An Employer of Record (EOR) in Cyprus is a company that takes on the responsibility of being the legal employer for a worker. This includes managing payroll, benefits, and other employment-related tasks on behalf of the worker's actual employer.
Discover the key considerations and essential details you should be aware of before opting for an Employer of Record (EOR) in Cyprus.
| Overview | |
| Continent | Asia |
| Country | Cyprus |
| Capital | Nicosia |
| Time zone | UTC+02:00 (EET) |
| Total Time zones | 1 |
| Personal Tax filing deadline | Varies depending on the individual taxpayer's profile. |
| Financial Year | 1st January to 31st December |
| Date format | dd/mm/yyyy |
| Currency | Euro (EUR) |
| VAT | the standard rate is 19% |
Employment Contracts in Cyprus
In Cyprus, while individual job contracts are not mandatory, the terms of employment are primarily governed by collective agreements. These agreements are crafted between trade unions and employers, typically spanning a duration of two to three years. Once finalized, any new collective agreements must be forwarded to the Department of Labour, with some accessible through the Greek version of their official website.
For employees working over eight hours weekly and for durations exceeding a month, a written notification detailing their employment terms is essential. This documentation, which should be provided within a month of employment commencement, serves as a formal record and should be endorsed by both the employer and employee. Key inclusions are:
- Employer and employee details
- Business address, and if distinct, the employee's work location
- Job designation, grade, and role description
- Commencement date of employment
- Duration specifics for temporary roles
- Applicable collective agreements
- Specifics or references to regulations on:
- Entitlement and protocols for paid leave
- Notice periods
- Regular working hours
- Compensation specifics
Should any amendments occur to the collective agreement that influence an employee's conditions, the employer is obligated to notify the staff within a month. Moreover, individual employment term modifications necessitate prior discussion with the concerned employee.
In terms of working hours, Cyprus maintains a standard 38.5-hour workweek, with overtime being compensable. Legislations mandate that an individual's workweek, inclusive of overtime, not surpass 48 hours. Additionally, biannual salary increments align with cost-of-living evaluations. Beyond these, salary reassessments are anchored in collective agreements. Notably, Cyprus revises its minimum wage annually, effective from 1st April, and it escalates post six months of consistent employment in a role. Furthermore, the legislation guarantees a minimum of four weeks' annual leave and stipulates that any medical benefits should align with the prevailing collective agreement.
Lastly, part-time employment in Cyprus denotes roles with lesser weekly hours than their full-time counterparts within the same organization. Despite reduced hours, these employees are entitled to analogous rights and conditions as full-time staff, ensuring proportional benefits and remuneration.
Employment Laws in Cyprus
Understanding employment laws is vital for foreign employers setting foot in countries like Cyprus. With Cyprus's mix of European and Middle Eastern influences, its employment regulations aim to find a balance between employer and employee rights. This guide is designed to provide foreign employers with insights into Cyprus's employment laws, especially those looking to expand and hire teams remotely in Cyprus.
Minimum Wages in Cyprus
Current Scenario (Until December 31, 2023)
- Monthly minimum wage: €940
- Applicable since: January 1, 2023
- Details: Applies to full-time employment over 6 months with one employer. Initial 6 months set at €900.
- Exceptions: Not applicable to certain categories like domestic workers, agricultural staff, and trainees.
Upcoming Change (Effective January 1, 2024)
- Monthly minimum wage: Increases to €1000 for full-time employment over 6 months.
Additional Insights
- Minimum wage is based on a 40-hour workweek but can vary by sector.
- All figures are pre-tax. Before 2023, wage determinations were sector-specific.
Payroll Cycle
- Frequency: Monthly is most common, but some opt for weekly.
- Employer Flexibility: The law doesn't dictate a specific frequency.
- Payment Protocols: Salaries should be paid by the last working day of each month with a detailed payslip.
Probation Period
The probation period, usually between 6 months to 2 years, is mentioned in the employment contract. During this time, notice periods are shorter for both parties. However, firings require valid reasons.
Notice Period
The length of notice for leaving a job depends on how long someone has worked:
- 26-51 weeks: 1 week
- 52-103 weeks: 2 weeks
- And so on, up to 8 weeks for over 312 weeks of service.
Employers must also follow these rules unless there's a strong reason for immediate termination.
Working Hours
A typical workweek is 40 hours over 5 days. General rules are set by the Organisation of Working Time Law, but exceptions exist for certain sectors. Required breaks ensure worker health, and specific rules cover overtime.
Overtime Pay
Working more than 40 hours a week means extra pay:
- Weekdays: +50%
- Saturdays: +75%
- Sundays/Public Holidays: +100%
Any work between midnight and 6 am is also considered overtime and gets the highest extra pay.
13th Month Salary
Though not a law, many employers give a bonus month's pay in December, based on the previous year's average earnings.
Termination and Severance Pay
If someone is let go without a good reason, they should get extra pay. The amount depends on how long they worked and how much they earned.
With this guide, foreign employers can navigate the Cyprus employment landscape, ensuring they follow the rules and maintain positive relationships with their employees.
If your employment is terminated without just cause, you are entitled to severance pay. The amount depends on your length of service and salary:
- 1-12 months: 1 month's salary for each month of service
- 13-24 months: 2 months' salary for each month of service
- 25-36 months: 3 months' salary for each month of service
- 37 months or more: 4 months' salary for each month of service
Social Security in Cyprus
From pensions to healthcare to unemployment support, Cyprus' Social Security system plays a vital role in ensuring social welfare.
Employer Payroll Contributions in Cyprus
| Employers | % of Gross Salary |
| Social Insurance | 8.3% |
| Social Cohesion | 2% |
| Redundancy | 1.2% |
| Training and Development | 0.5% |
| National Health System | 2.9% |
| Holiday Fund | 8% |
| Total Employment Cost | 22.9% |
In Cyprus, employers are required to make various payroll contributions as a percentage of their employees' gross salary. These contributions are aimed at funding social security programs, providing employee benefits, and ensuring the well-being of the workforce. Here are the key employer payroll contributions and their corresponding percentages in Cyprus:
- Social Insurance: Employers contribute 8.3% of their employees' gross salary to the Social Insurance fund. This fund provides coverage for various social benefits, including pensions, sickness benefits, maternity benefits, and disability benefits.
- Social Cohesion Fund: Employers are also obligated to contribute 2% of their employees' gross salary to the Social Cohesion fund. This fund aims to support social inclusion, combat poverty, and enhance social welfare programs.
- Redundancy Fund: Employers contribute 1.2% of their employees' gross salary to the Redundancy fund. This fund serves as a safety net for employees in the event of termination or redundancy, providing them with financial assistance and support during such circumstances.
- Training and Development Fund: Employers are required to contribute 0.5% of their employees' gross salary to the Training and Development fund. This fund promotes continuous learning and skills development among the workforce, contributing to the overall growth and productivity of the labor market.
- National Health System: Employers also contribute 2.9% of their employees' gross salary to the National Health System. This contribution ensures that employees have access to comprehensive healthcare services and coverage.
- Holiday Fund: Employers are obligated to contribute 8% of their employees' gross salary to the Holiday Fund. This fund is dedicated to providing employees with annual leave benefits, including holiday allowances and vacation compensation.
In total, the employer payroll contributions in Cyprus amount to 22.9% of the employees' gross salary. These contributions are deducted by the employer and remitted to the respective authorities on behalf of the employees. Compliance with these obligations is essential for employers to fulfill their legal responsibilities and provide necessary employee benefits.
It's important for employers to accurately calculate and allocate these payroll contributions, as failure to comply with these requirements may lead to penalties and legal consequences. Employers should seek guidance from professional advisors or consult the relevant authorities to ensure proper adherence to the payroll contribution regulations in Cyprus.
Employee Payroll Contributions in Cyprus
| Employees | % of Gross Salary |
| Social Insurance | 8.3% |
| National Health System | 2.65% |
| Total Employee Cost | 10.95% |
In Cyprus, employees must contribute a portion of their salary to support social security and healthcare.
Social Insurance:
Employees give 8.3% of their salary towards social security. This helps cover pensions, sickness, maternity, and disability benefits.
National Health System:
Employees also give 2.65% of their salary for healthcare. This ensures they can access necessary medical services.
In total, these contributions make up 10.95% of an employee's salary. Employers handle these deductions, sending the funds to the right places. It's essential for employees to check their payslips to confirm these deductions.
Both employers and employees must understand and follow these rules. If there are any questions, employees can ask their employer or seek advice from experts. Meeting these contributions supports Cyprus's social and healthcare systems, benefiting everyone.
Personal Income Tax in Cyprus
Personal income tax in Cyprus operates under a progressive system, meaning the tax rate increases as your taxable income rises. Residents are taxed on their worldwide income, while non-residents are only taxed on income derived from sources in Cyprus.
| Income Tax | |
| 19,500-28,000 EUR | 20% |
| 28,001-36,300 EUR | 25% |
| 36,301-60,000 EUR | 30% |
| Over 60,000 EUR | 35% |
Employee Benefits in Cyprus
Paid Time Off:
- Annual Leave: Employees have a minimum of 22 paid days off each year. Some might get more based on their role or company rules.
- Sick Leave: Employees get 10 paid sick days every year. More can be given with a doctor's note.
- Maternity Leave: Moms get 18 weeks of paid maternity leave, starting 6 weeks before the due date. Dads get 5 days of paid leave.
- Parental Leave: Parents can take up to 52 weeks of unpaid leave to care for a child under 6. Both parents can share this leave.
- Bereavement Leave: Employees get 3 paid days off if a close family member passes away.
Public Holidays:
Cyprus has 14 public holidays each year. Employees get paid time off on these days. Key holidays include Christmas, New Year, Easter Monday, and Independence Day.
Additional Leaves:
- Military Service Leave: Those called for mandatory military duty get paid leave.
- Jury Duty Leave: Employees chosen for jury duty get paid for that time.
Flexible Work Arrangements:
Many Cypriot companies offer flexible options like adjusted hours, working from home, or condensed workweeks. This helps staff balance work and personal life.
Other Benefits:
Some companies give extra perks, like cars, help with childcare, or health coverage beyond the standard. However, benefits can differ based on industry, company size, and contracts. This gives a general idea of what's common in Cyprus.
In Cyprus, an Employer of Record (EOR) emerges as a strategic partner for enterprises maneuvering through the intricate facets of the Cypriot employment landscape. By shouldering the tasks associated with local compliance, payroll administration, and administrative obligations, the EOR empowers businesses to concentrate on their primary goals, free from the complexities of regulatory intricacies. This collaborative alliance not only facilitates the process of market entry and expansion but also guarantees that employees operate under agreements that are in harmony with Cypriot labor regulations and norms. As Cyprus's business environment undergoes transformation, the significance of an EOR becomes even more pronounced, presenting organizations with a streamlined avenue to fortify their foothold in Cyprus while upholding compliance and nurturing a conducive work setting.