Employer of Record (EOR) Cyprus

Employment Contracts in Cyprus

In Cyprus, job contracts are not mandatory, and employment terms are established through collective agreements negotiated between trade unions and employers, typically lasting two or three years. These agreements, available only in Greek, must be submitted to the Department of Labour by the trade unions. Employees working over eight hours weekly and beyond a month should receive written notice of their employment terms within a month of starting. This includes details like names, addresses, job roles, start dates, and applicable collective agreements. Employers must inform staff of changes to collective agreements within a month, and any changes to individual employment terms should be discussed beforehand.

A standard workweek in Cyprus is 38.5 hours, with overtime pay, and the legal limit is 48 hours per week, including overtime. Salaries are reviewed biannually for cost-of-living adjustments, with additional reviews defined by collective agreements. Cyprus enforces a minimum wage, annually updated on April 1, and increases after six months in a role. Legislation mandates a minimum of four weeks of annual leave, with medical care specified in collective agreements. Part-time employees receive equivalent rights and conditions as full-time counterparts, proportional to their working hours.

Termination and Severance Pay

Termination law in Cyprus is anchored in the crucial principle of notice periods, with the duration contingent on the employee’s length of service. The statutory minimum notice ranges from none for employees with less than 26 weeks of service to eight weeks for those with 312 or more weeks of service. Employment contracts or collective agreements may specify extended notice periods, ensuring equitable terms for both parties.

The minimum notice periods based on the employee’s length of service are as follows:

• 26 to 51 weeks 1 week
• 52 to 103 weeks 2 weeks
• 104 to 155 weeks 4 weeks
• 156 to 207 weeks 5 weeks
• 208 to 259 weeks 6 weeks
• 260 to 311 weeks 7 weeks
• 312 and over 8 weeks

Notices must be in writing, clearly stating the start and end dates. During a probation period, where no notice is required, immediate dismissal is possible. The probation period, previously spanning 26 to 104 weeks, is now limited to six months by the Transparent and Predictable Conditions of Employment Law 2023. Employees intending to resign must give a minimum notice period, ranging from one to three weeks, depending on their continuous employment duration.

Social Security in Cyprus

From January 1, 2024, employees’ contributions to the state-administered social insurance fund stand at 8.8% of their gross remuneration, capped annually at EUR 62,868. This 8.8% rate applies to both employees and employers until January 1, 2034. Subsequently, the rate incrementally rises every five years, culminating in 10.7% starting January 1, 2039.

Self-employed individuals contribute 16.6% of their income as of January 1, 2024 (15.6% from 2019 to 2023). Similar to employee contributions, this rate increases every five years, reaching 20.4% from January 1, 2039 onward. Contributions are subject to specific lower and upper limits, varying based on the self-employed person’s profession or trade, with annual adjustments.

Payroll in Vietnam

Minimum Wages

The minimum wage in Cyprus for 2024 is €1,000.00 per month, effective from January 1, 2024. All amounts are in Euro and are stated before tax.

Overtime Pay

Overtime pay is generally not governed by law in Cyprus, except in the retail sector, and is typically subject to negotiation between employers and employees. However, specific legislation, regulations, or collective agreements may regulate working hours in certain industries.

Payroll Cycle

Typically, employees receive their salary at the end of each month, and the payment amount is determined by the terms of the employment agreement. In cases of non-paid leave, the employer is entitled to deduct a proportional amount from the employee’s salary.

Mercans’ Payroll Capabilities 

In Cyprus, managing payroll requires meticulous attention and comprehensive solutions. Mercans simplifies the process through Employer of Record services, ensuring accuracy, compliance, and operational efficiency.

Cyprus Employee Hiring Cost

Let’s consider a hypothetical example for employing someone in Cyprus with a gross annual salary of EUR 9,999.96. The total annual employer costs, including various components, would amount to EUR 11,490.00. Here’s the breakdown:

• Social Cohesion Fund EUR 200.04
• General Health Care System EUR 290.04
• Social Security EUR 830.04
• Human Resources EUR 50.04
• Redundancy Fund EUR 120.00

These costs are in addition to the gross annual salary and provide an estimate of the employer’s financial obligations when hiring an employee in Cyprus. Keep in mind that these figures are for illustrative purposes and may vary based on specific circumstances and legal requirements.

Employee Benefits in Cyprus

The Constitution of Cyprus guarantees fundamental rights related to employment, including the right to work, strike, and equal treatment. Additionally, international treaties ratified by Cyprus and EU regulations are applicable, given its EU membership since 2004.

Paid Leave

Employees are entitled to 20 days of annual paid vacation, which may extend to 24 days if they work on Saturdays. The specifics often depend on the employment contract, and the employer may offer different conditions.

Maternity and Paternity

Maternity protection, parental leave, and leave due to force majeure safeguard employees. Maternity leave is 18 weeks, with additional provisions for premature labor or infant hospitalization. Maternity allowance is 75% of the employee’s insurable earnings during the previous year.

Paternity leave, effective from 01/08/2017, allows fathers two weeks off, extendable under certain circumstances. Parental leave, introduced in 2002, provides up to 18 weeks for each child under 8 years without pay. Sick leave benefits are available after three days of continuous sickness insurance coverage.

Sickness Leave and Benefits

Employees subject to obligatory sickness insurance are entitled to sickness benefits after three days. The benefit is payable for a maximum of 156 days per period of discontinued work and may be extended to 312 days if the incapacity is not permanent. Certification by a doctor is required, and the application must be submitted within 21 days of the illness.

Incapacity due to illness must be certified by a doctor from the first day, and further examinations may be required during the illness. There is a waiting period of 3 days for employees and 9 days for the self-employed. In case of an accident or hospitalization, self-employed individuals are treated similarly to employees.

Workplace Rights

The time of absence is calculated as working time, and rights to promotion and return to work remain unaffected. Equal treatment is ensured, excluding commissions. Employees are not entitled to an allowance if the mother works during the maternity period, refuses medical examinations, or receives payment from the employer or social security benefits supplemented by the employer.

Personal Income Tax in Cyprus

Cyprus Personal Income Tax (PIT) is levied on the worldwide income of individuals classified as tax residents in Cyprus. Non-residents are taxed exclusively on specific income types generated within Cyprus.

The current Personal Income Tax rates and brackets applicable to individuals are outlined in the table below:

Top Skills on Demand in Cyprus

Stay abreast of Cyprus’s dynamic job market by exploring the key roles that promise thriving career opportunities in 2023.

IT Professionals

• In a digitally evolving landscape, IT roles like software developers, data analysts, cybersecurity specialists, and IT project managers are in high demand.
• Essential skills include proficiency in programming languages, data analysis tools, cloud computing, and cybersecurity measures.

Finance and Accounting Specialists

• Cyprus’s robust financial sector presents opportunities for financial analysts, accountants, auditors, and tax consultants.
• Key requirements include a strong grasp of financial regulations, tax laws, and accounting principles, along with certifications like ACCA or ACA.

Healthcare and Medical Professionals

• The growing healthcare industry seeks professionals like doctors, nurses, pharmacists, and medical laboratory technicians.
• Qualifications, licenses, and specialized experience are crucial for success in the healthcare sector.

Digital Marketing Specialists

• In the digital era, organizations rely on roles such as digital marketing managers, social media strategists, SEO specialists, and content marketers.
• Proficiency in digital marketing tools, data analytics, social media platforms, and SEO techniques is essential.

Hospitality and Tourism Professionals

• Cyprus’s flourishing tourism sector demands professionals in hotels, resorts, and event management.
• Roles like hotel managers, chefs, hospitality managers, tour guides, and event planners require language fluency and exceptional customer service skills.

Construction and Engineering Experts

• Ongoing construction projects in Cyprus create opportunities for civil engineers, architects, project managers, and quantity surveyors.
• Technical skills, knowledge of construction regulations, and project management expertise are key.

Sales and Business Development Professionals

• Professionals with strong sales and business development skills are highly valued across industries in Cyprus.
• Roles like sales managers, business development executives, and account managers necessitate negotiation skills, market knowledge, and the ability to identify new business opportunities.

Work Permit in Cyprus

Non-European Union (EU) foreign nationals intending to reside and work in Cyprus are required to secure both a work permit and a Cypriot visa specifically for employment purposes. These permits and visas must be obtained before the commencement of employment in Cyprus.

For Third Country Nationals (non-EU citizens)

• Visa duration is typically up to 4 years, with exceptions for certain categories such as highly skilled personnel, athletes, and other sports professionals.
• The Department of Labour evaluates applications based on criteria agreed upon by social partners (employers, employees, and the government).
• Spouses of third country nationals employed in Cyprus may also have the opportunity to work, subject to specific conditions.
• A residence and work permit is necessary.

For EU Citizens

• EU citizens are free to work in Cyprus, provided they adhere to the registration procedure.
• Family members and dependents of EU citizens, who are not EU citizens themselves, generally enjoy similar rights, but they require a visa and work permit to work.

It is mandatory that the terms and conditions of employment for foreign nationals align with those for Cypriot nationals, as stipulated in model employment contracts provided by the Ministry of Labour and Social Insurance.

Employing foreign nationals without a valid work permit is considered a criminal offense, punishable by imprisonment for up to three years, a fine of up to €8,543, or both.

The primary criterion for employing third-country nationals in Cyprus is the inability to find suitable local or EU citizen workers. The employer notifies the District Labour Office of the vacancy, and efforts are made for six weeks to identify suitable local or EU citizens. If none are found, the employer can then submit an application. However, the agriculture and animal husbandry sectors are exempt from this procedure.

Work Permits

• Employers need permission to hire a foreign national expert.
• The Labor Office must offer the job to Cypriot and EU national candidates recorded as unemployed applicants in the Cypriot labor market.

Residence Permit

• Family members should apply for a visa alongside the individual performing work in Cyprus.
• If the individual plans to work and stay in Cyprus for more than a year, an extension of the work permit and visa is required (achieved through a residence card with the right to work).

EOR Solutions in Cyprus