12-12-2012

Employment

Authors

  • George Z. Georgiou & Associates LLC

What are the basic characteristics of the Cypriot Employment legal system?

The Cypriot employment legal framework is a combination of principles from both the English and Greek legal systems. Cypriot employment law is social in its nature and, as such, it is more protective of the employee rather than providing absolute freedom to the employer.

What are the main Cypriot laws in relation to employment law?

The right to work is safeguarded by Article 25 of the Cypriot Constitution of 1960. The main laws that relate to employment include:

  • the Termination of Employment Law of 1967 (Law 24/67), as amended;
  • the Collective Redundancies Law of 2001 (Law 28(I)/2001);
  • the Annual Paid Leave Law of 1967 (Law 8/67), as amended;
  • the Social Insurance Law of 1980 (Law106/72), as amended;
  • the Safety and Health at Work Law of 1996 (Law 89(I)/96), as amended;
  • the Protection of Maternity Law of 1997 (Law 100(I)/97), as amended;
  • the Organization of Working Time Law of 2002 (Law 63(I)/2002), as amended;
  • the Law providing for Parental Leave and Leave on Grounds of Force Majeure (Law 69(I)/2002), as amended;
  • the Part-Time Workers Law of 2002 (Law 76(I)/2002), as amended;
  • the Preservation and Safeguard of the Employees’Rights on theTransfer of Businesses, Facilities or Sections of Businesses Law of 2000 (Law 104(I)/2000), as amended;
  • the Protection of Wages Law of 2007 (Law 35(I)/2007);
  • the Equal Treatment of Men and Women in Employment and Vocational Training Law of 2002 (Law 205(I)/2002);
  • the Minimum Salaries Law Cap. 183, as amended; and
  • the Equal Treatment at Work and Employment Law of 2004 (Law 58(I)/2004), as amended.

Each of the above laws is supplemented by relevant Regulations and Decrees. There is also a considerable amount of case law on all employment-related laws.

What are the primary mechanisms for enforcement of employment law in Cyprus?

The primary mechanisms for enforcement are the Ministry of Labor and Social Insurance, the Employment Courts and, in some cases, the District Courts.

The Ministry is the main state agency for labor and social policy and its departments include:

  • Social Insurance Services;
  • Social Welfare Services;
  • Department of Labor (Department for Social Inclusion of Persons with Disabilities);
  • Department of Labor Inspection; and
  • Department of Labor Relations.

What are the primary means for resolving disputes between employees and employers in Cyprus?

In the event of a dispute raised between employees and employers, the Employment Courts have exclusive jurisdiction, except for claims exceeding two years’ wages, in which case the District Court has the sole jurisdiction. Furthermore, a dispute may be resolved by use of the following means:

  • resolution by direct negotiation;
  • mediation by the Ministry (Department of Labor Relations); and
  • if the dispute is still unresolved, referral to arbitration or to a public inquiry, with the agreement of both parties.

Participation in alternative dispute resolution does not stop the limitation period of one year for filing a claim to the Employment Courts.

What is the definition of an “employee” and “employer” under Cypriot employment law?

An “employee”is considered as any person who works for another person under a contract of employment or apprenticeship or under conditions where an employment relationship between employer and employee can be inferred, and An “employer” is considered as any natural or legal person who is involved in an employment contract with an employee and is responsible for the business and/or facility. The term “employer” also includes any self-employed person.

What are the legal requirements for the employment of foreign nationals in Cyprus?

Regarding European nationals, they may work in Cyprus without any further restrictions. However, a simple application for the issuance of a Registration Certificate must be submitted to the Civil Registry and Migration Department within a period of four months from the date of entry into the Cyprus Republic. The European national - employee may work while his application is being processed. In relation to non EU nationals / third country nationals they are required by law to obtain an employment and residence permit prior to the commencement of employment. It is important to note that the terms and conditions of employment of all foreigners must be the same as those applied to Cypriot nationals. Working in Cyprus without a valid work permit is a serious criminal offense and can result in a fine and/or imprisonment for both the employer and employee.

Are written employment contracts required under Cypriot employment law?

Contracts of employment may be created orally between the employer and the employee given that under Cyprus law there is no specific legal requirement that there must be a written employment contract. However, employers are obliged to inform employees, in writing, about the basic terms that govern the employment contract. This requirement covers both oral and written contracts. It is important to note that in the event of an oral agreement, the employer must notify each employee by letter about the basic terms that govern their employment contract.

Which are the basic terms of employment which have to be provided to the employee in writing according to Cypriot employment law?

The law imposes an obligation on each employer to provide, in writing, specific information regarding the terms of employment to an employee as listed below:

  • information about the identity of the parties;
  • the place of work and the registered address of the business;
  • the position or the specialization of the employee;
  • the commencement date of the contract and its duration if this is for a fixed time;
  • notice periods;
  • the annual leave entitlement;
  • all the emoluments to which the employee may be entitled and the time schedule for their payment;
  • the usual duration of daily or weekly employment; and
  • mention of any collective agreements that govern the terms and/or the conditions of the employee’s employment.

What language should the employment contract be in?

The employment contract should be in a language that is understood by both parties. If the contract is in a language that the employee does not understand, the provisions of the contract must be explained to the employee. The employer should obtain confirmation from a professional (e.g. a lawyer) that the terms of the contract have been explained to the employee. There should be an agreed clause, included in both contracts, stating which language will prevail in the event of any doubt as to meaning.

Are there any implied terms into an employment contract?

Terms are implied both by virtue of statute and common law. Statutory implied terms include rights of and obligations on both the employer and employee while common law creates an implied duty of trust and fidelity on the employee to the employer. This is a fundamental term of the contract of employment and the employment relationship as a whole. The following terms are usually implied in the employment contract:

  • trust and confidence;
  • ‘good behaviour’ (i.e. the duty to behave appropriately towards the other party);
  • a duty of good faith;
  • payment of salary on time and without delay;
  • to refrain from abuse or harassment;
  • to refrain from discrimination.

What is the legal framework in relation to the duration of employment contracts under Cypriot employment law?

According to Cypriot employment law, an employment contract may be for a fixed term or unlimited duration. Employment under a fixed-term contract is automatically terminated upon the expiration of the specific term. However, the termination of the employment is lawfully resulted at the end of the fixed period unless successive renewals or extensions of a fixed-term contract, as well as an overall employment period exceeding 30 months, takes place which will inevitably lead the Court to find a contract of unlimited duration or indefinite period.

What additional documentation is given and/or made available to an employee and what is the main distinction between non-contractual and contractual documents?

In addition to the employment contract, it is very usual to provide an employee with an employees’ manual or handbook and/or a disciplinary code and/or internal policy of the organization -employer. The distinction between non-contractual and contractual documents rests on the consequences of an employee not following any of the provisions set out in the document. In the event that an employee breaches a term of an employment contract he or she may be lawfully dismissed. However, a term included in a non-contractual document might initiate internal disciplinary procedures.

What does the Cypriot employment laws establish in relation to probationary periods?

According to the Termination of Employment Law (Law 24/67) a fixed probationary period of 26 weeks applies to each employment. The said period however can be extended up to a maximum of 104 weeks by written agreement, at the time of the employment (i.e., on the employment contract). During the probationary period the provisions relating to notice and protection of termination of employment do not apply and thus the employer may dismiss the employee without reason and without notice, subject to any provision in the contract of employment. It is important to note that the latter possibility does not apply in the event that the employee is pregnant.

What is the legal framework in relation to discrimination in Cyprus?

Article 28 of the Cypriot Constitution contains a general antidiscrimination provision that corresponds to article 14 of the European Convention on Human Rights (ECHR). Article 28 establishes that every person is equal before the law and it prohibits in this way any kind of discrimination against any person on the ground of his or her community race, religion, language, sex, political or other convictions, national or social descent, birth, color, wealth, social class, or on any ground whatsoever, unless there is express provision to the contrary in the Constitution. However, age, disability, and sexual orientation are not covered by the Constitution. Cyprus has ratified most international conventions on human rights, which include antidiscrimination provisions.

In 2002, the Equal Treatment of Men and Women in Employment and Vocational Training Law (Law 205(I)/2002), as amended, was introduced, in relation to the equal treatment of men and women regarding their accession to employment, vocational training, promotion, and working conditions. Any differential treatment based on the grounds of racial or ethnic origin, religion or belief, age, disability, and sexual orientation is allowed only when the nature of the particular employment is such that a specific characteristic constitutes a substantial and determining employment precondition, provided that the aim is legitimate and the requirement proportionate (e.g. clerks, military and police vacancies).

What rules apply to sexual harassment at workplace?

Law providing for the Equal Treatment of Men and Women in Employment and Vocational Training of 2002-2006 [Law 205(I)/2002] constitutes the legal framework with regards to sexual harassment at work in Cyprus. It establishes an absolute prohibition of sexual harassment at work, both private and public sector, and covers all levels related to the accession, advancement and secession from the job market. Moreover, it establishes an obligation towards every employer to abstain from any action which constitutes sexual harassment and an obligation not to neglect any necessary action for the prevention or treatment of sexual harassment’s incidents. The Law provides protection against any revengeful action which may take place towards the victim of sexual harassment when the latter decides to denounce the action of harassment. Also, protection is established towards any employee who is willing to provide evidence or present himself as a witness with regards to any sexual harassment incident that has occurred within the business.

What are the legal required contributions which both the employer and employee have to pay?

Employment income in Cyprus (after all allowances) is taxed as follows:

Income Tax Rate
up to EUR 19,500 0%
from EUR 19,501-28,000 20%
from EUR 28,001-36,300 25%
above EUR 36,301 30%

Employers are required to pay contributions to the Social Insurances Fund, Annual Leave Fund, Redundancy Fund, Human Resource Development Fund, and Social Cohesion Fund for each of their employees. The contributions payable by the employer to the above funds are calculated as a percentage of the employee’s salary. Employees are obliged to pay contributions only to the Social Insurances Fund.

Which are the lawful grounds for dismissal under Cypriot employment law?

Dismissals that cannot be justified under any one of the grounds below are considered unlawful giving rise to a right for compensation:

  • unsatisfactory performance (excluding temporary incapacitation due to illness, injury, and childbirth);
  • redundancy;
  • force majeure, act of war, civil commotion, or act of God;
  • termination at the end of a fixed period;
  • conduct rendering the employee subject to summary dismissal; and
  • conduct making it clear that the relationship between employer and employee cannot reasonably be expected to continue, commission of a serious disciplinary or criminal offense, indecent behavior, or repeated violation or ignorance of employment rules.

Does the employer have to provide any notice prior to dismissal?

The statutory minimum notice which the employer has to give to the employee, and vice versa, varies according to the employee’s period of continuous employment:

Length of Service Notice Period
More than 26 weeks, but less than 52 weeks 1 week
More than 52 weeks, but less than 104 weeks 2 weeks
More than 104 weeks, but less than 156 weeks 4 weeks
More than 156 weeks, but less than 208 weeks 5 weeks
More than 208 weeks, but less than 260 weeks 6 weeks
More than 260 weeks, but less than 312 weeks 7 weeks
312 weeks or more 8 weeks

The notice period can be effectively extended by agreement but cannot in any event be less than the statutory minimum. The employer has the right to require the employee to accept payment in lieu of notice, which covers the employee’s salary entitlement, pro rata, for the period of the notice.

How is termination pay calculated in relation to dismissal?

The amount of termination pay is generally calculated based on the years of service of the employee as per the redundancy tables used by the Redundancy Fund (expressed in a number of weeks depending on years of service), multiplied by the last weekly wage of the employee including commissions and bonuses, if these have been incorporated as part of the employee’s remuneration package (and not one-off payments) or according to the employee’s contract of employment. The termination payment must be paid as soon as possible after termination.

What is the legal framework in relation to the transfer of undertakings?

Under Cyprus employment law the transfer of all (or part of ) a business is not considered as a reason in itself to terminate the employment of any person. However, dismissals may take place for economical, technical, or organizational reasons that require changes to the workforce as long as they are done in accordance with the provisions of the Termination of Employment Law. Nevertheless, a dismissal made for reasons relating to the transfer that takes place before the date of the transfer, will be considered as a dismissal by reason of the transfer.

Employees are not entitled to object to a transfer. Any objection may constitute a material breach of the employment contract. If the working conditions or the contract of employment are changed to the employee’s detriment (this may be a breach of contract by the employer.

All rights and duties of the transferor stemming from the employment contract or work relationship as it exists at the date of the transfer must be transferred to the transferee. The transferee must retain the same terms that have been agreed upon in any collective agreement, in the same way as was done by the transferor, for the remainder of the term of the collective agreement for at least one year after the transfer. Furthermore, employees retain all rights that they had with the transferor regarding old-age and disability benefits, plus any rights to supplementary occupational retirement benefits.

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