Hire and pay employees in Cyprus quickly and compliantly

Complying with labor and employment laws in Cyprus

Unlike many countries, Cyprus doesn’t have a main, overarching labor or employment law that forms the basis of its employment landscape. Instead, the legal framework employers must follow comprises a combination of common laws, national statutes, and EU directives. In addition to honoring Cypriot contract law, employers in the country must uphold all employees’ constitutional rights and comply with a number of workplace statutes, such as:

• The Termination of Employment Law of 1967
• The Social Security Insurance Law of 1967
• The Annual Paid Leave Law of 1967
• The Health and Safety at Work Law of 1996
• The Protection of Maternity Law of 1997
• The Collective Redundancies Law of 2001
• The Equal Treatment at Work and Employment Law of 2004
• The Minimum Salaries Law of 1973

Needless to say, complying with Cypriot labor and employment laws can be complicated. But no matter where in the world you hire, learning the ins and outs of labor and employment laws in new jurisdictions isn’t easy. If you’re looking to hire in Cyprus, simplify your compliance work by partnering with Rippling EOR, which can offer expert HR support on local employment regulations so your business is always up to date on the latest laws in Cyprus and beyond.

Employment contracts in Cyprus

An employment contract is a legally binding agreement between an employer and an employee that outlines the terms and conditions of the employment relationship. In Cyprus, written employment contracts aren’t required. Verbal contracts are acceptable, though a written contract is best practice to prevent misunderstandings. Contracts can be for a fixed term or indefinite duration. If the duration of consecutive fixed-term contracts exceeds 30 months, the employment may be regarded as indefinite unless there are objective reasons supporting the temporary status.

Employers are required to provide employees with specific information within one month of their start date. This includes:

• The identities of both parties
• The employer’s registered address and the place of work
• The employee’s position or specialization and the nature of their work duties
• The employee’s start date and duration of employment, if their contract is for a fixed term
• The employee’s annual leave entitlement
• The notice period required to terminate the employment agreement
• The employee’s salary and benefits
• The employee’s working hours
• Details of any collective agreement that applies to the employee

This information can be provided in an employment contract, letter of appointment, or any other written document signed by the employer.

Labor unions in Cyprus

Trade unions play a significant role in Cyprus's labor landscape, advocating for workers' rights and engaging in collective bargaining. The trade union movement in Cyprus is characterized by several prominent umbrella organizations:

• Pancyprian Federation of Labour (PEO): Established in 1941, PEO is affiliated with the World Federation of Trade Unions and has historically been associated with leftist political movements. ​
• Cyprus Workers' Confederation (SEK): Founded in 1944, SEK represents a broad spectrum of workers across various sectors and is affiliated with the International Trade Union Confederation and the European Trade Union Confederation.
• Democratic Labour Federation of Cyprus (DEOK): Established in 1962, DEOK is known for its centrist stance and is also affiliated with international trade union bodies.

Cyprus’s unions are instrumental in negotiating collective agreements, advocating for fair labor practices, and representing workers in disputes. Their influence extends across both the private and public sectors, helping workers ensure their voices are heard in policymaking and industrial relations.

Mitigating permanent establishment risk in Cyprus

Permanent establishment (PE) is a fundamental concept in international taxation, defining a fixed location where a business carries out its operations in another country. It serves as a key determinant of whether a company is liable to pay corporate taxes in that foreign jurisdiction. When a company establishes a PE, it may be required to report and pay taxes on income generated from its business activities within that country.

The definition of permanent establishment can vary depending on tax treaties and local laws, but it typically includes a place of management, a branch, an office, a factory, a workshop, or any other fixed place where business activities are carried out. Some activities, like preparatory or auxiliary functions, may not constitute a permanent establishment under certain tax treaties.

Cyprus’s domestic income tax legislation follows the OECD model, which says that PE is triggered when an organization has a “fixed place of business” for activities that generate profit for the company. Another main trigger is when a dependent agent works on behalf of the company in ways that generate revenue. For example, if a company representative in Cyprus has the authority to execute contracts on your business’s behalf, you may risk establishing PE.

Businesses expanding to, doing business in, or hiring in Cyprus can mitigate their PE risk by:

• Keeping employees in supportive roles only and avoiding direct contract signings in Cyprus
• Concluding major sales or signings outside of Cyprus
• Documenting staff tasks carefully to show no final authority for contract closures
• Consulting a local tax advisor for clarity about the risk of inadvertently forming a PE in Cyprus

Probationary period in Cyprus

A probationary period is used to assess and monitor the performance of new employees. In Cyprus, the probationary period is a crucial phase for employers and employees to assess suitability. 

The standard length of a probation period is up to six months, which is the maximum for most employees. For managerial or executive positions, employers may extend it up to 104 weeks, provided it's stipulated in the employment contract.

Employers should state the length of the employee’s probation period in the employment contract. Another best practice is to conduct regular evaluations to provide feedback and assess performance during an employee’s probation period.

Local laws in Cyprus

Cyprus's employment landscape is governed by a combination of common law principles and statutory regulations, so there are many laws employers need to know, especially if they’re new to the country’s regulatory landscape. Here are some key pieces of legislation to familiarize yourself with before hiring in Cyprus:

• The Termination of Employment Law (24/1967): This law outlines the procedures and protections related to employee dismissals, ensuring fair treatment and outlining notice periods.
• The Annual Paid Leave Law (8/1967): This law stipulates the minimum annual leave entitlements for employees, promoting better work-life balance for Cyprus’s workers.
• The Protection of Maternity Law (100(I)/1997): This law safeguards the rights of pregnant employees and new mothers, including provisions for maternity leave and protection from dismissal.
• The Equal Treatment in Employment and Occupation Law (58(I)/2004): Implementing EU directives, this law prohibits discrimination based on race, religion, sex, age, disability, or sexual orientation in the workplace.
• The Minimum Wage Law (21/1973): This law establishes a statutory minimum wage for certain categories of employees, ensuring fair compensation in line with the cost of living.
• The Social Insurance Law (59(I)/2010): This provides a comprehensive social insurance system covering sickness, maternity, unemployment, and retirement benefits.

These laws are enforced by the Department of Labour Relations under the Ministry of Labour and Social Insurance.

Worker classification and misclassification in Cyprus: Contractors vs. employees

When hiring new talent in Cyprus, you need to decide which type of working arrangement—independent contractor or full-time employee—is better suited for your business needs. In Cyprus, distinguishing between an employee and an independent contractor isn't merely about labels; it's about the actual nature of the working relationship. While a written agreement might designate someone as an "independent contractor," Cypriot courts and labor authorities prioritize the substance over the form. This means they assess the real dynamics of the relationship, regardless of contractual titles.

Here’s what employers need to know about the differences between the two under Cypriot law.

Worker classification in Cyprus: Key differences between contractors and employees

Consequences of misclassification in Cyprus

Misclassifying workers in Cyprus can result in serious consequences. An employer who is caught classifying employees as independent contractors may be liable for: 

• Unpaid social insurance contributions: Employers may be liable for back payments of social insurance contributions, including penalties and interest.
• Back taxes: Failure to withhold and pay appropriate taxes can result in substantial fines and back taxes owed to the authorities.
• Employee claims: Misclassified workers may claim entitlements such as paid leave, severance pay, and other benefits typically afforded to employees.
• Legal penalties: Authorities may impose fines or other sanctions for noncompliance with employment laws.

To avoid these consequences, it's essential for employers to accurately assess and classify their workers based on the actual working relationship, not just contractual terms.

Wages and payroll in Cyprus

When expanding into (or hiring in) a new, foreign jurisdiction, managing wages and payroll is one of the most complex parts of the process. 

Navigating the wage and payroll landscape in Cyprus requires a clear understanding of the country's labor laws and customary practices. From minimum wage regulations to payroll frequency and bonus structures, employers must stay informed to ensure they remain compliant and foster positive employee relations.​

Here’s what employers need to know about wages and payroll in Cyprus.

Minimum wage in Cyprus

As of January 2025, Cyprus’s minimum wage is €1,000 per month. Cyprus established a national minimum wage for the first time in 2023. Since 1941, the government has had the ability to set minimum wages for industries affected by low salaries, under the Minimum Wage Law.

It's important to note that certain sectors may still have different minimum wages than the national minimum, especially for roles like domestic workers, where the minimum can be significantly lower. Employers should consult sector-specific regulations to make sure they’re in compliance.

Payroll frequency in Cyprus

The standard payroll cycle in Cyprus is monthly, though in some industries, weekly or fortnightly payments are more common. There’s no legal requirement, but employers must pay wages on the agreed-upon date.

13th month pay in Cyprus 

13th month pay is an additional payment given to employees, usually equivalent to one month’s salary. Employers commonly give this payment as a holiday or year-end bonus. In Cyprus, 13th month pay isn’t mandatory, like it is in many European countries and other jurisdictions around the world. However, it’s customary for employers in Cyprus to pay their employees a 13th salary, typically in December as a year-end bonus and to coincide with the holiday season.

This practice is prevalent across various sectors and often stipulated in employment contracts or collective agreements. Employers who have established this practice may be obligated to continue it, and failure to do so could lead to legal disputes.​

Run payroll compliantly in Cyprus

To maintain compliance with Cypriot labor laws, employers should:

• Adhere to minimum wage laws, ensuring all employees receive at least the national or sector-specific minimum wage.​
• Maintain accurate payroll records, including employees' hours, wages, and deductions.​
• Make timely payments to their employees on the agreed-upon schedule, without delays.
• Consult legal experts if needed. Seek guidance from local labor law experts or legal counsel to navigate complex employment regulations.​

Working with an EOR means getting all the help you need to handle deductions, adhere to local wage laws, and make accurate, on-time payments. Rippling EOR makes hiring and paying employees across the globe quicker and easier than ever.

Employer and employee taxes in Cyprus

For international companies, navigating tax laws in different global jurisdictions is a complex part of their business operations. Cyprus is no exception—this Mediterranean island has its own tax framework that encompasses various contributions and taxes that employers and employees must navigate. Understanding Cypriot tax codes can be a challenge, but ultimately, employers are responsible for calculating and withholding contributions from employees’ paychecks, making it a crucial aspect of compliance.

Here are the key things to understand about employer and employee taxes in Cyprus.

Employer taxes in Cyprus

Here are the mandatory employer payroll taxes in Cyprus:

Employee taxes in Cyprus

The following contributions must be deducted from employees’ paychecks as a percentage of their income: 

Cypriot employees also pay progressive income tax, meaning they pay higher tax rates the more they earn. 

Penalties for not paying taxes in Cyprus

Failure to comply with tax obligations can result in significant penalties from local tax authorities. Look out for these common noncompliance risks for foreign businesses operating in Cyprus:

• Late payments: Penalties range from 3% to 27%, depending on the duration of the delay.
• Underreporting wages: This can lead to back taxes, interest, and additional fines.
• Incorrect worker classification: Misclassifying employees as independent contractors may result in liabilities for unpaid taxes and contributions.

To avoid these pitfalls, employers should maintain accurate records, stay informed about tax regulations, and consult with local tax professionals when necessary. Having a robust payroll system or local accounting support can help with compliance, or you can mitigate tax compliance risks by letting an EOR handle payroll taxes on your behalf. The EOR ensures all your local taxes are paid correctly and on time, allowing you to focus on growing your business in Cyprus and beyond.

Employee benefits in Cyprus

Offering competitive employee benefits in Cyprus can help your company stand out and attract top talent in a competitive hiring landscape. Many companies offer incentives beyond the baseline to make their organizations more attractive to the most in-demand employees, particularly in competitive fields.

Understanding benefits requirements early on can also keep you from landing in hot water with Cypriot authorities down the line. Employees are entitled to certain mandatory entitlements, so Cyprus employers need to know which perks to include in their benefits packages to keep them legally compliant.

Here’s an overview of the mandatory and optional benefits in Cyprus.

Mandatory benefits in Cyprus

Mandatory benefits are legally required, meaning employers have to offer them to their employees. In Cyprus, these benefits include various types of paid leave (which we’ll cover in the next section), as well as: 

• National Health Insurance (NHIS): Employers are required to contribute to the national healthcare system, which provides employees and their dependents access to care.
• Social Insurance: Social security contributions in Cyprus cover a number of benefits, including:
• Pensions: Pension funds provide secure retirement benefits for employees.
• Unemployment insurance: Social insurance also covers unemployment insurance for employees, which protects them should they lose their jobs.
• Occupational accident insurance: Employers are required to provide insurance that covers their employees in the event of an accident or injury that occurs during work activities.
• Family allowances: Employees with dependent children are entitled to family allowances, which help cover the cost of raising children.

Optional benefits in Cyprus

Investing in optional and fringe benefits improves your chances of attracting top talent, but choosing which ones to offer can feel overwhelming. Here are a few optional benefits you might consider adding to your package to help you stand out in Cyprus:

• Private health insurance: Supplementing the GHS, private health insurance offers employees access to private facilities and services.
• Provident funds: These are employer-sponsored retirement savings plans, where both the employer and employee contribute a percentage of the employee's salary.
• Performance bonuses: Monetary rewards based on individual or company performance metrics can be popular optional benefits for Cypriot employees. 
• Flexible working arrangements: Options such as remote work, flexible hours, or compressed workweeks are popular benefits around the world in the post-COVID era.
• Professional development: Support for training, courses, or certifications can enhance employee skills.
• Wellness programs: These include initiatives promoting physical and mental well-being, such as gym memberships or counseling services.

These optional benefits can significantly impact employee satisfaction and loyalty, making them valuable tools for employers aiming to attract top talent in Cyprus's competitive job market.

Incorporating both mandatory and optional benefits into employment packages not only ensures legal compliance but also fosters a supportive and attractive work environment, reflecting the values and culture of Cyprus's diverse and dynamic workforce.

Working hours, overtime, and leave in Cyprus

Understanding standard working hours, overtime regulations, and Cypriot leave laws is crucial, as these requirements vary significantly from country to country. When you hire international employees, you must be familiar with all the relevant laws because compliance is crucial to avoid penalties and ensure a safe, fair working environment.

Cyprus boasts a labor framework that harmonizes European Union directives with its unique Mediterranean work culture. Whether you're managing a tech startup in Nicosia or a small business in Limassol, understanding the intricacies of working hours, overtime, and leave entitlements is crucial for compliance and fostering a positive work environment.

The cornerstone of Cyprus's labor regulations is the Organisation of Working Time Law (Law 63(I)/2002), which delineates the standards for working hours, rest periods, and various types of leave.

Here’s what you need to know about working hours, overtime, leave, and more as an employer in Cyprus.

Standard working hours in Cyprus

A standard workweek in Cyprus is 40 hours, eight hours per day, five days per week. Employees typically work from Monday to Friday. However, the law permits flexibility, allowing for variations based on specific sectors or collective agreements. Flexible days and working hours are allowed as long as both the employee and employer agree to them.

The maximum permissible working time, including overtime, is capped at 48 hours per week, averaged over a four-month reference period. This provision helps make sure that employees are not overburdened over extended periods, promoting a healthier work-life balance.

In addition, certain professions have their own regulations:

• Retail employees: Limited to 38 hours per week, with a maximum of 46 hours including overtime
• Clerical and office staff: Capped at 44 hours per week, including overtime
• Mining and quarry workers: Underground workers are restricted to 40 hours weekly, while those above ground can work up to 44 hours, both including overtime

It's essential for employers to be aware of these sector-specific stipulations to make sure they stay in compliance and safeguard employee well-being.

Overtime laws in Cyprus

Overtime in Cyprus is primarily governed by individual employment contracts or collective agreements. While the law doesn't mandate a specific overtime rate for all sectors, certain industries have defined standards.

For example, in the hotel and catering sectors:

• Hotel employees are permitted up to nine hours of overtime per week.
• Catering employees are allowed up to eight hours of overtime per week.

In both cases, overtime compensation is set at a minimum ratio of 1:1.5 on weekdays and 1:2 on Sundays and public holidays.

For other sectors, the Organisation of Working Time Law stipulates that any agreement to work beyond the 48-hour weekly average must be voluntary, and the employee’s consent must be documented in writing. Employers are required to maintain records of any agreements they make with employees regarding consent to work overtime and may be required to present them to the Ministry of Labour and Social Insurance upon request.

It's worth noting that certain roles, such as managerial positions or those with autonomous decision-making powers, may be exempt from standard overtime regulations.

Rest period and break laws in Cyprus

Making sure employees get adequate rest is a fundamental aspect of Cyprus's labor laws. At a minimum, employees are entitled to:

• Daily rest: Employees must get at least 11 consecutive hours of rest within every 24-hour period.
• Weekly rest: A minimum of 24 consecutive hours of rest per week. Alternatively, over a 14-day period, employees can have two separate 24-hour rest periods or one uninterrupted 48-hour rest period.
• Breaks during work: For workdays exceeding six hours, employees are entitled to a rest break of at least 15 minutes. This break should not be scheduled at the beginning or end of the workday.

These provisions aim to promote employee health, safety, and overall productivity.

Leave laws in Cyprus

Cyprus offers a comprehensive set of leave entitlements, which help ensure that employees have the necessary time off for various personal and health-related reasons.

Here are the types of leave employees are entitled to receive in Cyprus:

• Annual leave: Full-time employees are entitled to a minimum of 21 working days of paid annual leave if they work a five-day workweek (and at least 24 working days of paid leave if they work a six-day workweek). They may receive additional time off if it’s mandated in their employment contract or collective agreement, but they cannot receive less than the minimum.
• Sick leave: Employees receive paid sick leave after the third day of illness, paid for by Social Security. Sick leave is paid at 60% of their typical salary or wage (potentially higher if they have a dependent spouse or children) for up to 312 days.
• Maternity leave: Female employees are entitled to up to 18 weeks of maternity leave for the birth of their first child, 22 weeks for their second child, and 26 weeks for all subsequent children. They must take at least 11 weeks of leave. Employees typically start maternity leave two weeks before the due date, taking the remainder after birth. The amount of pay is calculated depending on how many dependents the employee has.
• Paternity leave: Fathers are entitled to two consecutive weeks of paternity leave that they can take within the first 16 weeks after the birth of a child, paid for by Social Security at 75.2% of their regular salary or wage.
• Parental leave: All parents can take up to 18 weeks of unpaid parental leave up until their child is eight years of age.
• Adoption leave: Parents who adopt a child under the age of 12 are entitled to up to 16 weeks of continuous leave, beginning on the date their child arrives.
• Bereavement leave: Employees are entitled to five days of paid bereavement leave following the death of an immediate family member.
• Military leave: Employees called to perform military training or service are entitled to paid leave covered by Social Insurance.
• Public holidays: Cyprus recognizes 15 public holidays:
• New Year’s Day
• Epiphany
• Green Monday
• Greek Independence Day
• National Day
• Good Friday
• Easter Monday
• Easter Tuesday
• Labour Day
• Whit Monday (Pentecost)
• Assumption Day
• Cyprus Independence Day
• Ochi Day
• Christmas Day
• Boxing Day

Work permits in Cyprus

As an employer, it’s up to you to make sure your candidates have the legal ability to work in Cyprus before they start their new jobs. That’s easy if they’re Cypriot citizens or permanent residents, but what if you want to hire or bring foreign talent to the country? Then, they may require the correct work permit, depending on their country of origin and other circumstances.

Cyprus is a member of the European Union, so workers from other EU/EEA member states can work there without needing a work permit. However, non-EU nationals and workers from outside the EEA and Switzerland generally need a work permit before they can start paid work in Cyprus.

Here’s what employers need to know about the work visa process when hiring in Cyprus.

Who needs a work visa in Cyprus?

Can foreigners work in Cyprus? That depends on where they’re from—citizens of EU member states, as well as those from Iceland, Liechtenstein, Norway, and Switzerland, have the freedom to live and work in Cyprus without a work permit. However, they must register with the Civil Registry and Migration Department if they stay longer than 90 days.

Non-EU nationals are required to obtain both a work permit and a residence permit to legally work in Cyprus. Typically, it’s the employer’s job to start the process by submitting an application to the Civil Registry and Migration Department through the District Aliens and Immigration Branch of the Police. Along with the application, the employer needs to demonstrate that no suitable local or EU candidates are available for the position.

How long does it take to get a work visa in Cyprus?

Processing times for work visas can vary greatly, depending on a wide variety of factors. Plan on four to six weeks in general, but know that the duration can extend up to six months if the application is incomplete upon submission or if there are processing delays.

Work visa applications in Cyprus must be submitted with the following documents:

• A work contract, stamped by the Department of Labour of the Ministry of Labour and Social Insurance and the Revenue Stamps Registrar
• A photocopy of the applicant’s passport
• A clean criminal record certificate
• A medical certificate
• A bank letter guarantee to cover repatriation expenses, valid for six months after the expiration of the work contract
• A visa fee

Types of work visas in Cyprus

While Cyprus offers some special visa categories for specific types of employment (such as visas for artists and domestic assistants), most foreign employees from outside the EU will apply for two types of visas: a work visa and a residence visa.

Termination and redundancy in Cyprus

When making your first hire in Cyprus, termination policies might be far from your mind. But if you don’t know the basics about offboarding employees in Cyprus, you could be setting yourself up for trouble when it’s time to part ways with an employee down the road.

Navigating the end of an employment relationship in Cyprus requires adherence to established legal frameworks. The Termination of Employment Law of 1967 (Law No. 24/1967) governs the procedures and entitlements related to employee dismissal and redundancy. Understanding the rules established for termination and redundancy not only protects your brand’s reputation but also protects your business from legal disputes that can arise if you terminate an employee illegally.

Here’s what to know about termination and redundancy rules in Cyprus.

Does at-will employment exist in Cyprus?

At-will employment is a legal principle in which either the employer or the employee can terminate the employment relationship at any time, for any reason, or no reason. Prior notice isn’t required, as long as the reason for the termination isn’t illegal. Unlike some jurisdictions (like the US, where at-will employment is common), Cyprus does not recognize at-will employment. Employers must provide valid reasons for terminating an employee, such as redundancy, misconduct, or inability to perform duties. Similarly, employees are required to give notice when resigning.

Acceptable grounds for termination include:

• Redundancy: Due to organizational restructuring or economic reasons
• Misconduct: Serious or repeated violations of company policies
• Incapacity: Inability to perform job duties due to health or other factors
• Mutual agreement: Both parties consent to end the employment relationship

Employers must document the reasons for termination and follow due process to mitigate their legal risks.

Notice periods in Cyprus

A notice period is the amount of time an employee or employer is required to give before ending an employment relationship. During this period, the employee continues to work while preparing for their departure, and the employer has time to find a replacement or manage the transition.

The required notice period for terminating employment in Cyprus depends on the employee's length of service, beginning once the employee has worked for 26 weeks:

Employers must give notice in writing. If the employee’s contract or collective agreement calls for a longer notice period, then the employer is obligated to honor it.

An employer can dismiss an employee without notice in some limited cases, including:

• A serious offense or improper behavior by the employee during their job duties
• A criminal offense by the employee
• Serious or repeated violation or disregard for work rules or regulations

Severance pay in Cyprus

Employees dismissed due to redundancy are entitled to severance pay, which is paid from the Redundancy Fund. An employee is considered redundant when they are terminated because:

• The employer ceases or intends to cease carrying out the business or place of business where they were employed
• Reasons that affect business operations, such as modernization, change to products or production methods, closing of departments, lack of orders, scarcity, etc.

The amount of redundancy pay is calculated based on the employee’s length of service and last wages:

How to terminate employees compliantly in Cyprus

Ending an employment contract in Cyprus requires valid grounds, proper notice, and severance pay if it’s for redundancy. Mishandling any of the steps can lead employees to the courts or cause damage to your company’s reputation.

To ensure lawful termination of employment in Cyprus, employers should follow these steps:

1. Establish valid grounds: Make sure the reason for termination aligns with legal provisions.
   
2. Provide appropriate notice: Adhere to the statutory notice periods based on the employee's tenure.
   
3. Document the process: Maintain records of all communications and reasons for termination.
   
4. Settle all dues: Pay any outstanding wages, accrued leave, and severance pay if applicable.
   

By adhering to these guidelines, employers can mitigate legal risks and maintain a fair workplace environment.

When managing a global team, keeping track of termination regulations can be a challenge. Employers have to contend with just-cause rules, varying notice and probation periods, and inconsistent severance laws across different jurisdictions. Instead, consider partnering with an EOR solution, which can take care of compliance on your company’s behalf, ensuring you stay on the right side of the law from onboarding to offboarding.

FAQs about hiring in Cyprus

Can I hire employees in Cyprus without my own legal entity?

Yes, you can. Utilizing an employer of record in Cyprus allows foreign companies to hire employees without setting up a local entity. The EOR acts as the legal employer, handling payroll, taxes, compliance, and other administrative tasks, while you manage the day-to-day activities of your employees. With this approach, you can enter the market faster and reduce some of the complexities associated with establishing a business in a foreign jurisdiction.

An EOR like Rippling can help you quickly tap into Cyprus's talent pool, grow your global workforce, and reduce compliance risks and administrative workload.

How do I onboard employees in Cyprus?

A comprehensive onboarding process allows you to build a foundation for a strong working relationship with your international team members. Onboarding employees in Cyprus should involve several key steps that begin well in advance of a new hire’s first day to ensure compliance with local labor laws, so plan to start administrative tasks like paperwork and background checks early. You’ll need to cover:

1. Employment contract: Draft a written employment contract outlining the new hire’s job description and responsibilities, working hours, remuneration, leave entitlements, and notice periods.
2. Registration: Register the employee with the Social Insurance Services and the Tax Department to ensure proper contributions and tax withholdings.
3. Probation period: Note that the standard probation period is 26 weeks, which can be extended up to 104 weeks by mutual agreement at the start of employment.

What is the difference between an independent contractor and an employee in Cyprus?

In Cyprus, an employee works under the direction and control of the employer, has set working hours, and is integrated into the organization. Employees are also entitled to benefits such as paid leave, social insurance, and protection under Cyprus’s employment laws. Independent contractors control their work schedule and are not integrated into the client's organization. Contractors are responsible for their own taxes and social insurance contributions and do not receive employee benefits.

Misclassification can lead to legal and financial consequences, including back payments of taxes and social contributions.

How much does it cost to hire an employee in Cyprus?

Beyond the employee’s base salary, employers in Cyprus are responsible for several contributions:

What are the requirements for work permits in Cyprus?

Non-EU/EEA/Swiss nationals require a work permit to be employed in Cyprus. The employer must demonstrate that no suitable local candidates are available for the position. The application process involves:

1. Sending the application along with the employment contract and other documents required by immigration officials. The employer submits the application to the Department of Labour, providing necessary documentation, including proof of efforts to hire locally.
2. Applying for a residence visa. Upon approval of the work visa, the employee must also obtain a residence permit from the Civil Registry and Migration Department.

Processing times can vary, so it's advisable to begin the application process well in advance of the intended employment start date.

What is always required when an employer terminates an employee in Cyprus?

At-will employment isn’t recognized in Cyprus, so termination of employment requires adherence to specific procedures to follow the law:

1. Notice periods: The employer must provide written notice, with the duration depending on the employee's length of service, ranging from one to eight weeks.
2. Severance pay: If the termination is due to redundancy, the employee may be entitled to severance pay, calculated based on their length of service.

How does a US company pay a foreign employee in Cyprus?

There are generally three ways a US company can pay a foreign employee in Cyprus:

1. Form a local entity and open a local bank account to run payroll according to Cypriot law (including all relevant withholdings).
2. Partner with an EOR that specializes in global employment and manages salary, insurance, and taxes on your behalf.
3. Use a global payroll service that can integrate payroll for multiple countries.

Disclaimer: Rippling and its affiliates do not provide tax, legal, or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any related activities or transactions.