The employment of foreign workers in Cyprus has increased sharply over the recent years following the accession of Cyprus to the EU in 2004, and more importantly, the need for specialized, and highly qualified staff for the many industries that over the last decade have found Cyprus to be an ideal business environment. Examples include the finance industry, with the thriving Forex trading market, internet gambling and even more recently, the oil and gas industry following the discovery of hydrocarbon reserves in the Exclusive Economic Zone of Cyprus.
In terms of experience and technical know-how, Cyprus is still at an infant stage in the oil and gas market, so it is reasonable to expect that companies seeking to exploit the natural reserves will definitely need, and most likely want, to employ foreign specialised staff. In addition, surrounding the exploration, extraction and refining of the raw materials, there is a market made up of a wide network of companies that constitute a tightly knit infrastructure of ancillary services whose sole purpose is to support the oil and gas market. It is therefore evident that in order for the Cyprus oil and gas sector to maintain itself and subsequently benefit, it must compensate for its lack of expertise and know-how by allowing foreign companies to employ foreign staff.
Cyprus employment law
Cyprus employment law is a mixture of statutory and case law. The Constitution guarantees certain fundamental rights relating to employment, such as the right to work, to strike and to equal treatment. There are a number of employment law legislations, the most important of which is the Termination of Employment Law of 1967 which regulates all the basic matters relevant to the Termination of Employment, such as, the grounds for which an employer may lawfully terminate the employment of an employee without notice, or the notice and compensation an employee is entitled to, as well as other related employment rights.
The employment relationship between employer and employee is governed by standard contract law principles, statutory rights and obligations which supplement them where appropriate. An employment contract may be of a fixed term or indefinite duration. Where the employment is under a fixed-term contract, this is considered to be automatically terminated upon the expiration of the specific fixed term. Nevertheless, case law supports the assumption that successive renewals or extensions of a fixed-term contract, as well as an overall employment period exceeding 30 months, will lead the Court to a finding of a contract of indefinite duration, irrespective of the terms of the agreement.
Minimum wage in Cyprus is protected by the Minimum Wage Ministerial Order, which determines the minimum wage allowed under the law depending on the occupation and work the employee is expected to perform.
In Cyprus it is customary for employers to reward their employees with a 13th or 14th month of salary as a bonus for their annual service to the company. Even though this salary is not protected by law, it is normally covered by a collective agreement or individual contract or any other agreement regarding the terms of employment. Where there is no written agreement, the provision of 13th and/or 14th month salary is regulated by the business practice.
To protect certain rights to social insurance and other employment considerations, a foreign company cannot hire employees without having been officially registered within the territory of the Republic of Cyprus according to the relevant law. A foreign employer may operate through a local branch or register a local company depending on the type of the economic activity that is to be performed.
Cyprus employment law provides protection to foreign nationals in terms of non-discrimination. Under Cyprus employment law there is no distinction between a local or foreign worker, and, as such, there can be no discrimination in the terms and conditions of employment.
The granting of work permits for foreign workers is governed by the Aliens and Immigration Legislation, as well as by the decisions of the Council of Ministers and the Ministerial Committee. The competent authority for granting entry permits and temporary or permanent residence permits is the Civil Registry and Migration Department of the Ministry of Interior. All non-EU residents are required to apply for a residence and work permit prior to travelling to Cyprus if they intend to reside or work in Cyprus.
Generally, the criteria for the approval of a work permit are the following:
- Unavailability of suitably qualified local or EU personnel who satisfy the specific needs of the employers;
- Saving and better utilization of the local or EU labor force;
- An improvement in working conditions at the workplace;
- Terms and conditions of employment of foreign nationals should be the same as those of Cypriots or EU citizens; and
- In cases where work permits are recommended for the employment of foreign nationals with special skills and knowledge which Cypriots or EU nationals do not possess, the employer shall be obliged to name a Cypriot national who will be trained during the period of the foreign national’s employment.
Yaniv Habari, Managing Director, Y.Habari & Co. LLC, Nicosia, Cyprus