Cyprus possesses a well-trained and versatile labour force. Qualified professional, technical and clerical staff, with wide experience and fluency in English and other languages are available for employment at reasonable remuneration.
Economically active population
According to Eurostat’s Labour Force Survey 2012, Cyprus exhibits an employment rate of 64.6% for the age class 15-64; the rate is among the top 14 EU member states and above the average employment rate of the EU-27 (64.2%).
The employment in the market services sector accounts for the largest percentage of the Cyprus total economic activity (48.0%), while the industry and agriculture account for a percentage of 20.2% and 2.9% respectively.
Notably, Cyprus has the highest employment rate for women of 48.7% for the market services sector.
System of Labour Relations Work Relationship System
The Labour Relations System in Cyprus is based on the democratic principles of freedom of speech and tripartite cooperation. Through cooperation between the social partners within the liberal, voluntary model of labour relations, the terms of employing workers are freely determined, through collective bargaining, between the two parties (employers and employees) by concluding collective agreements.
Collective agreements, as documents not legally binding, are settled on the basis of a procedural agreement between the social partners named Industrial Relations Code. The Code, since its signing in 1977, remains the heart of the free labour relations system of Cyprus. Both trade unions and employers' organisations respect the Code, with few exceptions, and this has helped in the system’s success and the achievement of labour peace.
In addition to the Industrial Relations Code and with the aim of protecting vulnerable workers (with emphasis on those not organised by trade unions), mainly because of their bargaining power, minimum standards in terms of employment are set by Law. Also, the need to harmonize Cyprus with the European Acquis, in the area of Labour Legislation, has led to the regulation of additional and important terms of employment by Law.
Every person gainfully occupied in Cyprus, either as an employed person or as a self employed person, is compulsorily insured under the Social Insurance Scheme.
In case of employed persons, the contribution is 20,2% on their insurable earnings and it is divided to contributions paid by the employer, the employee and the State in the proportion of 7,8%, 7,8% and 4,6%, respectively. In case of self employed persons, the contribution is 16,9% on the insurable income of the person concerned. Out of 19,2%, 14,6% is paid by the self employed himself and 4,6% by the State.
In the case of voluntary contributors, the contribution is 17,1% on the earnings amount declared. Out of the 17,1%, 13% is paid by the voluntary contributor himself and 4,1% by the State. Voluntary contributors working abroad in the service of Cypriot employers pay contributions of 15,6% on either the basic insurable earnings or on their normal earnings, as agreed in the respective contract of employment, up to the maximum insurable earnings. An additional contribution of 4,6% is paid by the State.
The social insurance scheme provides for several benefits, such as the maternity allowance, sickness allowance, unemployment allowance, pension, widow’s pension, orphan’s allowance, allowances for industrial accidents and occupational diseases. The new EU Regulations (EC) 883/04 and (EC) 987/09 that coordinate the Social Security Systems between member states, have been put into effect in the Republic of Cyprus as of 01/05/2010.
In addition, employers are also obliged to contribute 1,2% to the Redundancy Fund, 0,5% to the Human Resources Development Fund and 2% to the Social Cohesion Fund.
An important piece of legislation is the employer's obligation to inform his/her employees on the basic terms and conditions of employment. This information must be given in writing within 30 days from recruitment of each employee.
One of the most important pieces of Legislation with regard to the terms of employment is the Minimum Wage Order. The minimum wage in Cyprus is not regulated at national level but only for some professions. In particular, the minimum wage is set at €870 gross on recruitment and at €924 after six-month continuous service to the same employer for clerks, sales assistants, school assistants, nursing assistants and carers. For building cleaners, the hourly gross salary on recruitment is set at €4.55 and at €4.84 gross after six months of continuous employment to the same employer. For security guards, the minimum hourly wage is set at €4.90 gross and upon completion of six months continuous employment with the same employer, it increases to €5.20.
Another important Law in relation to wages is the Protection of Wages Law. On the basis of this Law, every worker is protected regarding his/her regular payment of salaries. The Law provides that every employer is obliged to pay the salary of each employee without deductions and he/she has to keep relevant records.
Regarding working hours, according to the law regulating this subject, each employer must not be employed on average more than 48 hours weekly, including overtime given that the employee does not opt out. Workers are also entitled to at least 11 hours of daily rest and 24 hours of weekly rest time. The same law regulates, inter alia, night work, daily breaks and some exceptions regarding certain professions.
It is noted that the Cyprus Labour Legislation provides for more specific employment conditions for the professions of clerks, quarries workers, miners, hotel staff of catering employees and retail employees.
In case of termination of employment, the relevant law provides that the party that initiates termination must give a specific warning period to the other party. Also it must be noted that the first 6 months are counting as probation period and neither party is required to give notice to the other. This probation period can be extended to two years if both parties agree to do upon recruitment. In the event of redundancy, workers who have been employed for 104 consecutive weeks with the same employer are protected through payments made by the special Redundancy Fund. Also, an employee who has been fired illegally has the right to compensation payable by the employer, provided that the employee has worked for more than 26 consecutive weeks (or more than the agreed probation period).