Definitive Guide to Hiring in Republic Of Cyprus

Hiring in Republic of Cyprus

Hiring employees compliantly in Republic of Cyprus means doing it yourself or using an Employer of Record like Global Expansion. You should be careful using independent contractor agreements in Republic of Cyprus so that you don’t run afoul of employment laws. To hire an employee compliantly and offer them mandatory benefits and compliant agreements, you can:

(a) Establish your own new legal entity, banking, accounting and payroll service in Republic of Cyprus; or

(b) use an Employer of Record like Global Expansion who can handle all of the details for you.

Labor Laws in Republic of Cyprus

Employee Probation Period

• The employment of an employee is considered temporary for an initial period of up to 6 months.
• The said period may be shortened or extended by the mutual agreement of the contracting parties.
• The extension of the probation period cannot exceed 24 months.

Annual Leave in Republic Of Cyprus

• Employees are entitled to 4 weeks of paid annual leave (20 working days for a 5-day workweek; 24 working days for a 6-day workweek)

Holidays in Republic of Cyprus

• There are 15 bank holidays in Cyprus.

Maternity Leave Republic of Cyprus

• An employed woman who presents a certificate from registered medical practitioner stating the expected week of her confinement is entitled to maternity leave.
• Maternity leave is provided for 18 consecutive weeks, of which 11 weeks must compulsorily be taken during the period beginning two weeks before the expected week of confinement
• A new mother may be granted one additional week of maternity leave for every 21 days of hospitalization provided that the total additional leave may not exceed 6 weeks.

Paternity Leave Republic of Cyprus

• Paternity leave is for 2 consecutive weeks within a period of 16 weeks, commencing from the week of the birth.
• During the paternity leave, the employee receives paternity pay to the extent and under the terms and conditions provided by the social insurance law.

Sick Leave in Republic of Cyprus

• Sick pay continues for 156 days and may be extended an additional 156 days if the insured is eligible for an incapacity pension.
• Some employers provide sick pay for the first three days, and some pay the balance of the salary that the Social Insurance Fund does not cover.
• Sick pay paid by the employer cannot be recovered from the state.

Working Hours in Republic of Cyprus

• The standard working day is 8 hours and the standard weekly working duration is 40 hours per week.
• However, in the civil service the weekly work duration is 38 hours.

Overtime in Republic of Cyprus

• Overtime payments depend on the employment agreement and whether there are collective agreements in place.
• If there are collective agreements in place, then the rate stipulated in the collective agreement is paid. In the absence of any collective agreement and any express provision in the employment contract
• The overtime rate for shop employees is 150% of the normal wage rate for overtime work on weekdays.
• The rate is 200% of the normal wage rate for overtime work performed on Sundays, public holidays and free mornings or free afternoons.
• An employer also has the option to give paid time-off instead of premium pay for overtime hours.

Termination of Employment in Republic of Cyprus

Dismissals that cannot be justified under any one of the grounds below are considered unlawful per se:

• • unsatisfactory performance (excluding temporary incapacitation due to illness, injury or childbirth);
  • redundancy;
  • force majeure, act of war, civil commotion or act of God;
  • termination at the end of a fixed period;
  • conduct which renders the employee subject to summary dismissal; or
  • conduct which makes it clear that the relationship between employer and employee cannot reasonably be expected to continue, commission of a serious disciplinary or criminal offence, indecent behavior or repeated violation or ignorance of employment rules.
• Written notice of termination must be given to the employee outlining the reasons for the dismissal and the effective date of termination.
• Employees are generally protected from dismissal for any reason that is not a legally justified ground for dismissal.
• Furthermore, it is a criminal offence to dismiss a pregnant employee from the time of presentation with a doctor's certificate of pregnancy up to five months after the end of maternity leave.

Notice Period in Republic of Cyprus

• Notice period is as follows: -
  • 1 week of notice period for 26 to 51 weeks of employment
  • 2 weeks of notice period for 52 to less than 104 weeks of employment
  • 4 weeks of notice period for 104 to less than 156 weeks of employment
  • 5 weeks of notice period for 156 to less than 208 weeks of employment
  • 6 weeks of notice period for 208 to 259 weeks of employment
  • 7 weeks of notice period for 260 to less than 311 weeks of employment
  • 8 weeks of notice period for more than 312 weeks of employment

Severance in Republic of Cyprus

• Statutory severance pay for unlawful dismissal payable by the employer depends on the period of continuous employment and is calculated in the same way as compensation for redundancy.
• This compensation is calculated in accordance with Table 4 of the Termination of Employment Law, which provides 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 10 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.
• In cases of lawful termination of employment due to redundancy, an employee is not entitled to compensation from the employer. In such case the employee is entitled to compensation from the National Redundancy Fund, to which all employers pay monthly contributions.

Republic of Cyprus Salary and Wages

• Employees' own contribution to the state-administered social insurance fund is 8.3% of their gross remuneration, with a maximum annual cap on insurable emoluments as from 1 January 2023 of EUR 60,060.
• The rate of 8.3% applied for both employee and the employer up to 31 December 2023.
• Thereafter, the rate will increase every five years until it reaches 10.7% as of 1 January 2039.
• Self-employed individuals contribute at 15.6%.
• An employer also is required to contribute 2% of all earnings of its employees to the social cohesion fund.
• These limits are set on an annual basis.

Immigration Republic of Cyprus

• Professional and clerical employees are usually not granted visas unless no qualified local (i.e. Cypriot or EU/EEA) personnel are available. A local employer must prove that it cannot find a Cypriot employee with comparable experience.
• However, this does not apply to highly-skilled personnel, employees from international business companies, athletes and religious icon painters. The duration of the visa is 4 years and its renewable.
• Foreign nationals may work in Cyprus if he or she has an employment visa. Employment visas are issued to foreign nationals who are employed in Cyprus by Cypriot entities.
• Under the EU principles of freedom of movement, EU/EEA Nationals are free to work in Cyprus without a work / residence permit. EU Nationals from member states have the right to enter Cyprus by simply showing a valid EU passport or ID card without having to register upon arrival.
• If there is an intention to stay and take up employment, the EU/EEA national has to apply for a Registration Certificate.
• EU Blue Card: -
  • An application for a residence and employment permit (EU Blue Card) to work in any company of foreign interests, including international companies must be submitted to the Director of the Civil Registry and Migration Department.
  • The gross annual salary resulting from the monthly or annual salary specified in the work contract or binding job offer must be equal to or higher than the relevant salary threshold defined by the Member State (at least 1.5 times the average gross annual salary in the Member State concerned).
  • For 2014, Cyprus set the minimum salary threshold at: 23 964 EUR.
  • In Cyprus, the EU Blue Card is issued for a period of one year. If the employment contract is of shorter duration, the EU Blue Card shall be issued for the duration of the contract plus three months.

Value Added Tax (VAT) in Republic of Cyprus

• VAT is imposed on the provision of goods and services in Cyprus as well as on the acquisition of goods from the European Union and the importation of goods into Cyprus.
• Taxable persons charge VAT on their taxable supplies (output tax) and are charged with VAT on goods or services that they receive (input tax).
• The standard VAT rate in Cyprus is 19%.
• Additionally, two reduced VAT rates, a 9% rate and a 5% rate, apply in Cyprus.
• The reduced VAT rate of 9% applies on accommodation, restaurant and catering services, as well as on certain local passenger transport services.
• The reduced rate of 5% applies on foodstuffs, pharmaceutical products, books and newspapers, as well as on a variety of other goods and services that are beyond the scope of this summary.
• The 5% reduced rate also applies to renovation and repair of all used private residences that are considered as being old (i.e. a period of at least three years has elapsed from their first use), excluding the value of materials which constitute more than 50% of the value of the services.

Mandatory Benefits in Republic of Cyprus

• These refer to mandatory benefits as stipulated by law
• Statutory benefits include probationary period, annual leave, public holidays, sick leave, maternity and paternity leave, notice period, severance pay in case of unfair dismissal, redundancy pay.
• Statutory benefits also include social security benefits include unemployment benefits, pension, workers’ medical benefits, sickness and maternity benefits, disability pension.

Payroll Accrual in Republic of Cyprus

Payroll Accruals Additional Information

Why use Global Expansion to hire in Republic of Cyprus

Establishing a branch office or subsidiary in Republic of Cyprus can be time-consuming, expensive and complex. With such a robust labor market in place, one must pay great attention to detail when structuring employment because Republic of Cyprus labor laws are complex.

The company also has a responsibility to comply with specific employment practices dictated by Republic of Cyprus law to maintain its good standing as an equal opportunity employer.

Global Expansion makes it easy for you to expand into Republic of Cyprus. We'll help you hire your candidate of choice, handle HR matters and payroll, and ensure that you comply with local laws without the burden of setting up a foreign branch office or subsidiary. In addition, you'll have complete control and direction over your employees.

We enable you to stay in control of everything. Our Republic of Cyprus Global Professional Employer Organization (PEO) and Employer of Record (EOR) solution provides you with peace of mind to focus on running your company and the security to enter new markets.