All questions

Year in review

The cases described in this section are considered to be the most significant in the past 12 months.

In the Iacovides case, the respondent submitted an application to the IDT claiming that he had been wrongfully dismissed from the position of general manager. The respondent held the position of general manager at the appellants' business on the basis of successive contracts of definite duration. Prior to the termination of the respondent's employment, all of the appellants' shares were obtained by the Republic of Cyprus. The main grounds upon which the appellants based their action to terminate the respondent's employment were the mismanagement of the company, the respondent's failure to carry out his work in an adequately satisfactory manner and, in general, the serious misconduct of his duties, which led the company to the brink of bankruptcy and to financial disaster.

The IDT held that the appellants had failed to prove their allegations with a clear, convincing and acceptable testimony. However, even if the IDT was of the opinion that any of the reasons that led to the respondent's dismissal were proven and accepted, the time that had elapsed from the day that the alleged facts had taken place until the respondent's actual dismissal was sufficient for the appellants to lose their right to dismiss the respondent, according to the proviso of Section 5(e) of the Termination of Employment Law 24/67. The decision of the IDT was appealed before the Supreme Court.

The Supreme Court noted that the IDT had not applied the test adopted by the relevant case law (i.e., whether the dismissal fell within the ambit of the reaction of a reasonable employer on the basis of the material available before him), bearing in mind that the burden on the employer is to prove this on the balance of probabilities. However, it was held that this was not sufficient for the appeal to succeed. The Supreme Court held that the time that had elapsed from the actual occurrence of the alleged facts until the final dismissal of the respondent should lead to the conclusion that the appellants did not have a right to dismiss the employee.

In the Erotokritou case, the Supreme Court rejected the appellant's application that he had been wrongfully dismissed by the respondent company – of which Erotokritou owned 50 per cent of the share capital and was one of the two directors. It was held that her alleged coercion to relinquish her shares to the third respondent – who was an employee of the company – could not lead to a decision that there had been constructive dismissal, when taking into account the company structure of the appellant. In view of the appellant's participation to the board of directors of the defendant, which acts as a collective organ, the Supreme Court held that it was not sufficient to consider the status of the appellant as an employee of the defendant. Such a dispute should be resolved by virtue of the relevant provisions of the Companies Law Cap 113. Consequently, the Supreme Court rejected the appeal.

In Askanis and Gregoriou, the Supreme Court reiterated the well-established principle that the assessment of factual evidence by the IDT falls within its exclusive jurisdiction and that accordingly the Supreme Court shall not intervene, since IDT decisions are subject to appeal only on the basis of legal grounds. However, such intervention is possible where the assessment is the result of improper legal guidance.

The Koukoutsika case dealt with the repudiation of the employment contract. The respondent had been employed for years by the appellants as general manager. During a meeting of the board of directors, the chairman of the board blamed him for having irrevocably exposed the appellants and suggested that the respondent should tender his resignation. The latter submitted his resignation and left. During the assessment of the evidence presented before it, the IDT found that there had been no evidence of reprehensible behaviour by the respondent and concluded that the appellants, with their behaviour and for the reasons they submitted, expressed their desire to the applicant that it was impossible to continue the employment relationship. In view of this, the IDT held that, from a legal perspective, the appellants had violated the relationship of trust and confidence the employee is reasonably entitled to have in his employer and, thus, the respondent justifiably considered that he was forced to resign.

The Supreme Court upheld the IDT judgment, pointing out that the appellants, during the aforementioned meeting of the board of directors, had irrevocably violated the implied obligation of trust and confidence that the employee is reasonably entitled to have in his employer. Furthermore, the Supreme Court accepted that the implied obligation of trust between the employee and the employer governs every employment agreement and it dictates that the parties should not behave in a manner that can shake the foundations of the employment relationship or destroy that relationship. The Supreme Court concluded that the respondent's belief that he was not desired as general director of the appellants was justified, and it was upon him to decide whether he should insist on the continuation of the employment relationship or to choose to terminate it. His choice to terminate the employment relationship amounted, under the circumstances, to constructive dismissal pursuant to Section 7(1)(2) of the Termination of Employment Law 24/67.

Outlook and conclusions

In last year's edition, we noted that many employers had viewed the economic crisis as an opportunity to restrict the rights of employees previously established by collective agreements, and to violate their obligations towards them. Moreover, fear of unemployment has led many employees to accept various forms of violations of their rights. At the same time, the maintenance of industrial peace in a period of economic crisis remains a major challenge for the future of the Cypriot corporate model. Whereas the financial situation has definitely improved and the unemployment rate has been reduced significantly, with the memory of the financial crisis and the bank collapse that followed the decisions of the Eurogroup meetings in March 2013 still vivid, the Cypriot labour market is still in turmoil and now trying to get back on its feet.