All questions

Discontinuing employment

i Dismissal

In Cyprus, dismissals that are not justified under any of the grounds presented below are considered unlawful and give the employee a right to compensation:

  1. unsatisfactory performance (excluding temporary incapacitation owing to illness, injury and childbirth);
  2. redundancy;
  3. force majeure, acts of war, civil commotion or acts of God;
  4. termination at the end of a fixed period or termination when the employee reaches the normal retirement age in accordance with custom, law, collective agreement, contract, employment rules or otherwise;
  5. conduct rendering the employee subject to summary dismissal; and
  6. conduct making it clear that the relationship between the employer and employee cannot reasonably be expected to continue, commission of a serious disciplinary or criminal offence, indecent behaviour or repeated violation, or ignorance of employment rules.

Some categories of employees enjoy increased protection from dismissal. The increased protection applies to employees who participate in trade union-related activities, pregnant women and employees on sick leave.

Employees are generally protected from dismissal for any reason that does not justify dismissal under the law. An employer may never terminate employment for the following reasons:

  1. membership of trade unions or a safety committee established under the Safety at Work Law of 1988;
  2. activity as an employees' representative;
  3. the filing in good faith of a complaint, or the participation in proceedings, against an employer involving alleged violation of laws or regulations, civil or criminal;
  4. race, colour, sex, marital status, religion, political opinion, national extraction or social origin;
  5. pregnancy or maternity; or
  6. parental leave or leave on the grounds of force majeure.

An employer is obliged to inform the Ministry of Labour regarding redundancies, but not for dismissals. The employer is also obliged to rehire redundant employees if a position becomes available up to eight months following the redundancy. More stringent notification requirements apply for collective redundancies or where a works council is established.

The most common remedy available for unlawful dismissal is damages, which in the Industrial Disputes Tribunal cannot exceed two years' wages. With regard to the remedies established by the law in Cyprus concerning unlawful dismissals, the only effective mechanism is statutory and contractual compensation, which is often insufficient. The remedy of reinstatement is theoretically available against employers employing over 19 people, but it is very rarely ordered by Cypriot courts.

The notice period for dismissals correlates to the length of service of an employee in continuous employment and must be in writing.

Length of serviceNotice period
More than 26 weeks but less than 52 weeks1 week
More than 52 weeks but less than 104 weeks2 weeks
More than 104 weeks but less than 156 weeks4 weeks
More than 156 weeks but less than 208 weeks5 weeks
More than 208 weeks but less than 260 weeks6 weeks
More than 260 weeks but less than 312 weeks7 weeks
312 weeks or more8 weeks

No notification is required to be given to an employee on probation (provided that the trial period does not last longer than 104 weeks).

By amendment of the Termination of Employment Law on 25 July 2016, giving notice to an employee who is absent from work owing to incapacity for work for a period of up to 12 months is prohibited for a period that is equal to the period of absence plus one-quarter.

Furthermore, the employer has the right to pay in lieu of notice, for which the sum paid is equivalent to the applicable notice period, but there is no obligation for any severance or dismissal indemnity. Private settlement agreements between the employer and the employee can be concluded provided that such agreements do not violate the minimum amounts set by the law.

Any provision in a contract or agreement providing for the reduction of the length of the statutory notice period is void ab initio, although the parties have the right to extend the notice period by contract, collective agreement or for any reason established by law, custom or otherwise.

ii Redundancies

Redundancy compensation is calculated according to Table 4 of the Termination of Employment Law. An employee who is made redundant as part of a collective redundancy plan under the Collective Redundancy Law of 2001 has the same termination payment rights as an employee who is individually made redundant under the legislation of 1967.

Redundancy payments are calculated according to years of employment as follows:

  1. two weeks' wages for each year of service up to four years;
  2. two-and-a-half weeks' wages for each year of service from five to 10 years;
  3. three weeks' wages for each year of service from 11 to 15 years;
  4. three-and-a-half weeks' wages for each year of service from 16 to 20 years; and
  5. four weeks' wages for each year of service beyond 20 years.

The upper limit for redundancy compensation is 75.5 weeks' wages. The minimum statutory compensation for unlawful dismissal payable by the employer is also calculated in the same way. Depending on the circumstances of each case, the court may award anything between the minimum (the redundancy amount) and the maximum (two years' wages), taking into account all the facts of the case. The court may, inter alia, consider the age, family situation, career prospects and circumstances of termination before deciding. In the event of redundancy, the payments are made from the government redundancy fund. The Redundancy Fund was established by the Termination of Employment Law. It is a national fund to which employers pay contributions for the purpose of the payment of compensation upon redundancy. The Redundancy Fund is wholly financed by contributions from employers.

Collective dismissals under Cypriot law are dismissals for one or more reasons not related to the employees, and where the number of employees dismissed within a 30-day period is:

  1. at least 10 employees, if the establishment employs more than 20 but fewer than 100 employees;
  2. at least 10 per cent of the workforce, in cases where the establishment employs at least 100 but fewer than 300 employees; or
  3. at least 30 employees, in cases where the establishment usually employs at least 300 employees.

An employer intending to implement a collective redundancy has a statutory obligation to notify and engage in consultations with the employees' representatives as soon as possible to reach a settlement agreement.

The employer must also give notice to the Minister of Labour, Welfare and Social Insurance of any proposed redundancy dismissal at least one month before the intended date of termination. Notice must be given on a standard form and include the following particulars:

  1. the reasons for any proposed collective dismissal;
  2. the number and the description of the employees it proposes to make redundant;
  3. the total number of employees and the description of employees normally employed at the establishment;
  4. the time period during which the proposed redundancies are to take place;
  5. the criteria for selecting the employees that are to be dismissed; and
  6. the calculation method of any redundancy payment, other than the redundancy payments provided by the Termination of Employment Law.

If the number of dismissals is less than the number provided in the law, the Termination of Employment Law applies. As regards notice periods, the rules of the Termination of Employment Law, as amended, apply.