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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Cyprus’ labor laws are mainly informed by laws passed by the Parliament and collective bargaining agreements. These mix of laws can be daunting for any foreign employer. For example, there is no weekly minimum wage in Cyprus like in many countries but a monthly minimum at €940.00 per month.  Moreover, Cyprus has strong labor unions who lobby for worker rights, resulting in a changing labor landscape.

EORs in Cyprus have in-depth knowledge of these labor laws, ensuring compliance at all times. By relieving you from these duties and expediting hiring, you can focus solely on onboarding and managing the everyday tasks for your employee.

Employing a local workforce comes with inherent risks, including language barriers, cultural differences, and unfamiliarity with local practices. Their expertise in local practices, customs, and language ensures effective communication and a smooth employer-employee relationship.

EORs typically charge a transparent fee structure that covers payroll processing, benefits administration, tax compliance, and other related services. EORs typically offer two common pricing models: fixed pricing and percentage-based pricing. The fixed pricing model allows EORs to charge a fixed fee for their services. Businesses prefer this pricing model with a stable workforce. The pricing model offers a clear understanding of the business’ ongoing expenses. This way, they can easily budget for their hiring budgets in Cyprus.

Some EORs in Cyprus may employ a percentage-based pricing model - a percentage of the employee's total compensation is charged as a fee. This pricing model benefits employers who want flexibility in fee structures that align with the employee's salary. 

Employers must discuss and negotiate the pricing structure to best suit their hiring budgets. Factors such as the number of employees, the complexity of employment contracts, and the level of support desired should be considered when evaluating an EOR's cost.

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.

When hiring globally, ensuring compliance comes with its own set of battles. Employers must ensure all hiring and onboarding activities adhere to employment laws, payroll procedures, DE&I compliance, GDPR and similar data protection laws. If you think it is hard to set up local entities and start hiring, keeping up with a dynamic compliance landscape is far harder. 

Gloroots helps you minimise all these efforts by providing a single window to manage all these tasks. Our in-house experts fully shield you from cross-border employment and payroll compliance risks. They do this by helping you with generating employment contracts, on-time payments, compliant benefits, while you focus only on screening talent. 

Our promise is a stress-free global employment experience for both you and your employee.

Contact our experts today to kickstart your global hiring campaign.

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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