As more international companies choose Cyprus as their base for European operations, understanding the local employment law framework is essential. Whether relocating an existing business or establishing a new one through the Business Facilitation Unit (BCS), employers must ensure full compliance with Cypriot labour regulations, which are harmonised with EU law and designed to protect both employees and employers.
Legal Framework
Employment relations in Cyprus are governed by a combination of statutory provisions, EU directives, and common law principles. The key legal instruments include:
• The Employment Rights Law (24/1967) and related regulations.
• The Termination of Employment Law (24/1967).
• The Annual Leave with Pay Law (8/1967).
• The Protection of Wages Law (35(I)/2007).
• The Safety and Health at Work Law (89(I)/1996).
• The Social Insurance Law (59(I)/2010).
These laws apply equally to Cypriot and foreign-owned companies operating in Cyprus.
Employment Contracts
Every employee must receive a written employment contract or a statement of terms within one month of starting work. The contract must include:
• The identity of both parties.
• The date of commencement and duration (if fixed-term).
• Job title and description.
• Working hours and place of work.
• Salary and benefits.
• Notice periods and probation (which may not exceed six months unless extended by agreement).
Termination must follow the Termination of Employment Law, which provides for notice periods based on length of service and protects against unfair dismissal. Severance pay may be due if the termination is unjustified.
Working Conditions and Employee Rights
The standard working week in Cyprus is 40 hours, typically spread over five days, though flexible arrangements are common. Employees are entitled to:
• At least four weeks of paid annual leave per year.
• Sick leave, depending on company policy or collective agreement.
• Maternity leave of 18 weeks, with social insurance benefits.
• Paternity leave of two weeks.
• Public holidays, as designated by the Ministry of Labour.
As of January 2024, Cyprus also applies a national minimum wage, currently set at approximately €1,000 per month, depending on the sector and job type.
Social Insurance, GESY, and Employer Contributions
Both employers and employees are required to contribute to the Social Insurance Fund and several other state-managed schemes, including:
• The Redundancy Fund,
• The Industrial Training Fund,
• The Social Cohesion Fund, and
• The Holiday Fund (unless the employer maintains its own paid annual leave policy).
As of 2025, the total employer contribution rate stands at approximately 22.9% of gross salary, while employees contribute around 11.05%. These contributions are mandatory for all employees, regardless of nationality, and are remitted monthly through the Social Insurance Department’s electronic system.
GESY Contributions (National Healthcare System)
Cyprus operates a universal healthcare system known as GESY (General Healthcare System), which provides access to state and private medical services. Both employers and employees contribute to GESY as follows:
• Employers: 2.9% of gross salary.
• Employees: 2.65% of gross salary.
• Self-employed persons: 4% of declared income.
These contributions are compulsory and ensure eligibility for GESY medical coverage, regardless of nationality or private health insurance arrangements.
Special Defence Contribution (SDC)
The Special Defence Contribution applies to dividends, interest, and rental income earned by Cyprus tax residents who are domiciled in Cyprus. However, employment income is not subject to SDC. Importantly, most foreign individuals relocating to Cyprus are eligible for non-domicile (‘non-dom’) status, which exempts them entirely from SDC on dividends, interest, and rental income — a key tax advantage for executives and international entrepreneurs establishing residence in Cyprus.
Non-EU Employees and Work Permits
Companies relocating to Cyprus often employ non-EU nationals. Employment of third-country nationals must comply with one of the authorised frameworks, most commonly:
• The Business Facilitation Unit (BCS) for international companies employing highly skilled staff,
• The EU Blue Card, for high-salaried professionals in sectors such as IT, pharmaceuticals, and shipping, or
• The Digital Nomad Visa, for remote professionals employed abroad.
Each framework has its own requirements regarding salary, qualifications, and residence status. BCS-registered companies are exempt from Department of Labour approval for these positions, ensuring a streamlined process.
Compliance and Employee Protection
Employers must also comply with broader EU-aligned obligations, including:
• Non-discrimination in recruitment and employment on grounds of gender, nationality, age, religion, or disability.
• Data protection under the General Data Protection Regulation (GDPR) when processing employee data.
• Health and safety obligations under the Safety and Health at Work Law.
• Equal pay for equal work, irrespective of gender or nationality.
Failure to comply can result in administrative fines or civil liability.
How Lyssiotis Law Can Help
Lyssiotis Law advises both foreign and Cypriot companies on employment compliance, recruitment policies, and drafting of employment contracts. The firm assists with:
• Preparing compliant employment agreements.
• Registering companies with the Social Insurance and Tax Departments.
• Advising on employee transfers, terminations, and dispute resolution.
• Securing residence and work permits for non-EU personnel.
Frequently Asked Questions (FAQ)
Do employment contracts in Cyprus need to be in Greek?
No, contracts may be in English or any language understood by both parties, provided the terms are clear and lawful.
Can probation exceed six months?
Only by express written agreement between the parties, and typically not beyond one year.
Is 13th salary mandatory?
It is not mandatory by law but is customary in many industries. It must be clearly stated in the employment contract.
What are the employer’s obligations for social insurance?
Employers must register each employee with the Social Insurance Department and make monthly contributions based on gross salary.
Can a foreign company transfer employees from abroad to its Cyprus entity?
Yes. Transfers can take place under the BCS framework or through intra-corporate transfer permits, depending on the employee’s role and nationality.
Conclusion
Cyprus offers a stable and business-friendly employment environment supported by clear legislation and EU-aligned labour standards. For companies relocating to Cyprus, early legal guidance ensures full compliance, protects against employment disputes, and creates a transparent and attractive workplace for both local and international employees.
Lyssiotis Law LLC assists corporate clients throughout the relocation process — from company formation to employee onboarding, compliance, and residence permits — providing a comprehensive, trusted legal framework for business success in Cyprus.