Employment contracts

Posted on 20 Nov 2012, by Fotini Omirou

A prerequisite of being able to work in Cyprus is the obtainment of a work permit. This permit is granted to individuals who have supplemented their fourteenth year of age, have successfully completed secondary education and have ordinary residence in Cyprus. Although the law does not impose an obligation for writing agreements, in most cases of managerial positions a written agreement is entered into with work related information enclosed.

These agreements must state clearly the identities of the employer and employee, the registered office of the employer and the place of work if this differs and the residential address of the employee. Also, the date of commencement of work must be mentioned in all employment contracts in conjunction with the duration of the contract, where applicable. Moreover, the title and position of the employee ought to be stated along with the job description, requirements, duties, and working hours with the maximum of 48 hours per week, unless we are referring to a specific industry. Any general rules and regulations that apply to the employer, such as dress code, are also required to be included.

Additionally, the remuneration of the employee and the frequency of payments must be agreed upfront and be clearly stated in the employment contract. To reach to an agreed amount, it is advisable to take into consideration the Minimum Wage Order 2010, which sets the amount of minimum monthly salary from the 1st of April 2010. The Decree on Minimum Wage is required by law and is adjusted on the 1st of April of each year by decision of Parliament. Consequently, any allowances, bonuses, pension schemes, medical funds or pension plans which are provided by the employer can be included in the contract as well, although the private sector employer is obligated to contribute only to the social security scheme of the employee. The social security contributions include the Social Insurance Fund, the Annual Paid Leave Fund, the Termination of Employment Fund, the Development of Human Resources and the Social Coherence Fund. The employee is also compelled to contribute 6.8% of his or her gross salary to the social security contributions each month.

Furthermore, holidays, annual leaves of absence, illness leaves of absence and trial periods should also be mentioned in an employment contract although no legal obligation applies to trial periods or illness. The Social Insurance Department pays for sick leave for any period exceeding three working days. What is more, an employee is entitled to twenty working days of annual leave and in the case of six working days per week, employees are entitled to twenty four working days of annual leave (unless on the basis of any other law, custom or collective agreements, more days off are allowed).

A female employee is entitled to maternity leave up to eighteen consecutive weeks and in the case of employees of either gender who have completed six continuous months of employment, they are entitled to thirteen weeks of unpaid parental leave for the birth or adoption of a child. This applies even if the same employee has more than one child, provided that at least one year has passed from the leave taken in respect of the previous child. For male employees, the employer is obligated to grant work absence for military services.

An employment contract must also have clause for disclosure of work related information and termination of employment. In reference to disclosure of work related information, Cyprus law implies duty of reliability on the basis of the contract of employment with focus on information which could classify as trade secrets such as plans, ideas, general information or financial resources. The employer is entitled to terminate a contract on such grounds. Consequently, the employment contract should include provisions for notice of resignation along with reasons of possible termination of employment such as the failure to produce efficient work, the case where an employee is rendered redundant, expiration of contract, misconduct and the case where the employee has reached the age of retirement reasons of Force Majeur.

Finally, all employment contracts must be approved and stamped by the Labour Office in the case of non-EU citizens, in accordance with the requirements of the Immigration Law of Cyprus. The Labour Office must grant authorization to the employer which must present evidence that there was no availability of a Cypriot or European Union citizen to meet the requirements of the specific vacancy.