances of worker misconduct.

Termination requires the employer to provide notice to the employee and provide a written explanation for the decision. In cases of misconduct, it is customary to issue a warning to the employee and allow them an opportunity to explain their actions.

Severance pay is provided, and all statutory obligations, including compensating for paid time off, are fulfilled as part of the termination process. These measures ensure that employees are appropriately compensated and that their rights are respected when employment comes to an end.

Notice Period

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Severance Pay

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Probation Periods

The length of the probationary period in Cyprus is determined by the nature of the role and is specified in the employment agreement. Typically, probation periods can range from six months to two years. The specific duration of the probation period will be outlined in the employment agreement, providing clarity and expectations for both the employer and the employee.