Employment law in Cyprus

1. Can you provide guidance on the process for terminating an employment contract in Cyprus, including any legal requirements and potential risks?

For a dismissal to be considered lawful without the employee being entitled to compensation for unfair dismissal, one of the following reasons of dismissal must apply:

  • The employee has become redundant.
  • The termination is due to force majeure (war, political uprising, act of God or destruction of the premises by fire not caused by the willful act or negligence of the employer).
  • The employment is terminated at the end of a fixed-term contract or because of the attainment by the employee of the normal retirement age by virtue of custom, law, collective agreement, work rules, or otherwise.
  • The dismissal is due to the employee’s fault, eg, if he fails to carry out his work in a reasonably efficient manner.

An employer intending to terminate the employment of an employee who has at least 26 weeks’ seniority with that employer, is obliged to give the employee a minimum period of notice, depending on the length of service, as follows:

Seniority Notice by the employer
26 to 51 weeks 1 week
52 to 103 weeks 2 weeks
104 to 155 weeks 4 weeks
156 to 207 weeks 5 weeks
208 to 259 weeks 6 weeks
260 to 311 weeks weeks
312 or more weeks 8 weeks

The parties may agree a longer notice period.

The employer has the right to require the employee to accept payment of wages in lieu of the period of notice to which they are entitled.

For reasons like redundancy and failure by the employee to carry out his work in a reasonably efficient manner, it is expected that prior consultation, time to improve and opportunities are provided to the employee with the dismissal being the last resort.

The employer may also dismiss an employee without notice if the employee’s behaviour is such that immediate termination is justified:

  • gross misconduct by the employee in the course of his/her duties;
  • commission by the employee in the course of his/her duties of a criminal offence without the agreement, express or implied, of the employer;
  • behaviour by the employee that makes clear that the employer-employee
    relationship cannot be reasonably expected to continue;
  • immoral behaviour by the employee in the course of his/her duties; and
  • serious or repeated contravention or disregard by the employee of work or other rules in relation to his/her employment.

Even in the above circumstances, it is expected that the employee is at least provided with an opportunity to be heard before the decision to be dismissed is made.

The legal risk accompanying a decision to dismiss an employee, is the right of such employee to bring a claim for unfair dismissal against the employer, whereby if the claim succeeds, the employee might be entitled to compensation, a right to be reinstated to work or both.

Additionally, if there is any discriminatory element to the decision to dismiss, the employee might be further allowed to receive additional compensation.

2. Can you explain the process for resolving employment disputes in Cyprus? Are there any alternative methods, such as mediation or arbitration, available?

The most common process for resolving employment disputes is an adjudication of the dispute by the Industrial Disputes Tribunal. Notwithstanding the above, employees may also opt to file an action in a District Court for breach of contract, although this is rarely the case as there is very limited jurisdiction for District Courts to adjudicate on issues relating to employment.

Finally, civil servants may also opt to file a claim with the Administrative Court for judicial review especially with respect to cases involving promotion and/or the failure of granting same to the employee.

While mediation and arbitration is possible, such methods have yet to become popular and are more commonly reserved for high ranking employees.

3. Are there any recent changes or upcoming developments in Cyprus employment law that employers should be aware of? How can employers stay updated on changes in legislation and regulations?

A significant piece of legislation that is currently being considered is the legislation regulating remote work. As of today, the issue remains unregulated despite its implementation by various entities. The legislation will provide for the implementation of remote work by employers on a voluntary basis and shall provide for the respective obligations of employers including, inter alia, the provision of appropriate equipment and training to the employees, while simultaneously maintaining a safe working environment. Since certain rights and obligations of the involved parties will be clarified and ascertained with the implementation of the legislation, we expect that a significant number of entities will need to reconsider their stance with respect to remote work and employees will require that a clear policy as to such type of work is applied.

Apart from the above, four new pieces of legislations have been introduced this past year in Cyprus. The first concerns the Protection of Salaries (Amending) Law of 2022 which imposes several obligations on the employer including, inter alia, the obligation to issue monthly and/or weekly payslips (whichever applicable) and introduces the obligation to agree with the affected employee in writing any deduction to their salary.

The second piece of legislation concerns the Minimum Wage Order of 2022 which introduced a universal minimum wage and replaced the old regime which was applicable only to specific industries or professions.

The third piece of legislation which was recently introduced concerns the Leaves (Paternity, Parental Care, Force Majeure) and Flexible Working Arrangements Law of 2022 which provides, inter alia, for the introduction of paternity leave, carer’s leave, force majeure leave and the extension of the right to request flexible working arrangements to carers and working parents of children up to eight years old.

The final piece of legislation concerns the Transparent and Predictable Working Conditions Law of 2023 which provides, inter alia, for a limit to the length of probationary periods at the beginning of the job to six months and the implementation of effective measures to combat contracts which do not provide a fixed amount of working hours.

All updates are published in the Official Gazette of the Republic of Cyprus, whereby the employers can stay informed on any changes in the legislation.

Our firm regularly issues D-briefs setting out recent changes in laws affecting employment in Cyprus.