G-P provides employer of record services for customers that want to hire employees and run payroll without first establishing a branch office or subsidiary in Cyprus. Your candidate is hired via G-P’ Cyprus PEO in accordance with local labor laws and can be onboarded in days instead of the months it typically takes. The individual is assigned to work on your team, working on your company’s behalf exactly as if he or she were your employee to fulfill your in-country requirements.
Our solution enables customers to run payroll in Cyprus while HR services, tax, and compliance management matters are lifted from their shoulders onto ours. As a Global PEO expert, we manage employment contract best practices, statutory and market norm benefits, and employee expenses, as well as severance and termination if required. We also keep you apprised of changes to local employment laws in Cyprus.
Your new employee is productive sooner, has a better hiring experience and is 100% dedicated to your team. You’ll have peace of mind knowing you have a team of dedicated employment experts assisting with every hire. G-P allows you to harness the talent of the brightest people in more than 185 countries around the world, quickly and painlessly.
Cyprus is an island in the Mediterranean Sea, off the coast of Türkiye. 1.21 million people live in Cyprus, and the island is a major tourist destination with about 2 million visitors each year. While Greek and Turkish are the official languages, about 80% of Cypriots are also proficient in English.
When negotiating terms of an employment contract and offer letter with an employee in Cyprus, it may be useful to keep the following in mind:
Employment Contracts in Cyprus
Although employment contracts do not legally have to be in writing, it is legally required that the employer state in writing the terms of employment of any employee, and therefore it is best practice to put a written employment contract in place. The contract should be in the local language, and spell out the terms of the employee’s compensation, benefits, and termination requirements. An offer letter and employment contract in Cyprus should always state the salary and any compensation amounts in Euro rather than a foreign currency.
Working Hours in Cyprus
In general, the work week is between 38 and 40 hours and should not exceed an average of 48 hours including overtime.
Holidays in Cyprus
Cyprus celebrates 14 national holidays:
- New Year’s Day
- Ash Monday / Clean Monday (Kathara Deftera)
- Greek Independence Day
- Greek Cypriot Day (EOKA Day)
- Orthodox Good Friday
- May Day
- Orthodox Easter Monday
- Orthodox Whit Monday (Katalysmos)
- Assumption Day
- Cyprus Independence Day
- Ochi Day (Greek national Day)
- Christmas Day
- Boxing Day
Vacation Days in Cyprus
Employees who have worked at least 48 weeks within one year are entitled to 4 weeks of paid leave. Employees who work 5 days per week are entitled to 20 days of paid annual leave, and those who work 6 days per week are entitled to 24 days of paid leave.
Temporary absence due to accident, sickness, maternity, parental leave or for reasons of force majeure is considered as a working period.
Employees who worked fewer than 48 weeks should have their leaves adjusted based on the number of weeks they did work.
Cyprus Sick Leave
For the first 3 days of absence due to illness, the employee is not entitled to pay. After 3 days, employees are eligible to receive a portion of their salary from the Social Insurance Fund. Sick pay continues for 156 days and may be extended an additional 156 days if the insured is eligible for an incapacity pension.
Some employers provide sick pay for the first three days, and some pay the balance of the salary that the Social Insurance Fund does not cover.
Maternity/Paternity Leave in Cyprus
Female employees are entitled to 18 weeks of maternity leave for their first child, 11 weeks of which must be taken beginning two weeks before the expected birth date. Mothers receive 22 weeks for their second child and 26 weeks for any child after that. Women must present a medical certificate.
Women on maternity leave receive a grant.
Both parents are generally entitled to 18 weeks of unpaid leave after the maternity leave.
Health Insurance in Cyprus
Cyprus has a public/private health care system. Medical benefits are based on income.
Cyprus Supplementary Benefits
The following benefits are commonly offered:
- Provident (pension) fund
- Health insurance
- Car allowance
- Gym allowance
- Meal allowance
- Phone allowance
The 13th month bonus is very common in Cyprus
An additional performance-based bonus is often given to management-level employees and typically ranges from 1 to 3 times the average monthly salary.
Termination/Severance in Cyprus
Probation periods of up to 6 months are allowed and may be extended to 2 years with a written agreement signed by both parties.
Employees may be terminated for cause with written notice as follows:
- More than 26 weeks but less than 52 weeks’ service: 1 week’s notice
- 52+ weeks but less than 104 weeks: 2 week’s notice
- 104+ weeks but less than 156 weeks: 4 week’s notice
- 156+ weeks but less than 208 weeks: 5 week’s notice
- 208+ weeks but less than 260 weeks: 6 weeks’ notice
- 260+ weeks but less than 312 weeks: 7 week’s notice
- 312+ weeks: 8 week’s notice
Severance payments are owed according to the following schedule:
- Up to 4 years of service: 2 weeks’ pay
- 5-10 years’ service: 2 1/2 weeks’ pay
- 11-15 years’ service: 3 weeks’ pay
- 16-20 years’ service: 3 1/2 weeks’ pay
- 20+ years’ service: 4 weeks’ pay
Paying Taxes in Cyprus
Income taxes are owed on a progressive schedule and range from 0% to 35%.
Employers must make the following social security contributions:
- Social Insurances contributions amounting to 8.3% of the employee’s monthly salary (rate valid until December 31, 2024).
- Social Cohesion Fund: 2% of the employee’s monthly salary.
- Redundancy Fund: 1.2% of the employee’s monthly salary.
- Industrial Training Fund: 0.5% of the employee’s monthly salary.
Employees must contribute 8.3% of their monthly salary to social security.
This information is provided as generally accepted information and is not intended as advisory services.
Establishing a branch office or subsidiary in Cyprus to engage a small team is time-consuming, expensive and complex. Cypriot labor law has strong worker protections, requiring great attention to detail and an understanding of local best practices. G-P makes it painless and easy to expand into Cyprus. We can help you hire your candidate of choice, handle HR matters and payroll, and ensure that you’re in compliance with local laws, without the burden of setting up a foreign branch office or subsidiary. Our Cyprus PEO and Employer of Record solution provides you peace of mind so that you can focus on running your business.
If you would like to discuss how G-P can provide a seamless employee leasing or PEO solution for hiring employees in Cyprus, please contact us.