Hiring Talent And Managing Payroll In Cyprus

Hiring in Cyprus? Read on to find out the employment norms (like taxes, payroll and benefits) and EOR (Employer on Record) norms in Cyprus.

Employment Norms in Cyprus

Cyprus is an Island country located in the Mediterranean sea. It is a presidential republic and a high-income economy. It is a significant tourist destination. It also has a large service sector, contributing 74% to its economy.

General Information:

The currency of Cyprus is EURO.
Nicosia is the capital of Cyprus and also a central economic hub.
Greek and Turkish are the official languages of Cyprus. Documentation can be in either of the two languages. The Securities Exchange of Cyprus is the only institution that allows English as the language for corporate documents and correspondences.
As of 2022 (latest figure), the GDP of Cyprus was reported to be 26.705 Billion USD (nominal) and 44.762 Billion USD (PPP).

The Employment laws of Cyprus are based on the common laws, statutes of Cyprus, and contract laws. Employers must abide by constitutional rules and give their employees the right to work, equal opportunities, and work in a healthy environment.

Table of Contents

Select Section

Agreements
Onboarding Process
Visa
Minimum Wage
Payroll Cycle
Annual Bonus
Health Benefits
Working Hours and Overtime
Leaves
Social Security
Taxes for Employers
Taxes for Employees
Probation
Termination
Severance Pay
Employees or Contractors
Final Words

Agreements Onboarding Process Visa Minimum Wage Payroll Cycle Annual Bonus Health Benefits Working Hours and Overtime Leaves Social Security Taxes for Employers Taxes for Employees Probation Termination Severance Pay Employees or Contractors Final Words

Agreements

In Cyrpus, written and oral agreements are valid per contract laws.
But the employer must register the written employment contract within one month of the commencement of the job.
It has to be drafted in either of the official languages with translation in any language that both parties understand (if need be).
It must include the following essential details:
- Name of the employer/organization, along with the valid address of the company
- Name and address of the employee. (including the original address of the foreign employees)
- Date of the commencement of the job
- Length of the employment
- Type of job and detailed description
- Terms and conditions of employment and termination
- Working hours, weekly off, along with annual leaves
- Statutory leaves-including sick leaves and parental leaves
- Salary details, including details of bonus (if any)
- Validity of the agreement

Onboarding Process

The onboarding process begins after the employer submits the legal documents to the Department of labor.
The time frame depends on the registration process, but ordinarily, it takes 3-7 days.
The onboarding process varies in each organization, but the market practice in Cyrprus mainly includes- new events, meet and greet, training programs, incentive programs, and corporate workshops.

Visa

In Cyprus, work permits and visas are the responsibility of the employers, and they have to apply for them on behalf of the employee.

There are three types of documents required for foreign workers in Cyprus:

Cyprus Work permits
Cyprus Work Visa- It is valid for 90 days.
Residence permit- for anyone who intends to work longer than 90 days.

Requirement for work visa:

Application form by the employer
Valid passport
Employment contract sealed by the Department of Labour
Tax clearance certificate of Employers
Medical bill of the employee
Background check of the employee
Financial statements of the employee

Process:

The employer in Cyprus has to prove that there are no eligible local job seekers in Cyprus who can fill in the post. And that's why they are hiring a foreign worker.
This has to be followed by a letter of recommendation from the Department of Labour, along with a permit from the Civil Registry and Migration Department.

Once all these requirements are met, then a work visa is issued.

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Minimum Wage

As of 2023, the National minimum wage in Cyprus is 940 EURO per month, which means 11280 EURO per year. Employers must comply with minimum wage standards.

Payroll Cycle

Employees are usually paid on a monthly basis in Cyprus.
It is mandatory to mention the payroll cycle in the employment contract.

Annual Bonus

There is no statutory obligation on the employers to provide an annual bonus. Most employers mention the terms and conditions of the bonus in the employment contract.

Health Benefits

Health benefits in Cyprus are covered under social insurance contributions.
Employers must make social insurance contributions on behalf of their employees.
Most of the employees prefer private health insurance for their employees, as it is more lucrative.

Working Hours and Overtime

Work hours: In Cyprus, weekly Work is for 48 hours. It could be 5 or 6 days a week but cannot exceed 48 hours a week.
Break: Employees are entitled to 24 consecutive hours break in a week, or- 2 consecutive days off with a 14-day cycle. It is mandatory to mention the break details in the employment contract.
Overtime: Overtime is when the employee has worked for more than 48 hours weekly. If an employer wants to engage employees in overtime work, the former should seek prior consent from the Ministry of Labour and social insurance and mention it in the employment contract.

Leaves

Sick Leaves

There are provisions for 156 paid sick leaves annually in Cyprus.

Employees who take up to 3 days of sick leave are entitled to 100% of their base salary. The employers pay for this.
Employees who take 3 days to 156 days are entitled to a 60% base salary, paid by social security.

Parental leaves

Maternity leave
- Mothers are entitled to 18 weeks of paid maternity leaves. They are entitled to this only when they have worked for 180 consecutive days with the same employer.
- Mothers can take two weeks of leaves out of the 18 weeks right before the child's birth.
- These benefits start at 72% of their salary, which the social security fund pays.
Paternity leave
- Fathers/ or other spouses are entitled to 14 days of paid paternity leaves when they have worked for 180 consecutive days with the same employer.
- Fathers can take the leaves within the first 16 weeks of the child's birth.
- The social security fund pays 72% of their base salary during paternity leave.
Parental leave
New parents are also entitled to 8 months of unpaid leaves. It is divided between both parents, and they can decide the distribution. This period cannot be extended.

Annual leaves

Employees are entitled to 20 days of paid leave annually when they are working for five days per week.
If employees are working for six days a week, then they are entitled to 24 days of leave annually.

Public Holidays (for the Calendar year 2024)

A few of the following dates may vary according to the traditional calendar.

New Year's Day: January 1
Epiphany: January 6
Green Monday: February 19
Greek Independence Day: March 25
National Day: April 1
Orthodox Good Friday: April 5
Orthodox Easter Sunday: April 7
Orthodox Easter Monday: April 8
Labour Day: May 1
Orthodox Whit Monday: June 17
Assumption: August 15
Cyprus Independence: October 1
Ochi Day: October 28
Christmas Eve: December 24
Christmas Day: December 25
Second Day of Christmas: December 26

Public Holidays (for the Calendar year 2025)

A few of the following dates may vary according to the traditional calendar.

New Year's Day: January 1
Epiphany: January 6
Green Monday: March 3
Greek Independence Day: March 25
National Day: April 1
Orthodox Good Friday: April 18
Orthodox Easter Sunday: April 20
Orthodox Easter Monday: April 21
Labour Day: May 1
Orthodox Whit Monday: June 9
Assumption: August 15
Cyprus Independence: October 1
Ochi Day: October 28
Christmas Eve: December 24
Christmas Day: December 25
Second Day of Christmas: December 26

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Taxes for Employers

Employers in Cyprus are obliged to contribute to various funds such as:

8.3% of Social security
1.2% in Redundancy fund
0.5% in Industrial Training and Development
2% in Social cohesion fund
2.90% to General Healthcare System (GHS)
8% in the Central Holiday fund (if the company is not exempted)
12.5% in Corporate Income Tax (CIT)

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Taxes for Employees

A part of the employee's salary is also contributed to:

social security- 8.3%
general healthcare system- 2.65%

Employees are also obliged to pay taxes as per their salary range.

There is no taxation for income up to 19,500 EURO.
An employee earning between 19,501- 28,000 EURO would have to pay a 20% tax.
There is a 25% tax for employees earning between 28,002- 36,300 EUROS.
There is a 30% tax for employees earning between 36,301- 60,000 EUROS.
For the employee earning 60,001 EUROS and above- there is a flat rate of 35%.

Probation

There is no statutory period of probation. But most organizations in Cyprus have probation periods ranging from 6 months to 2 years.
Most organizations include a probation period in the employment contract.

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Termination

The Termination of Employment legislation regulates the termination in Cyprus. The legislation states the employer does not issues have to include a notice or pay severance to employees in the following cases:

Offence - criminal or corporate during the working hours
Improper behavior
Violation of contract or company policy

In other cases, a minimum of 7 days of notice is mandatory.

Severance Pay

Severance pay is determined by the number of years spent in an organization:

2 weeks of pay -4 years of employment
2.5 weeks pay- 5-10 years of employment
3 weeks pay- 11-15 years of employment
3.5 weeks pay- 16-20 years of employment
4 weeks pay- 20 years and above

Employees or Contractors

The differentiation between the employee and the contractor is determined by the following:

control of the work
daily responsibilities
time spent
entitlements

The organization should specify whether they are hiring the employee or the contractor. Otherwise, it would invite heavy penalties from the judiciary.

Final Words

The employers in Cyrpus need to adhere to the local laws while hiring a global team. They need to interact and comply with various departments such as social insurance, the labor department, and the ministry of migration. This could be tedious; hence, hiring an EOR service will be beneficial.