Cyprus

Employment Contract Types

– Permanent Contract: This contract type offers ongoing employment with no predefined end date.

– Fixed-Term Contract: This contract is set for a specific period or until the completion of a particular task.

Agency Workers

Temporary work agencies can hire employees under temporary employment contracts, often referred to as “atemping.” If disputes arise, these temporary contracts might be classified as indefinite.

Independent Contractors/Self-Employed

Independent contractors or self-employed individuals operate under agreements to provide services or deliver goods but maintain their independence from other contractors. They are not considered employees of the contracting company.

In Cyprus, the maximum allowable work hours are 48 hours per week, including overtime. Typically, the standard workweek is 40 hours. Employees are entitled to at least 11 consecutive hours of rest each day. Additionally, if an employee works more than 6 continuous hours in a day, they are entitled to a minimum 15-minute break.

In Cyprus, the maximum average weekly working time is 48 hours, including overtime, unless more favorable terms apply to employees.

For shop workers specifically, the standard working hours are limited to 38 hours per week or 8 hours per day. This excludes breaks and any overtime worked.

In Cyprus, all employees are entitled to a minimum of four weeks of paid leave annually. Employees working a five-day week are entitled to at least 20 days of leave per year, while those working a six-day week are entitled to 24 days of leave.

Individual employment contracts or collective agreements may provide more generous leave entitlements.

In Cyprus, it is customary for employers to provide a 13th salary, which is typically paid around mid-December each year. While this bonus is a common practice, it is not legally mandated. Additional bonuses may be offered depending on the industry; for instance, in sectors such as banking and insurance, bonuses are often included in employment contracts.

In Cyprus, an employed pregnant woman is entitled to 18 consecutive weeks of maternity leave. This includes 11 compulsory weeks: two weeks before the expected delivery date, the week of delivery, and eight weeks following delivery.

Fathers, or partners of a surrogate mother, or those who have adopted a child up to the age of 12, are eligible for 2 consecutive weeks of paternity leave. This leave starts from the week of birth or adoption and extends through a total of 16 weeks.

Maternity allowance consists of a basic benefit and a supplementary benefit. The weekly rate of the basic benefit is 72% of the weekly average of the claimant’s basic insurable earnings from the previous contribution year. This rate increases to 80% with one dependent, 90% with two dependents, and 100% with three or more dependents.

Maternity and paternity benefits are not paid if the individual receives their full salary during the maternity leave period. If a reduced wage is received, the combined total of the reduced wage and the allowance must not exceed the full salary.

1. Initial Sick Leave Period: Employees are not entitled to sick pay for the first 3 days of illness.

2. Sick Pay from the Social Insurance Fund: After the initial 3 days, employees are eligible to receive sick pay from the Social Insurance Fund. This benefit is provided for up to 156 days of sickness.

3. Extension of Sick Pay: The sick pay period may be extended for an additional 156 days if the employee qualifies for an incapacity pension.

4. Employer’s Role: Some employers provide sick pay for the initial 3 days and may also cover any shortfall between the Social Insurance Fund’s payment and the employee’s full salary.

5. Healthcare System: Cyprus operates a mixed public and private healthcare system where medical benefits are based on income.

Social Security Contributions in Cyprus

In Cyprus, social security contributions are managed through the employee’s salary. Both employees and employers are responsible for monthly contributions, which are withheld from the salary and paid to the tax authorities.

 Employee Contributions:
– Social Insurance: 8.3%
– National Health Insurance: 2.65%

Employer Contributions:
– Social Insurance: 8.3%
– National Health Insurance: 2.9%
– Social Cohesion: 2.0%
– Redundancy Fund: 1.2%
– Training & Development Fund: 0.5%
– Holiday Fund: 8.0%

In total, the employee’s contribution rate is 10.95%, while the employer’s total contribution is 22.9%, divided among various funds.

Personal Income Tax: The personal income tax rate in Cyprus is progressive, ranging from 0% to 35%, depending on the income amount.

Additional Benefits:

– Healthcare Benefit: Provides medical coverage and can be used as an alternative to the State’s mandatory medical insurance.

– Child Benefit: Granted to families with unmarried dependent children residing together. However, child benefit is not available if the family’s total assets exceed €1,200,000.

– Family Benefit: Families with three or more children or single parents with any number of children, and a total gross annual family income of less than €39,000 from the previous year, are entitled to family benefit through a provisional payment system in the first quarter of the calendar year.

– Maternity Benefit: Provided to insured employees, self-employed individuals, and voluntarily insured women.

Visa and Residence Permit Procedures for Cyprus

Obtaining a Visa:

Visas for Cyprus are issued by all Diplomatic Missions (Embassies and General Consulates) of the Republic of Cyprus, as well as by Honorary Consulates abroad. To apply for a short-stay or travel visa, you must submit a completed and signed application form to the relevant Consulate, along with the necessary supporting documents based on your visa purpose. The processing time for a visa application is typically up to one week.

Obtaining a Residence Permit:

EU nationals planning to stay and work in Cyprus for more than three months must obtain a residence permit. Within the first three months of arrival in Cyprus, EU nationals are required to apply for a Certificate of Registration within eight days. The residence permit application process can take up to two years.

Obtaining a Residence Work Permit:

Non-EU foreign nationals must secure a valid work permit to work in Cyprus. Most work permits are issued through the temporary residence permit system. Depending on the permit category, it can allow residency and employment in Cyprus for up to five years and is renewable. The evaluation of a work permit application can take up to six months.

Notice Period for Employment Termination in Cyprus

In Cyprus, when an employer intends to terminate the employment of an employee who has completed at least 26 weeks of continuous service, they must provide notice based on the employee’s length of service. The required notice periods are as follows:

– 26 to 51 weeks of service: 1 week’s notice
– 52 to 103 weeks of service: 2 weeks’ notice
– 104 to 155 weeks of service: 4 weeks’ notice
– 156 to 207 weeks of service: 5 weeks’ notice
– 208 to 259 weeks of service: 6 weeks’ notice
– 260 to 311 weeks of service: 7 weeks’ notice
– 312 weeks or more of service: 8 weeks’ notice

In Cyprus, severance pay for redundant employees is calculated based on their length of service. The compensation structure is as follows:

– Up to 4 years of employment: 2 weeks’ severance pay for each year of service
– 5 to 10 years of employment: 2.5 weeks’ severance pay for each year of service
– 11 to 15 years of employment: 3 weeks’ severance pay for each year of service
– 16 to 20 years of employment: 3.5 weeks’ severance pay for each year of service
– Over 20 years of employment: 4 weeks’ severance pay for each year of service