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Employer of Record System in Cyprus

Employer of Record in Cyprus

Skuad’s Cyprus Employer of Record (EOR) solution helps your business expand without the need for an entity setup. Our unified and automated global human resource (HR) platform enables you to expedite the onboarding of your remote team, manage their payroll, benefits, taxation, probation, and termination in compliance with the local laws. In addition, we help you streamline the global expansion process with the able assistance of our international network of experts from over 150 countries. Book a demo with Skuad to kick-start your expansion into Cyprus

Cyprus at a Glance

Employment in Cyprus: 1,215,630 (World Population Review 2021)

Currency: Euro (EUR)

Capital: Nicosia

Languages: Greek and Turkish

Gross Domestic Product (GDP): USD 23.97 billion (as per 2020); it is expected to increase to USD 26.48 billion in 2021.

Learn more about employment in Cyprus and business expansion by partnering with Skuad.

Employment in Cyprus

What You Should Know Before Employing in Cyprus

The employment laws in Cyprus are drafted and enforced by the Department of Labor under the Ministry of Labor and Social Insurance. The main legislations are available on the Web Portal of the Republic of Cyprus. The key entitlements are tabulated below.

Entitlements Details
Employment Contract Law, Cyprus A written contract is not legally required as per the Cyprus employment laws, but it is advisable to have a written contract stating the terms and conditions. The employer is obliged to provide the information to the employee in writing within one month of commencement of the job. There are generally two types of contracts, as follows.
  • Indefinite contract
  • Fixed-period contract

The fixed-period contract is for a term no longer than 30 months. However, if the employee continues beyond 30 months, the fixed-period contract is converted into an indefinite contract.

A probation period of up to six months is provided in addition to the contract’s term. However, a maximum probation period cannot exceed two years with a written agreement between the employer and employee.

Standard Working Hours

The Organization of Working Time Law governs the hours of work, rest, break, and annual leave for the employees.

The standard working hours are 40 hours distributed across five working days a week. However, the weekly working hour cannot exceed more than 48 hours, including overtime.

The minimum period of rest every 24 hours is fixed at 11 consecutive hours. However, if the working hours exceed 48 hours weekly with the employee’s consent, the employer has to present the record to the Ministry of Labor and Social Insurance.

Night work can occur between 11.00 pm to 6.00 am. Employers employing night workers regularly must notify the Ministry of Labor and Social Insurance in writing and take necessary steps to safeguard the health of the workers.

Minimum Wage The minimum wage upon recruitment is EUR 743 and goes up to EUR 789 after six months with the same employer, effective from April 2008. This applies to clerks, salespersons, shop and school assistants, baby- and child-minders, nurses, and those employed to sanitize hospitals, clinics, and homes for elderly people.

An employer is guilty of an offense and is liable to conviction with a fine of up to EUR 170 for refusal to pay minimum wages.

Paid Vacation Leaves According to Cyprus labor laws, employees become eligible for paid leaves after working for 48 weeks.
  • All employees can take four weeks of paid leave.
  • An employee who has worked five days a week is entitled to 20 days of paid leave.
  • An employee who has worked for six days a week is entitled to 24 days of paid leave.
Sick Leave

The sick leaves are fixed through enterprise-based agreements or collective bargaining of industries.

The employees are eligible for receiving a portion of their salary through the Social Insurance Fund for illness extending beyond three days and to a maximum of 156 days. The first three days are paid for by the employer.

Further, employees can take one week of unpaid leave for taking care of a sick or injured family member.

Maternity Leave

The Maternity Protection Law protects the right of the women who have given birth or adopted a child and provides the right to maternity leave. A pregnant woman is entitled to 18 months of maternity leave. A total of nine weeks is compulsory as maternity leave starting from two weeks before delivery, one week during the delivery week, and six weeks after delivery of the child.

Mothers who have given birth to more than one child are entitled to an additional four weeks of leave for each additional child.

In case of hospitalization of the baby, the maternity leave can be extended for up to one week for every 21 days the baby is in the hospital, up to six additional weeks.

Upon meeting eligibility criteria, mothers can get a lump sum childbirth grant as part of social security benefit but this is based on the employer’s discretion.

Adoption Leave

An employee can avail of up to 18 weeks of unpaid leave following birth or adoption of a child after working for an employer for six months.

Mothers who adopt a child under the age of 12 are entitled to 16 weeks of maternity leave. However, the employee must inform the Ministry of Social Welfare Service.

The employee is required to provide six weeks of advance notice to the employer before adoption.

Paternity Leave Fathers can take two weeks of paternity leave within 16 weeks after the birth of the child. However, two weeks of advance notice is required for approval of the leaves.
Public Holidays As per 2021, the public holidays are,
  • New Year’s Day (January 1)
  • Epiphany (January 6)
  • Green Monday (March 15)
  • Greek Independence Day (March 25)
  • National Day (April 1)
  • Orthodox Good Friday (April 30)
  • Labor Day (May 1)
  • Orthodox Easter Monday (May 3)
  • Orthodox Pentecost Monday (June 23)
  • Assumption of the Virgin Mary (August 15)
  • Cyprus Independence Day (October 1)
  • Ochi Day (October 28)
  • Christmas (December 25)
  • Boxing Day (December 26)
Cyprus Compensation Laws
  • According to the Compensation laws of Cyprus, an employee must pay a minimum wage upon recruitment is EUR 743. However, the wage varies depending on the employer and the direct negotiation.
  • The 13th-month bonus is a common compensation that is a performance-based bonus ranging from one to three times the average monthly salary. This is not compulsory but is customary.
Employee Health Benefits The employee is entitled to universal health care as Cyprus has its own public/private health care system. There is private health insurance for employees, which offers comprehensive health and medical care.

To know more about the employment laws and policies in Cyprus, talk to Skuad experts.

Contractors vs. Full-time Employees

The employment contracts in Cyprus are either for an indefinite period or for a fixed time. The two types of employment contracts depend on the type of the job or project.

The fixed-time contract is valid for 30 months, and upon expiry of the contract or if the job continues beyond that, it is converted into an indefinite contract. An indefinite contract only expires in one of the following circumstances.

  • Upon resignation
  • Upon termination by mutual consent or in response to a major violation of the terms of the contract
  • Upon the death of the employee

Advantages of Hiring Contractors

  • Flexibility: Since contractors are hired on a short-term basis, you are free to determine the scope of their work temporarily. If new needs arise, new contracts can be drafted in the short term.
  • Independence: Short-term contractors usually work independently. They do not require close supervision; hence, your resources can be transferred elsewhere, as needed.
  • Cost: Hiring contractors may be cheaper in the long run, although their individual rates are higher than those of full-time employees. This is because such employees are not entitled to employment benefits such as bonuses and tax compensations.

Advantages of Hiring Full-time Employees

  • Loyalty and organizational commitment: Full-time employees are likely to be more loyal, as they exclusively work for your company. Since their individual success depends on the performance of your firm, they are likely to invest more effort into their work.
  • Knowledge: All employees undergo training when they join a firm. The skills and knowledge gained by a full-time employee, however, stay within the organization.
  • Legal freedom: Since full-time employees are defined as such in their contracts from the outset, misclassifications can be avoided completely. When hiring full-time employees, you determine the terms of the contract and entitlements, and these are not liable to change unless mutually decided by both parties.

The employment agreement in Cyprus is based on the job requirement. Contractors work on a project basis and get paid based on the project. Full-time employees are paid every month and do not work on a project basis. Learn more by getting in touch with Skuad experts.

Hiring in Cyprus

The most common hiring and recruitment processes in Cyprus are through job advertisements in local newspapers or online job portals or boards. The application rate by candidates increases when there is complete information provided by the employer for the wage, job role and responsibilities, and job title. The common job portals in Cyprus are,

The recruitment of the right candidate by the company requires a strategic approach. The job postings made by hiring companies in Cyprus must be legally compliant. The employment contract should be in the local language. It must spell out all the employment terms. The offer letter and contract in Cyprus should state the salary and monetary compensation in EUR.

The Cyprus Compliance Laws vary based on the nationality of the employee. The foreign employees are recruited in compliance with the Alien and Migration Law. The Law on Free Movement and Residence of Nationals of the Member States of the European Union is applied for hiring employees from the Europeanfrom European Union. The citizens of Cyprus are hired under compliance of the Department of Labor and the Civil Registry and Migration Department. According to Article 28 (2) of the Constitution of Cyprus, equal treatment should be provided for both foreign workers and locals.

Skuad helps with the recruitment and onboarding process and all the necessary formalities. To know more about hiring in Cyprus, talk to Skuad experts now.

Probation & Termination

Probation Period

The standard probation period in Cyprus is up to six months but it can be extended for up to two years through a written agreement between the employer and employee. The employee’s performance is checked during the probation period before they are provided a full-time employment position.

Termination of Employment

The termination of employment in Cyprus is governed by the Termination of Employment Law enacted on May 27, 1967. The law protects the rights of employees and prevents unlawful termination. The employers intending to terminate employment are obliged to give a notice period in advance, which varies depending on the length of the service.

Period of Employment Advance Notice Period
26 to 51 weeks One week
52 to 103 weeks Two weeks
104 to 155 weeks Four weeks
156 to 207 weeks FIve weeks
208 to 259 weeks SIx weeks
260 to 311 weeks Seven weeks
312 or more weeks Eight weeks

The employer is not obliged to give a notice period for terminating an employee on probation for up to 104 weeks. In case an employee is absent from work for a period of up to six months, an employer cannot serve them their notice. In such cases, the employee is suspended. An employer can terminate an employee without notice on grounds including,

  • A serious offense committed by the employee in course of duty
  • Criminal offense without agreement or consent by the employer
  • Inappropriate behavior during duty
  • Repeated violation of work regulations or rules during employment

In case of termination, some employers are obliged to pay severance or compensation but it varies from industry to industry and period of employment. An employee is entitled to compensation in case of termination due to employer behavior against him. When the employee is employed continuously beyond 104 weeks, they are entitled to a redundancy payment from the Redundancy Fund.

Period of Employment Redundancy Payment
Up to four years Two weeks’ pay
More than four, under 10 years Two and a half weeks pay
More than 10, under 15 years Three weeks’ pay
More than 15, under 20 years Three and a half weeks pay
More than 20, under 25 years Four weeks’ pay

To ensure your expansion endeavors are in compliance with the Cyprus employment laws, Contact Skuad today.

EOR Solution

Expert guidance and step-by-step assistance are crucial for establishing an enterprise or company and for foreign recruitment in Cyprus. Every country has its compliance policies and different employment and labor laws.

Skuad has a high-tech, unified HR platform for businesses to manage and pay their remote teams. Some of Skuad’s primary functions are,

  • Talent discovery: We discover exceptional talent and skill to onboard the employees for the companies.
  • Updated EOR: The tech-enriched HR platform enables seamless and easy control over the hiring procedure, including onboarding, paying, and managing the hiring process.
  • Local compliance: Not limited to the hiring process only, we release you from the hassle of complying with the local laws to create entities and manage tax.
  • Conducting formalities: We help in creating a suitable employment contract, following all the legal provisions of the land, and ensuring an easy collection of documents for taxation.

Skuad offers an EOR solution for Cyprus to simplify the process of hiring, payroll, and global business expansion. The local partners provide extensive information about the HR policies and employment laws of the country. To avail of our services, book a demo today.

Types of Visas in Cyprus

There are two types of visas in Cyprus.

  • Short-stay visas are valid for up to 90 days. They are issued to tourists for multiple entries into the country across 180 days.
  • Long-stay visas are valid for longer than 90 days. These can be student visas or work visas.

A work visa is mandatory for foreign employees to legally work in Cyprus. The work visa must follow the labor laws of the country. There are different types of work visas depending on the employment type and duration. The mandatory documents required by an employee to work in Cyprus based company or organization include,

  • Work visa, which allows employees to work legally in the work
  • Cyprus work permit that offers authorization to the employee to work in Cyprus
  • Residence visa, which is for foreigners planning to live in Cyprus beyond 90 days
Documents required to obtain a work visa in Cyprus The following documents are required to obtain a work visa in Cyprus.
  • Passport with validity of at least six months
  • A duly filled visa application form
  • Proof of travel health insurance
  • Proof of sufficient financial means
  • Medical and police clearance certificates
  • Employment contract letter with a seal of the Department of Labor
Procedure to get a work visa
  • The first step is to obtain a work permit, and it is to be applied for by the employer on behalf of the employee.
  • After getting the work permit, the foreign national must visit the consulate or embassy of Cyprus with a duly filled application form and all the mandatory documents.
  • The processing of the visa application starts after the interview and can take from five to 10 days.
  • Upon receiving the Cyprus work visa, the employee is free to travel to Cyprus. However, a foreign employee needs to apply for a residence permit within one week of arriving in Cyprus through local police or the Central Offices of Civil Registry and Migration.

To know more in detail about Cyprus work visa requirements and the application process, talk to Skuad experts.

Work Permits

In Cyprus, work permits for foreigners are mandatory for paid employment. An employee can get a work permit only when,

  • It is applied for by the employer on behalf of the employee
  • The employer can prove that the paid position cannot be filled by a Cyprus citizen or citizens from European Union/European Free Trade Association countries

The process of obtaining a work permit in Cyprus involves approval from the Cyprus Department of Labor. The application must be submitted to the Civil Registry and Migration Department. Here are the job positions eligible to get a work permit in Cyprus.

  • Executive director with an annual salary starting from EUR 41,000
  • Middle management employee with an annual salary between EUR 21,000 and EUR 40,000
  • Supporting staff with varied salary slabs

Foreign employees can apply for a Cyprus work permit without a job offer but it is done personally without the involvement of the company.

Documents Required for Application of Work Permit

  • Application form signed and signed by the employer
  • Passport photocopies
  • Original employer contract
  • Certificate of police clearance and medical clearance
  • Tax clearance certificate of the hiring company

Learn more about work permits in Cyprus with Skuad’s global EOR solutions.

Payroll & Taxes in Cyprus

Payroll in Cyprus

The Cyprus employer payroll taxes follow the PAYE (Pay as You Earn) system; hence, 0.35% of the employees’ gross salary is withheld in form of income tax. Here are the options for setting up payroll in Cyprus.

  • Internal: This requires an internal staff for the management of the payroll and calculation of taxes and is most feasible for large companies.
  • Remote: This system involves the addition of the employees in Cyprus to the payroll of the parent company located in another country. However, the regulations and rules might vary, despite one-stop payroll management.
  • Payroll processing company in Cyprus: The process of payroll can be outsourced to other payroll processing companies. However, an awareness of the HR compliance laws of the country is crucial.
  • Payroll outsourcing in Cyprus: Global EOR companies such as Skuad provide the payroll while complying with all laws. Talk to us to know more about payroll in Cyprus.

Taxes in Cyprus

Tax Applicable in Cyprus Explanation
Individual income tax The tax breakdown based on the salary range is as follows.
Income Range (EUR) Tax Rate (%)
Less than 19,500 0
19,501 to 28,000 20
28,001 to 36,300 25
36,301 to 60,000 30
Over 60,001 35
Corporate tax 12.5%
Sales tax/value-added tax 19%
Property tax (immovable property tax) This has been abolished in Cyprus.
Fiscal year-end date March 31
Tax returns Tax returns must be filed.

To understand how payroll and taxes are managed in Cyprus and expedite your expansion process, talk to Skuad experts and book a demo.

Incorporation: How to Set Up a Subsidiary in Cyprus

Setting up a subsidiary will help in the legal expansion of business in Cyprus. However, there are multiple factors associated with the expansion of business. Here are the steps for setting up a subsidiary in Cyprus.

  1. The first step is the employer must choose the type of business and appropriate location for setting up the business as per the local laws and compliance.
  2. The second step is incorporating a holding company in Cyprus, which requires a few tasks, such as,
  • Have the company name approved
  • Prepare the memorandum and articles of association
  • Submit the necessary documents to the companies sector of THE Department of Registrar of Companies and Official Receiver
  • Register your subsidiary with the Inland Revenue Department
  • Apply for a Tax Identification Number and VAT

According to the Cyprus subsidiary laws, the company incorporation can either be a limited liability company (LLC) or a public limited company (PLC).

Setting up an entity and creating your legal presence can be a complicated process in a foreign country. Skuad’s Cyprus EOR solution offers a team of expert lawyers, accountants, and consultants who can help with the incorporation process. Book a demo to know more.

Professional Employer Organization (PEO)

A professional employer organization (PEO) in Cyprus helps with the comprehensive management of HR-related matters in compliance with the local laws. Many global companies take the help of PEOs to expand their businesses. A PEO takes care of HR tasks such as hiring, onboarding, payroll, taxation, probation, termination, employment contracts, and visas.

You must remember that your company will be held liable for the penalties imposed on any unwarranted employment-related actions executed by the PEO. On the other hand, an EOR service takes care of all compliance-related liabilities. This means that your company is not held responsible for the contravention of local laws.

Partnering with a PEO works well if you already have a legal entity in a foreign country. However, an EOR service does not require an entity establishment; it can take care of incorporation for you.

Skuad's EOR solution is a good way to expand your business in Cyprus without setting up a separate entity. Our solutions help you to stay focused on your business and leave all business compliances, payroll processing and complete management work to us. Connect with Skuad to know more.

Conclusion: What Gives Skuad’s Cyprus Solutions an Edge?

Expanding your business globally is challenging. Skuad can help you by providing a well-established global HR platform to manage the entire employment life-cycle without setting up a legal entity in Cyprus.

Skuad has an extensive network in 150+ countries across the globe and provides a single interface to onboard and manage employees and contractors. It offers consistent prices, irrespective of the location, and manages the payment of your team through a single invoice.

Expand your business into Cyprus, recruit employees globally, and streamline HR-related tasks with help of Skuad’s efficient EOR solution. Skuad understands and follows the labor laws of Cyprus for the effective establishment of businesses. Talk to Skuad experts and get started with business expansion, recruitment, and HR management.

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