Employee Benefits in Cyprus

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Employee Benefits

When expanding your company’s presence in a new country, you need to ensure compliance both in your employment contracts and benefit guarantees. These involve social security contributions, sick leave, health insurance, and unemployment, to name a few. In Cyprus, benefits are guaranteed by national legislation as well as collective agreements with trade unions or workers’ councils.

As an employer, it is vital to understand what is guaranteed, as well as what can be open to negotiation when expanding into new territory. This is where Bradford Jacobs, a Professional Employer Organization (PEO) with years of expertise and knowledge on all facets of employment in Cyprus, can step in and help you out.

Our guide will explain what benefits and employee compensation are guaranteed, and what can be modified, for any employer who wishes to expand their business into the bridge between Europe, Africa, and Asia.

What Compensation Laws exist in Cyprus?

In Cyprus, compensation laws are set by national legislation, but the types of compensation can vary according to the sector the employees are in, regulations of collective agreements, and the internal regulations of the company.

For example, there is a 13th month payment in Cyprus, which is optional, and is paid as a yearly bonus – other employee bonuses are also negotiated between the employer or employer when the contract is being drawn up and signed.

There are, however, benefits and/or compensation that are guaranteed by national legislation:

  • Minimum wages: There is no national minimum wage for workers in Cyprus. However, there are minimum wages set for certain occupations, which are issued by the Ministerial Council and comes into force every April.
  • Work Hours and Breaks: Employees are entitled to a rest break of 15 minutes when the working day is over 6 hours, and during the break the worker may leave the workstation.
  • Sick Leave and Payments:  Employees are entitled to a statutory sick leave benefit from Social Insurance. However, it is optional for an employee not to be compensated for the first three days of sickness. After the three days have passed, they may file an application to the Ministry of Labor, Welfare, and Social Insurance to receive a sickness benefit. In practice, employers often agree with their employers to receive several days of paid sick leave, even though they are not legally obliged to do so. The employers have a choice to pay for the first few days of sick leave (normally three) or cover the remaining percentage of the sickness benefit after the first few days have passed. Employees may be compensated for a maximum of 156 days, during a single period of employment. The rate of sickness benefits is equal to a percentage of the weekly average earnings of the employee, and the rest is paid by the employer.
  • Holiday and Vacation Leave: Employees are also entitled to paid leave for public holidays (which are normally between 14 and 17), as well as paid annual leave, which depends on the number of working days during the week. Employees working a five-day week are entitled to at least 20 days of paid annual leave a year, whilst employees working a six-day week are entitled to at least 24 days of paid annual leave a year.
  • Maternity Leave: Maternity leave is 18 consecutive weeks, which can start from 6 weeks before the estimated date of birth. In the case of the delivery of a second child, the duration of maternity leave extends by another 4 weeks, and in case of the delivery of two or more children, it is extended for another 4 weeks. The salary and insurance contributions are normally paid by the Social Insurance Fund and equals 72% of the employee’s salary. If the mother is the head of the family and has more than one dependent, the contributions are increased to 80% or 90%. When the mother goes back to work, she is entitled to a shift reduction of one hour per day for the first 9 months after the date of birth.
  • Paternity Leave: Paternity Leave in Cyprus is 2 weeks between the week of childbirth and the following 16 weeks, or between the week of confinement and the end of maternity leave in the case of multiple births.
  • Parental Leave is also practiced in Cyprus. Any parent with a child under 8 years old is eligible for 18 weeks of unpaid parental leave, per child. In the case of a widower/widow, they are entitled to parental leave of 23 weeks. Parents are allowed to transfer about two weeks of parental leave to the other parent if they have taken a minimum of two weeks themselves. Parental Leave can be taken for a minimum of one week to a maximum of five weeks per calendar year. In the cases of 3 children or more, this is increased to a maximum of 7 weeks.
  • Unemployment: An unemployed person is eligible for compensation if they have paid social insurance whilst employed, as well as registered themselves as unemployed with the local district office, and as a jobseeker with the Public Employment Service. They are entitled to a maximum of 156 days of unemployment benefits, which depends on the insurance type, as well as how much has been contributed.

Social Security in Cyprus

Social security contributions in Cyprus are settled through the employee’s salary, where social security contributions are withheld from the salary every month and paid to the tax authorities, as well as the employer’s own monthly contributions.

An employee must contribute a rate of 10.95%, which is split into social insurance and health insurance contributions, whilst an employer the contribute 22.9% of an employee’s salary, which is split into six types of contributions.

Employer’s Contributions

  • Social Insurance (8.3%)
  • National Health Insurance (2.9%)
  • Social Cohesion (2.0%)
  • Redundancy (1.2%)
  • Training & Development (0.5%)
  • Holiday Fund (8.0%)

Employee’s Contributions

  • Social Insurance (8.3%)
  • National Health Insurance (2.65%)