Employ Candidates Compliantly in Cyprus

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  1. Overview: Cyprus
  2. Global HR Compliance
  3. Global PEO and payroll
  4. Work permit for hiring expats via PEO
  5. Expand without a company set up
  6. Contractor vs. employee: which is better?
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Global HR Compliance in Cyprus

Acumen’s global employment and HR compliance solution offers an efficient and convenient way to meet your global hiring needs in Cyprus and worldwide while greatly diminishing any legal and financial risks. Our solution is designed especially for global companies and agencies like yours, to help you meet your or your clients’ hiring needs and remain fully compliant in Cyprus.

A lack of on-the-ground expertise and knowledge of local labor legislation exposes your company or agency client to legal and financial risks. Partnering with Acumen International takes the guesswork out of global HR compliance for you. Our global experts with hyper local expertise ensure you stay fully compliant in Cyprus, so you can focus on growing your business.

We take the hassle of HR management off your shoulders and handle your global employees’ onboarding, payroll, benefits and, when necessary, termination on your behalf. Acumen’s Cyprus Employer of Record (EOR) solution makes it possible for you to quickly hire your selected local workforce in the country, eliminating the need to set up a legal business entity before to get your business operations underway.

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The labor laws and regulations of your home country may not apply to employees in Cyprus, and things can become even more difficult if you need to hire talent in multiple locations.

Cyprus has an influential union presence, and its labor laws and regulations continue to develop while employers must be careful to comply. When hiring talent in Cyprus, for your company or your clients, it is crucial to abide by the local legal and tax requirements.

Common HR compliance risks to global employers include:

  • a continually evolving in-country tax and social security system
  • employee misclassification risks
  • ubiquitous and highly active trade unions
  • labor legislation favoring the rights of employees over employers

Acumen International operates as your trusted international partner with hyper local expertise: offering innovative global employment solutions, we take the guesswork out of global HR compliance. Our global expert team helps businesses and agencies to navigate the complexities and nuances of Cypriot labor legislation, as well as manage employee onboarding, and compensation, including mandatory and voluntary benefits, on your company or your clients’ behalf.

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Risks of Hiring Contractors/Freelancers in Cyprus

Hiring contractors in Cyprus was long considered the quickest and most cost-effective solution. However, governments around the world take notice of the lost tax and social security revenues due to contractors who should have been classified as employees.

In Cyprus, an individual who does not work for another person under a contract of employment or apprenticeship is considered self-employed where a relationship between employer and employee can be inferred.

To remain compliant with the country’s laws, the onus of determining the worker status and correctly classifying their personnel falls entirely on global employers.

Companies misclassifying their workers in Cyprus risk:

  • reputational damage
  • employee lawsuits and punitive damages
  • back taxes and costly fines
  • potential criminal penalties

The law does not specifically define the term independent contractor. However, an independent contractor can be distinguished from an employee on the basis of the following:

  • The degree of integration into the business.
  • The degree of control exercised by the employer.
  • The economic realities of the relationship, such as whether or not emoluments depend on performance and responsibility, and whose responsibility it is to pay social insurance contributions and income tax.

Cyprus does not legally specify the term “contingent worker”, however it is usually a temporary employee who works for a specific project (for example, a maternity leave cover) for a set time. In some instances, a contingent worker can also be an independent contractor.

New Off-Payroll Rules in Cyprus for 2022 and beyond

Taking the above into account, abiding by the newly arising Cypriot off-payroll rules comes into play for 2022 and beyond.

Make sure to consult Acumen to stay abreast of the newly arising Cypriot regulations and evade potential non-compliance risks.

With Acumen at your side, our global team of experts monitors HR laws and compliance requirements around the clock to ensure full compliance when using our Global EOR services in Cyprus.

How to Hire Your Workforce in Cyprus

Cyprus is a candidate driven market and a lack of cultural understanding, and technical expertise in HR compliance and employment law, can be a major hurdle to attracting and retaining top talent in the country.

Hiring and compensating an employee in Cyprus is a multi-step process posing challenges to the employer. Acumen’s team of global employment specialists help international employers like you to arrange fully compliant onboarding and payrolling your selected candidates in the country.

* PLEASE NOTE: Acumen International offers global talent recruitment only as an on-demand service upon request, with subsequent employment of your selected candidates via our Cyprus EOR (Employer of Record) services.

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Employment Laws in Cyprus

Employment relations in Cyprus are regulated by local legislation, employment contracts as well as collective agreements and labor union rules.

The Cyprus Ministry of Labour, Welfare and Social Insurance handles all matters regarding labor including negotiations on collective bargaining agreements.

In addition to complying with labor laws in Cyprus, global employers must be in full HR compliance with the following:

  • International agreements regarding labor laws as well as local labor laws
  • Acts and secondary legislation defining employer and employee rights and obligations
  • Provisions defined in collective labor agreements and statutes governing employment relationships

Anti-discrimination employment laws in Cyprus

Cyprus anti-discrimination legislation applies to all employees in the private and public sectors and states:

  • equal conditions for access to employment; and this applies to selection criteria, recruitment conditions, promotion, dismissal, and remuneration
  • equal access to all types of vocational guidance and training
  • equal working conditions
  • the right to membership of an organization for workers or employers.

Every person, who considers himself wronged as a result of any violation of the law, has the right:

  • to pursue his rights before the competent Court and to make use of any appropriate measures for establishing the violation and the material or moral damages suffered by them, as well as for countering the allegations of the respondent
  • to submit a relevant complaint to the Ombudsman

Businesses that become entangled in a discrimination lawsuit in Cyprus risk:

  • a disruption to business processes and company growth strategy
  • fines and penalties costing time and money
  • loss of the company’s reputation and hiring appeal to high-value talent

Partnering with a global EOR service provider is an effective way to compliantly hire employees without the need for you to handle the complexities of Cypriot employment laws on your own. Acumen makes sure that the employees we onboard on your behalf are given access to all the rights and protections afforded them by the country’s law, eliminating the risks of lawsuits, fines and penalties for your company or your clients.

Documents needed for compliant employee onboarding in Cyprus

Businesses and organizations wishing to hire citizens, residents, or potential residents in Cyprus need to obtain the required paperwork to do so.

Employers will need to verify the right to work of employees in Cyprus by checking their ID or passport and relevant visa, where it applies. Cyprus being part of the European Union automatically grants EU citizens the same rights to work as Cyprus citizens.

Employees in Cyprus need to share their identity card (ID) and social insurance number with the company at least one day before the beginning of their employment.

Employers must fill out a hiring form minimum one day before the official hire date and send the form electronically via the Ergani information system.

Background checks

Criminal background checks are allowed, but not mandatory for employment in Cyprus. All background checks must be carried out following the General Data Protection Regulation (‘GDPR’).

Sensitive topics include:

  • physical or mental disability checks are only allowed if relevant for the position
  • credit and financial background checks are generally allowed
  • checks on convictions for criminal offenses involving dishonesty and fraud are allowed for positions of trust

Employment agreements: Fixed-Term vs Indefinite Contracts

Cyprus does not legally require a written employment contract, however, the law mandates all employers to state the terms of employment in writing, no later than one month after their start date.

Backdated agreements have not been allowed in Cyprus since the fall of 2021.

At Acumen, we recommend providing formal written employment contracts in the local language. For Cyprus these contracts can be in Greek or Turkish. Offer letters and contracts should use Euro, the local currency since 2008, and include details such as compensation, working hours, benefits, and entitlement.

Fixed-term employees as well as part-time employees in Cyprus are offered the same level of protection as permanent employees, except that fixed-term employees may be lawfully dismissed at the end of the contract.

Companies interested in engaging their selected global workforce in Cyprus should keep in mind that collective agreements between unions and the Cypriot government apply in a large number of industries. A high percentage of workers are unionized. For example, more than 90% of the workforce in the banking and public sectors is in a union.

Acumen monitors developments in local labor laws and unions closely, in order to keep our clients abreast of them and employ their staff in Cyprus on their behalf without the hassle for client companies of opening a local subsidiary.

Employment protection in relation to business transfers

The 2000/2018 Cyprus Law on the Preservation and Protection of the Employee’s Rights during the Transfer of Business, Facilities or Parts of Business or Facilities protects employees with indefinite contracts or apprentices in case of a business transfer; whether public or private, profit or not-for-profit.

Employment agreements must remain unchanged except in cases where changes have been expressly agreed upon before the transfer.

Employee termination and Severance Pay in case of Dismissal

The Cyprus Termination of Employment Law came into operation in 1968 to protect employees against dismissal. The law covers all employees, whether in the private or the public sector, including apprentices.

The law stipulates the employer’s obligation to give notice, the obligation to notify the employee in the event of a transfer, the employee’s right to redundancy payment as well as compensation in case of unlawful dismissal.

Employers have the right to terminate the employment of an employee without notice in the case of:

  • gross misconduct by the employee in the course of his or her duties
  • commission of a criminal offense without the agreement, expressed or implied, of their employer
  • immoral behavior at work
  • serious or repeated contravention or disregard by the employee of work or other rules in relation to their employment

Unfair dismissal

The following do not constitute a valid reason for dismissal in Cyprus and may render an employer liable to compensation:

  • union membership or participation in union activities
  • participation in a safety committee under the Safety and Health at Work Laws.
  • seeking office as, or acting as, a workers’ representative
  • filing of a complaint or taking part in proceedings against the employer involving a violation of laws or regulations
  • race, color, marital status, religion, political opinion, ethnic extraction or social origin
  • pregnancy or maternity
  • parental leave or leave for force majeure

Notice periods

All employees, who have completed at least six weeks of continuous employment, except for employees on probation, need to be given a minimum period of notice, depending on the length of their service. No minimum notice period is required for termination during the probation period.

The notice period in Cyprus is between one week to eight weeks, depending on the length of continuous employment. Notice needs to be given in writing.

Severance payments

Severance payments in Cyprus depend on the employee’s length of service.

Mandatory severance payments are calculated as follows:

  • two weeks of pay for each year of service up to four years
  • two-and-a-half weeks of pay for each year of service from five to ten years
  • three weeks of wages for each year of service from 11 to 15 years
  • three-and-a-half weeks of pay for each year of service from 16 to 20 years
  • four weeks of pay for each year of service beyond 20 years

Acumen helps businesses and agencies to navigate the challenging landscape of Cypriot labor legislation with our global PEO/ Employer of Record (EOR) solution. As a global Employer of record, we hire your workforce without the need to open a local entity and the risk of hiring contractors – in compliance with local laws. Trust Acumen to mitigate compliance risks and streamline onboardring, payrolling and terminating your global workforce, when needed, on your company’s behalf. Leverage our extensive global knowledge base and professional international partner network with hyper local expertise to rest assured that your company remains in full compliance with Cypriot employment laws.

Employee Benefits and Contributions

Minimum statutory salary

Cyprus currently has no legal minimum statutory salary in place but is expected to introduce a minimum wage in 2022.

Collective bargaining agreements establish the wage levels for specific categories. The average gross salary in Cyprus in 2022 is is €1,990 per month.

Probationary period

Cyprus labor legislation includes a provision for a minimum probation period of at least 26 weeks which may be extended up to 104 weeks, provided it is specified in the employment contract at the commencement of employment.

Employers can determine whether a probationary period applies for each employment contract, including for fixed-term employees.

Mandatory Employee benefits

When negotiating the terms of an employment agreement in Cyprus, employers are not required to provide any particular employee benefits outside of benefits required by statute or collective agreements.

Mandatory benefits include redundancy and annual leave payments, and contributions to the social insurance scheme.

As a global EOR/PEO service provider, Acumen supports companies to establish a competitive benefits strategy and attract the best local or expat talent in Cyprus.

Overtime

In Cyprus, all work hours exceeding 40 hours a week are paid at an overtime compensation rate. The overtime rate is negotiated between employer and employee and established in the employment contract. However, in certain industry sectors, any overtime payment is governed by collective bargaining agreements and detailed legislation and regulations.

The maximum number of working hours during a workweek is set at 48 hours and calculated as an average over a 4-month period.

Working hours

The standard pattern of working hours in Cyprus is 40 hours per week.

The regulated hours of work for most employees in Cyprus are determined by the provisions of the Organization of Working Time Law.

Under the Cyprus Working Time Law, unless more favorable arrangements for the employees are applicable through industry-wide collective or enterprise-based agreements, the following apply:

  • weekly working time cannot exceed 48 hours including overtime
  • the minimum period of rest per 24 hours is set at 11 consecutive hours
  • the minimum weekly rest is set at 24 consecutive hours
  • where the daily working time exceeds six hours, a break of at least fifteen minutes must be given

Annual Leave

Employees in Cyprus are entitled to 20 working days of paid annual leave for five day work weeks and 24 working days for employees working 6 days a week. Employers may concede more generous terms for an employee in the contract.

Annual leave may be accumulated for a period of two years if agreed between the employer and the employee and it can be paid out in monetary retribution only at the end of an employment relationship. No annual leave has to be granted if an employee has worked for less than thirteen weeks in the year.

Sick Leave

Employees in Cyprus are entitled to paid sick leave from the fourth day of sickness. Statutory sick pay is disbursed by the Social Insurance Department for any period of more than three days of an employee being unable to work, and up to 156 days in relation to every period of interrupted employment.

The incapacity to work due to illness needs to be certified by a doctor and the employee needs to present a medical certificate to the Social Security Administration within 48 hours of the start of the sick leave period.

It is common practice in Cyprus for employers to grant three days as paid sick leave to cover the period until payments by the Social Insurance Department kick in. However, any payment and maximum duration of sick leave outside of statutory sick pay are discretionary.

Parental Leave

The Cyprus Maternity Protection Law covers all pregnant employees, female employees who have recently given birth or are adopting a child by ensuring:

  • the right to maternity leave and maternity benefits
  • protection against dismissal and safeguarding of seniority and promotion
  • leave of absence for prenatal examinations
  • facilitating of nursing of the child
  • the safety and health of pregnant women and women who have recently given birth

Female employees are entitled to 18 weeks of maternity leave. The leave period is extended to 22 weeks for twins and 26 weeks for triplets. Eleven weeks of maternity leave are mandatory, and employees typically take two weeks before the due date and the rest after.

Paternity leave was introduced in 2017. It is paid to natural fathers for two consecutive weeks between the week of confinement and the following 16 weeks.

Retirement and pensions

As of January 2022, the total rate of an employee’s contribution towards the pension is 20.2%, which is mostly split between employer and employee with the state contributing less than 5%.

The general pensionable age in Cyprus is 65 years.

Voluntary Employee Benefits

In addition to providing mandatory benefits as stated by the local law in Cyprus, employers may include additional benefits to attract top talent.

Many companies in Cyprus offer private medical insurance as an employee benefit since the national health insurance scheme (GESY) is relatively new.

Other voluntary benefits may include:

  • flexible or remote working
  • four-day work week
  • additional time off
  • company cars or transport allowances
  • accommodation
  • gym memberships
  • childcare
  • other perks and benefits

Some employee benefits may be taxed. Acumen International can help you provide a broad range of voluntary benefits that best match the country’s requirements and your business needs. This ensures competitiveness in the marketplace for your business or agency clients.

For more information, feel free to contact our expert team at Acumen International.

Acumen International: Your HR Compliance Partner in Cyprus

All signs point to Cyprus increasing in popularity with highly-skilled talent, whether local or expatriate. From the Mediterranean climate to government initiatives, at Acumen, we highly anticipate Cyprus to increase in popularity with highly skilled talent over the next few years.

Going global is an important growth opportunity – and yet it can be fraught with complex in-country laws and regulations that many international employers struggle to fully comprehend. You can avoid non-compliance pitfalls in Cyprus by partnering with Acumen International, your trusted global employment and HR compliance partner with hyper-local expertise. Take advantage of the opportunities in Cyprus and let Acumen’s global EOR / PEO solution take care of all potential legal, HR and tax compliance issues.

Acumen is available 24/7 to help your business or agency navigate the numerous complexities of onboarding, payroll, and termination of your global employees in Cyprus and in 190 countries as you build your multinational presence.

In addition to our core solution for compliantly employing your global workforce on your behalf, Acumen’s team of English-speaking professionals can deliver custom solutions that can include payroll, benefits and perks provision for your team in Cyprus.

Acumen provides you with an all-in-one global HR solution that saves time, money, and valuable resources, so you can focus on growing your business.

Cypriot employment laws and regulations are constantly evolving, making it difficult for international companies to remain compliant. You can simplify and streamline your global hiring in the country by outsourcing it to Acumen International.

We reduce the risk of non-compliance and employee misclassification with our world-class global employment and HR compliance solution helping you stay current with emerging laws and regulations in Cyprus and 190 countries worldwide.

To learn more, request your Free Express Quote for Cyprus, or ask us a question. Our global expert team is always ready to assist you, no matter what time zone you’re in.

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