I INTRODUCTION

In recent years, and in particular after the accession of Cyprus to the European Union, Cypriot employment law has rapidly evolved to comply with the EU legislation (directives) in its national legislation. Cypriot employment law implements the European principles of protection of the employee rather than providing absolute freedom to the employer. Overall, the legal framework, as reformed over a period of years, is a combination of principles from both the English and Greek legal systems, and offers a secure environment for both employees and employers.

The right to work is safeguarded by Article 25 of the Constitution of the Republic of Cyprus. The majority of employment-related matters, including the termination of employment and employees' and employers' rights and obligations, are mainly governed by the Termination of Employment Law of 1967, as amended, and the Annual Paid Leave Law of 1967, as amended. In addition, a number of other laws make up the legal labour framework in Cyprus, most notably the Social Insurance Law of 1980; the Safety and Health at Work Law of 1996; the Protection of Maternity Law of 1997; the Minimum Salaries Law; the Equal Treatment at Work and Employment Law of 2004; and the Law Providing for the Preservation and Safeguard of the Rights of Employees on the Transfer of Businesses, Facilities or Sections of Businesses of 2000, all as amended. Each law is supplemented by relevant regulations and decrees. Cyprus has also ratified a number of International Labour Organization (ILO) conventions, which have become part of its national legislation, most notably Convention 158 of the ILO concerning Termination of Employment at the Initiative of the Employer, which introduced the right to a fair hearing into Cypriot law.

Another instrument, the Industrial Relations Code (IRC), was negotiated and signed by the government, employers and trade unions in 1977. It is a purely voluntary agreement, and any adherence to it depends on the goodwill of the parties. Nevertheless, its procedural part is of considerable importance in practice.

Collective labour agreements have contractual but not legislative force. They are concluded by sectors of industry and also at company level on a voluntary basis.

The primary mechanisms for enforcement are through the Ministry of Labour and Social Insurance, the employment courts (or Industrial Disputes Tribunal) and in some cases the district courts.

The Annual Paid Leave Law of 1967, as amended, is the law that formed the Employment Court and granted exclusive jurisdiction to determine matters arising from the termination of employment, such as the payment of compensation, payment in lieu of notice, compensation arising out of redundancy and any other claim for any payment arising out of the contract of employment. Where the amount claimed as damages exceeds the equivalent of two years' salary, jurisdiction is vested in the district court. The Employment Court is composed of the President of the Court, a judge and two lay members appointed on the recommendation of the employers' and employees' unions. The lay members have a purely consultative role.

The Ministry of Labour, Welfare and Social Insurance is the main state agency for the enforcement of labour and social policy, and its departments offer services for social protection, employment, industrial training, labour relations, terms and conditions of employment and safety and health at the workplace. Its departments include Social Insurance, Social Welfare, the Department of Labour (Department for Social Inclusion of Persons with Disabilities), the Department of Labour Inspection and the Department of Labour Relations, as well as the Appropriate Authority for Retirement Funds.

II YEAR IN REVIEW

Following 2013, during which the Eurogroup welcomed the conclusion of an agreement between the Republic of Cyprus and the other Member States within the Eurozone for the grant of financial aid to the Republic of Cyprus, with a contribution from the International Monetary Fund (IMF) for the purpose of supporting the Cypriot economy, covering fiscal needs and the banking sector's restructuring; and the passing of laws by the Cypriot parliament aimed at rescuing the economy.

The European Stability Mechanism financial assistance programme of 2013 ended on 31 March 2016. Thanks to a better than expected economic recovery, private investors' participation in bank recapitalisation and a return to market financing, the full amount of assistance was not needed. Cyprus has managed to restore economic growth and repair public finance much faster than expected. Unemployment has shown an improvement, but it is still high, mostly among young people and university graduates. This year, the tourist season welcomed a record number of incoming tourists, thus giving work to a lot of unemployed people, albeit only seasonal work. Since last year, there has been a decrease in unemployment of 8.9 per cent, according to the Statistical Service of Cyprus.

There is still a high number of labour disputes, giving a great volume of work to the mediation department of the Ministry of Labour Welfare and Social Insurance. There has also been a significant increase in the number of cases filed in the Employment Court.

No noticeable rises in salaries have been recorded. Salaries remain at the same levels as the past year and the year before. The Redundancy Fund is still facing a huge number of claims, with the inevitable delay in dealing with them.

III Significant cases

The Employment Court has recently made a number of judgments on the issue of discrimination, harassment and sexual harassment under the Equal Treatment of Men and Women in Employment and Vocational Training Law (Law 205(I)/2002).

Under this law, which applies to both the public and private sectors, any person who is discriminated against because of his or her sex, harassed or sexually harassed can have a recourse to the appropriate court, which is the Employment Court, with the exception of recourse to the Administrative Court, which has exclusive jurisdiction to hear administrative actions. Up to this moment, there is no judgment of the Administrative Court that concerns the violation of Law 205(I)/2002.

i Case report

The Industrial Disputes Court makes an award for injury to feelings while rejecting a sexual harassment claim.

Summary

In the decision AP (applicant) v. (1) Republic of Cyprus and others issued on 22/04/2016, the Industrial Disputes Court considered a variety of substantive and procedural issues in the context of a claim for sexual harassment and victimisation. This case provides a good illustration of the principles the tribunals apply when examining sexual harassment cases and how these are interpreted by Cypriot Employment Courts.

Facts

The applicant is an employee working in the public sector. Respondent 2 and respondent 3 were, at the time, employees of respondent 1 and the applicant's superiors. Respondent 2 was a chief inspector of the relevant public department where the applicant was working, and up until 1 February 2009, he was the manager of the district offices of the department. Respondent 3 was the director and the chief of the department.

In May 2006, the applicant filed an oral sexual-harassment complaint against respondent 2 to respondent 3. Then, on 30 January 2007, the applicant submitted a written complaint against respondent 2 to respondent 3. Following receipt of the complaint, a formal investigation commenced. On 6 August 2007, the General Director of the Ministry of Agriculture and Environment submitted the findings of the report to the Public Service Commission (PSC). Based on the findings of the report, the PSC initiated disciplinary proceedings against respondent 2. On 29 October 2008, following the conclusion of the disciplinary hearing, respondent 2 was found guilty, among others, on disciplinary charges relating ‘to an act or mode that is equal to a breach of any of the duties or obligations of a public servant' in breach of articles 73 (1)(b) and 73 (2) of the Civil Service Laws of 1990 until 2006 and Articles 2 and 12(1) of Law 205(I)/2002. On 1 December 2008, the PSC imposed as means of disciplinary measure the following: (1) the transfer of respondent 2 to another district as of 2 January 2009, for the period of three years; and (2) severe reprimand.

On 21 October 2009, the applicant brought proceedings against the respondents claiming, inter alia, damages for sexual harassment and damages for injuries to feelings and physical health that the applicant suffered as a result of the respondents' actions and omissions within the meaning of Law 205(I)/2002.

In her claim, the applicant stated, inter alia, that from the commencement of the 2006, up to May 2006, she was sexually harassed by respondent 2 (despite raising the issue with respondent 2) and that as a result of making an oral complaint to respondent 3 she suffered negative actions inflicted by negative behaviour towards her by respondent 2 and other employees under his supervision. She further claimed that such actions resulted in the creation of a hostile working environment and respondent 3 did not take any measures to protect the applicant or rectify the situation. She therefore filed a formal written complaint to respondent 3 against respondent 2. It was the applicant's position that following the submission of the complaint the negative working environment deteriorated and that respondent 3 urged her to withdraw her complaint. The applicant claimed that following the submission of the written complaint, and up to the submission of the court application, she faced problems in the workplace and unfair treatment.

Respondents 1 and 2 alleged that there was no sexual harassment against the applicant in accordance with the provisions of Law 205(I)/2002, and that the applicant's application is time barred. Respondent 3 did not file an appearance.

Judgment

In order to render its ruling, the Court took into consideration the evidence presented and ruled that the behaviour of respondent 2 for the period January 2006 to May 2006 constituted sexual harassment against the applicant in accordance with the provisions of Law 205(I)/2002. However, the Court found that the applicant's claim was time barred and did not award compensation for the sexual harassment the applicant suffered for the period January 2006 to May 2006.

The Court then examined whether there was a breach of the Law 205(I)/2002 by defendants 1 and 3. Based on the facts presented by the applicant, the Court ruled that the applicant had suffered unfavourable treatment in the workplace and was victimised by respondents 2 and 3 because of the submission of the sexual harassment complaint. Further, respondent 1 failed to prove that it has taken any action to prevent the sexual harassment from happening in the applicant's workplace and the actions that led to the victimisation of the applicant. The Court therefore found respondent 1 guilty of the offence alongside and to the same degree as respondents 2 and 3. The Court noted that even the applicant did not inform her superiors of the actions of respondent 2, respondent 1 would still be found guilty and to the same degree alongside respondents 2 and 3 as respondent 1, as the employer, failed to adopt the preventive measures in accordance with Law 205(I)/2012.

Awards

The Court upheld the applicant's claim for injuries to feelings caused by the respondents based on unfavourable treatment and the applicant was awarded €22,000 for injury to feelings. Respondents were made jointly and severally liable for the unfair treatment award.

Upon issuing the award, the Court noted the general legal principles governing injuries to feelings and took into consideration the facts of the case and, in particular, the surrounding circumstances of the discrimination the applicant suffered as a result of her gender, such as: (1) the nature of unfavourable treatment the applicant suffered as a result of filing the sexual harassment complaint (insults, social exclusion and work isolation, psychological war, poor performance reviews, reduction of tasks and unequal treatment in relation to tasks and volume of work); (2) the substantial period the case lasted (from May 2006 to September 2009); (3) the hierarchical relationship between the applicant, respondent 2 and respondent 3; (4) the long period that the examination of the written complaint of the applicant lasted (22 months approximately), during which no measures were taken to protect the applicant; (5) the disciplinary measures taken following the conclusion of the disciplinary process against AP and the cancellation of the applicant's appraisals for the years 2007 and 2008; (6) the negative treatment the applicant experienced following the imposition of the disciplinary measures to respondent 2 (continuation of unfavourable treatment, unequal distribution of work and threat to be moved to another department); and (7) that the applicant continued to work at the department and the consequences of the unfavourable treatment of the applicant.

Commentary

The Court focused on two important aspects while examining the case concerned: firstly, whether the actions concerned fell within the definition of sexual harassment and whether the treatment the applicant suffered at the workplace was a reaction to the complaint of sexual harassment she had lodged; and secondly, the type of damages the applicant would be entitled to as a result of her being victimised. To address these questions, the Court proceeded with a systematic classification of the case's evidence in the light of the relevant legal framework, namely Law 205(I)/2002, the respective Directives 2006/54/EC (consolidating Directive 76/207/EC) and 97/80/EC, and relevant case law.

IV BASICS OF ENTERING AN EMPLOYMENT RELATIONSHIP

i Employment relationship

In Cyprus, although written employment contracts are not required, the Law2 imposes an obligation on the employer to provide to the employee, in writing, specific information regarding the terms of employment. Such information must include:

  • a information about the identity of the parties;
  • b the place of work and the registered address of the business;
  • c the position or the specialisation of the employee;
  • d the commencement date of the contract and its duration, if it is for a fixed period;
  • e notice periods;
  • f annual leave entitlement;
  • g all the payments (salary, bonuses, etc.) to which the employee may be entitled and the time schedule for their payment;
  • h the usual duration of daily or weekly employment; and
  • i the application of any collective agreements.

The only valid reasons for dismissal are exhaustively prescribed by the Termination of Employment Law 24/67, as amended, (the Termination of Employment Law). There is no requirement for employment contracts to contain termination provisions unless they are contracts of fixed term duration. In practice, most contracts of indefinite duration copy the provisions of Article 5 of the Termination of Employment Law, which states that the contract may be terminated for inadequate performance, non-performance of lawful instructions, criminal conduct not sanctioned by the employer, gross misconduct by the employee, and redundancy reasons.

An employment contract may be of a fixed term or indefinite duration. Employment under a fixed-term contract is considered to be automatically terminated upon the expiration of the specific term. Nevertheless, according to Article 5(d) of the Termination of Employment Law, a termination is lawfully effected at the end of the fixed period unless the Employment Court determines that the contract was for an indefinite period. Successive renewals or extensions of a fixed-term contract, as well as an overall employment period exceeding 30 months, will invariably lead the Court to a finding of a contract of indefinite duration.

Finally, there are no specific limitations in the law regarding amendments to the employment relationship. However, any unilateral change in employment terms may give rise to a claim for constructive dismissal and, therefore, it is advisable that any major changes are agreed between the employer and employee.

ii Probationary periods

Pursuant to the Termination of Employment Law, as amended, there is a fixed probationary period of 26 weeks that can be extended up to a maximum of 104 weeks by written agreement at the commencement of employment. During the probationary period the employer may dismiss the employee without cause.

iii Establishing a presence

A foreign company cannot hire employees without being officially registered within the territory of the Republic of Cyprus to satisfy social insurance and protection-of-employment considerations set out in the relevant law.3 A foreign employer may operate through a local branch or register a local company. The requirements depend on the type of the economic activity that is to be performed. For financial services, licences from the Central Bank of Cyprus or the Cyprus Securities and Exchange Commission may be necessary. If a foreign company hires employees, taxes must be deducted at source and the employer is responsible for reporting and withholding.

V RESTRICTIVE COVENANTS

During an existing employment relationship, there is an implied duty of fidelity that is the basis for the existence of a contract of employment. It has long been recognised by the Cypriot courts that the employee should offer his or her services to his or her employer in a trustworthy and faithful manner. This obligation, which stems from the duty of trust and good faith that must exist in every employment relationship, requires the employee not to act in a manner directly and substantially prejudicial to his or her employer's interests or generally in a manner that is capable of causing real or substantial harm to the employer's interests.

Under Cypriot employment law, strict and unreasonable covenants should not to compete, solicit or deal with customers after the employment ends are usually considered void, as it is considered that the employee is restrained from exercising a lawful profession, which conflicts with Article 25 of the Constitution.

If a clause is made within the limits of employment law and is reasonable in geographic and time scope, it may be enforceable.

An employer can protect confidential information through non-disclosure contracts. Employees have a continuing duty of good faith towards the confidentiality and protection of their employer's property. This duty survives the termination of employment for whatever reason. Therefore, unless anything to the contrary is provided in the employment contract, an employee (former or present) may not use the employer's intellectual property other than in the course of his or her business, or with the employer's express consent.

VI WAGES

i Working time

Generally, in Cyprus, the number of working hours for a five-day week should not exceed 48 hours per week, including overtime. However, in certain sectors (such as the hotel industry) different limitations may apply. Employees are generally entitled to a minimum of 11 continuous hours of rest per day, 24 continuous hours of rest per week and either two rest periods of 24 continuous hours each or a minimum of 48 continuous hours within every 14-day period.

Employees may opt out of the above rules as long as they freely consent. Managerial members of staff are also exempt from the statutory restrictions on hours worked.

Night workers should not, on average, exceed eight working hours per day within a period of one calendar month or within any other period specified in a collective agreement. Night workers whose work is hazardous or physically or mentally demanding should not exceed eight hours of night work in 24 hours.

ii Overtime

Overtime pay is generally not regulated by law in Cyprus and is usually a matter of private agreement between the employer and the employees. However, in certain industries in which working time is regulated by specific legislation and regulations, overtime payments may also be regulated accordingly. For example, employees in the hotel industry are entitled by law to receive overtime pay for work performed outside the prescribed daily working hours and on weekends and public holidays, at a rate of one-and-a-half or two times the normal pay.

Collective agreements may also regulate overtime pay. It is important to note that public holidays must be considered regarding the payment of overtime depending on whether there is a collective agreement or not. In the public sector (where there is a collective agreement) public holidays are considered overtime. In the private sector (if a collective agreement exists) employers may offer additional days off or, for highly paid management posts, the overtime paid may be considered part of the existing remuneration package.

Concerning the payment of overtime, it cannot be automatically considered that it is payable as employers may offer additional days off instead of overtime payments, although this is a matter of contractual agreement between the employer and the employee and with reference to each specific sector and the collective agreements that govern each sector.

VII FOREIGN WORKERS

The terms and conditions of employment of all foreign nationals must be the same as those for Cypriot nationals and this is guaranteed by the model employment contracts provided by the Ministry of Labour and Social Insurance. Foreign workers working in Cyprus are protected by Cyprus employment law.

EU nationals may work in Cyprus freely without any restrictions. However, if an EU citizen intends to stay and take up employment he or she must apply for an alien registration certificate at the local immigration branch of the police and also apply for a registration certificate. Applications must be submitted at the local immigration branch of the police within four months of entering Cyprus. Moreover, EU nationals must apply for a social insurance number upon securing employment in Cyprus. The registration certificate is issued within approximately six months of the date of application. The employee may work while his or her application is being processed.

With regard to non-EU nationals, an employment and residence permit is required prior to employment. The granting of work permits for foreign workers is governed by the Aliens and Immigration Legislation, along with the decisions of the Council of Ministers and the Ministerial Committee. It is important to note that working in Cyprus without a valid work permit is a serious criminal offence and may result in a fine or imprisonment for both the employer and employee.

There are a number of restrictions on obtaining work permits. Generally, the criteria for the approval of a work permit are the following:

  • a unavailability of suitably qualified local or EU personnel who satisfy the specific needs of the employers;
  • b saving and better utilisation of the local or EU labour force;
  • c an improvement in working conditions at the workplace;
  • d terms and conditions of employment of foreign nationals should be the same as those of Cypriots or EU citizens; and
  • e in cases where work permits are recommended for the employment of foreign nationals with special skills and knowledge which Cypriots or EU nationals do not possess, the employer shall be obliged to name a Cypriot or EU national who will be trained during the period of the foreign national's employment.

The major categories of companies for which applications are examined are local enterprises and local companies with foreign investment.

All non-EU nationals are required to apply for an entry and residence permit before travelling to Cyprus if they intend to reside or work in Cyprus. The competent authority for granting entry permits and temporary or permanent residence permits is the Civil Registry and Migration Department of the Ministry of Interior.

Any person who resides in Cyprus for more than 183 days a year is taxable in Cyprus on their worldwide income. Pension payments and tax liabilities depend to a great extent on the individual arrangements made by the person as well as any double taxation treaties that may exist between Cyprus and the originating country.

An employer is required to pay contributions to the funds (social insurance, annual holidays with pay, redundancy, industrial training and social cohesion) for each of their employees, if the employee is paid a salary.

VIII GLOBAL POLICIES

In Cyprus, internal discipline rules are not required in general, with the exception of governmental and semi-governmental bodies for which such rules are usually made into subsidiary legislation.

There is no obligation for the employees to approve or agree to the aforementioned rules unless they have a retrospective effect or change the fundamental basic terms of employment. Moreover, such rules do not have to be filed with, or approved by governmental authorities with the exception of rules governing governmental or semi-governmental bodies, which are generally approved by the House of Representatives.

If internal discipline rules exist, they must be written in a language the person who is involved can understand. There is no legal obligation for such rules to be signed by the employees. A simple notification of where the rules can be found is considered sufficient.

Finally, internal discipline rules may be incorporated into the employment contract.

As regards mandatory rules concerning discrimination, the Cypriot Constitution (Article 28) contains a general anti-discrimination provision that corresponds to a number of international conventions that the Republic of Cyprus has ratified. Age, disability and sexual orientation are not covered by the Constitution, but are covered by the specific legislation below.

In 2004, four separate anti-discrimination laws came into force implementing the two anti-discrimination EU Directives 2000/78/EC and 2000/43/EC:

  • a Law 57(I)/2004 amending the existing Disability Law;
  • b Law 58(I)/2004 on Equal Treatment in Employment and Occupation;
  • c Law 59(I)/2004 on Equal Treatment (Racial or Ethnic Origin); and
  • d Law 42(I)/2004 appointing the Ombudsman as the Equality Body.

Law 58(I)/2004 on the Equal Treatment in Employment and Occupation Law, as amended, applies to all natural and legal persons in both the private and public sectors. The sanctions that courts can impose against physical persons found to be guilty of discrimination cannot exceed €6,835.27 or imprisonment of up to six months, or both. For legal persons the maximum penalty is €11,960.21.

The provisions prohibiting discrimination on the grounds of age are included in the Combating of Racial and Some Other Forms of Discrimination (Commissioner) Law 42(I)/2004, as amended, the Equal Treatment in Employment and Occupation Law 58(I)/2004, as amended, and Law 57(I)/2004 amending the existing Disability Law.

IX TRANSLATION

Employment contracts or other documents can be written in any language that is understandable to both parties or, if the contract or document is written in a language other than the employee's native language or in a language that the employee does not understand, the provisions of the contract or document have to be orally explained to the employee.

It is generally recommended that the employer obtains the confirmation of an independent professional (e.g., a lawyer) that the terms of the contract have been appropriately explained to the employee. Moreover, it is recommended for the employer to provide the employee with an appropriately translated copy of the employment contract, the employees' handbook, any confidentiality agreements or restrictive covenant agreements and any other document or policy containing essential terms and conditions of employment or plans. Although a certified translation is not necessary, it is advisable.

In the event that any of the above-mentioned documents have not been appropriately translated or are not in a language comprehensible to the employee, the terms may not bind the two parties, as interpreted under Cypriot contract law, and, in some cases, may not be enforceable in court.

X EMPLOYEE REPRESENTATION

Workplace representation in Cyprus is carried out mainly through trade unions. According to the Cypriot Constitution4 employees have the right to join any union of their choice and even incorporate their own union with a view to protecting their collective rights. There are no employees who, by law, must be represented by one or more trade unions. In practice, workers are either ‘recruited' by union officials or apply to join unions.

Union workplace committees are elected by employees in companies with more than 10 employees, in order to deal with issues such as health and safety, work organisation, discipline and the implementation of the collective agreement. The committee also provides a link to the union structures, encouraging employees to join the union, and getting support and advice from full-time union officials when necessary.

Matters pertaining to collective bargaining, collective agreements and the settlement of disputes are regulated by the Labour Relations Code. According to the Labour Relations Code, in the event of a large-scale redundancy the employer should notify the union as soon as possible and begin consultations. In companies where collective bargaining is carried out at the company level, the workplace committee may be involved in this, although more often a full-time government official will play the key role.

The right to consultation and information of the local union committees has been strengthened by the Law 78(I)/2005 Establishing a General Framework for Informing and Consulting Employees, implementing EU Directive 2002/14/EC on information and consultation, which requires management and the existing employee representatives in the workplace (the unions) to negotiate the appropriate practical arrangements for informing and consulting employees in undertakings that employ at least 30 employees.

Trade union representatives at the workplace are elected by a meeting of the members. The number of representatives elected depends on the union and the circumstances involved. Typically, the term of office is one year.

There are specific legal protections against the dismissal of workplace trade union representatives. Discrimination on the grounds of trade union activity is unlawful. Trade union representatives have general rights to enable them to carry out their duties and in larger workplaces the union will have access to a room and limited time off. In the banks and some public utilities, the main trade union representative is completely released from normal duties.

XI DATA PROTECTION

i Requirements for registration

The Processing of Personal Data (Protection of Individuals) Law of 2001, as amended, protects employee privacy and personal data. The employer must ensure that data is processed in accordance with the law and for specific and legitimate purposes. The processed data must be relevant, appropriate and not excessive in relation to the purpose of processing.

For the data processing to be considered lawful, the employer must notify the Commissioner for Personal Data Protection in writing about the establishment and operation of a filing system or the commencement of processing. Employers are discharged from the general obligation to notify the Commissioner in certain cases.5 Furthermore, for data to be legally processed, the employee must explicitly give his or her consent, unless processing is (1) necessary for compliance with a legal obligation to which the employer is subject; (2) necessary for the performance of a contract to which the data subject is party; (3) at the employee's request; or (4) necessary to protect the vital interests of the employee.

The employer must ensure that the employee's data is kept in a form that permits identification of the employee for no longer than necessary (the determination of this period is at the Commissioner's discretion); and that the data be kept only for the fulfilment of the purposes for which it was collected and processed. After the expiry of this period, the Commissioner may, by a reasoned decision, allow the preservation of personal data for historical, scientific or statistical purposes, if he or she considers that the rights of the data subjects (employees) or third parties are not affected.

The employer is under the obligation to take the appropriate organisational and technical measures for the security of data and their protection against accidental or unlawful destruction, alteration, unauthorised dissemination or access and any other form of unlawful processing. Such measures shall ensure a level of security that is appropriate to the risks involved in the processing and the nature of the data processed.

In addition, the employer is responsible for updating and destroying personal data that has been collected and is no longer needed or that was collected unlawfully. If the Commissioner ascertains, either on his or her own initiative or following a complaint, that the processing of personal data is not in accordance with the provisions of the law, the Commissioner shall order the interruption of the collection or processing and the destruction of the personal data already collected or processed.

ii Cross-border data transfers

According to the Processing of Data (Protection of Individuals) Law of 2001 as amended, the transfer of data that has undergone processing or is intended for processing after its transmission to any country shall be permitted upon issuance of a licence by the Commissioner. The Commissioner shall issue the licence only if he or she considers that the country ensures an adequate level of protection. For this purpose, the Commissioner shall take into consideration the following factors:

  • a the nature of the data;
  • b the purposes and duration of the processing;
  • c the relevant general and special rules of law;
  • d the codes of conduct and the security measures for the protection of data;
  • e the level of protection in the countries of origin; and
  • f transmission and final destination of the data.

In accordance with the Law, data may be freely transmitted to EU Member States, EEA Member States and third countries that the European Commission has decided ensure an adequate level of protection.

iii Sensitive data

According to the Processing of Data (Protection of Individuals) Law of 2001, as amended, data concerning racial or ethnic origin, political convictions, religious or philosophical beliefs, participation in a body, association and trade union, health, sex life and sexual orientation as well as data relevant to criminal prosecutions or convictions are considered sensitive. As a result, they can be processed when one or more of the following conditions are met:

  • a the data subject has given his or her explicit consent, unless such consent has been obtained illegally or is contrary to accepted moral values, or a specific law provides that consent does not lift the prohibition;
  • b processing is necessary so that the controller may fulfil his or her obligations or carry out his or her duties in the field of employment law;
  • c processing is necessary to protect the vital interests of the data subject or of another person where the data subject is physically or legally incapable of giving his or her consent;
  • d the processing relates solely to data that is made public by the data subject or is necessary for the establishment, exercise or defence of legal claims before the courts;
  • e the processing relates to medical data and is performed by a person providing health services by profession and has a duty of confidentiality or is subject to relevant codes of conduct, on condition that the processing is necessary for the purposes of preventive medicine, medical diagnosis, the provision of care or the management of health-care services;
  • f processing is performed solely for statistical, research, scientific or historical purposes, on condition that all the necessary measures are taken for the protection of the data subjects; or
  • g processing is performed solely for journalistic purposes or in the framework of artistic expression and as long as the right to privacy and family life is not violated.
iv Background checks

Generally, there are no specific restrictions or prohibitions against background checks about the prior work experience and qualifications of a potential employee in Cyprus. Employers are free to ask relevant questions about the applicant's educational background and professional training, although questions relating to the timing of the education and training may cause age discrimination claims. Furthermore, questions relating to an employee's credit and financial background are allowed as long as they do not violate data protection laws and the right to privacy and personal life. The criminal background of a job candidate is considered ‘sensitive data'. As such, it is prohibited to gather or request such information unless exceptions apply, or when the explicit consent of the candidate is obtained. If a candidate refuses to give consent, he or she may be refused employment solely if the nature of employment is a position of trust. For criminal offences, the exceptions relate to information about convictions for dishonesty or fraud, to ensure that such candidates are not put in a position of trust. For such positions, the employer may therefore ask the candidate to provide a previous conviction record.

XII DISCONTINUING EMPLOYMENT

i Dismissal

In Cyprus, dismissals that are not justified under any of the grounds presented below are considered unlawful and give the employee a right to compensation:6

  • a unsatisfactory performance (excluding temporary incapacitation due to illness, injury and childbirth);
  • b redundancy;
  • c force majeure, act of war, civil commotion or act of God;
  • d termination at the end of a fixed period or termination when the employee reaches the normal retirement age in accordance with custom, law, collective agreement, contract, employment rules or otherwise;
  • e conduct rendering the employee subject to summary dismissal; and
  • f conduct making it clear that the relationship between the employer and employee cannot reasonably be expected to continue, commission of a serious disciplinary or criminal offence, indecent behaviour or repeated violation, or ignorance of employment rules.

Some categories of employees enjoy increased protection from dismissal. The increased protection applies to employees who participate in trade union-related activities, pregnant women and employees on sick leave.

Employees are generally protected from dismissal for any reason that does not justify dismissal under the law. An employer may never terminate employment for the following reasons:7

  • a membership of trade unions or a safety committee established under the Safety at Work Law of 1988;
  • b activity as an employees' representative;
  • c the filing in good faith of a complaint, or the participation in proceedings, against an employer involving alleged violation of laws or regulations, civil or criminal;
  • d race, colour, sex, marital status, religion, political opinion, national extraction or social origin;
  • e pregnancy or maternity; or
  • f parental leave or leave on the grounds of force majeure.

An employer is obliged to inform the Ministry of Labour regarding redundancies, but not for dismissals. The employer is also obliged to rehire redundant employees if a position becomes available up to eight months following the redundancy. More stringent notification requirements apply for collective redundancies or where a works council is established.

The most common remedy available for unlawful dismissal is damages, which in the Employment Court cannot exceed two years' wages. With regard to the remedies established by the law in Cyprus concerning unlawful dismissals, the only effective mechanism is statutory and contractual compensation, which is often insufficient. The remedy of reinstatement is theoretically available against employers employing over 19 persons, but it is very rarely ordered by Cypriot courts.

The notice period for dismissals correlates to the length of service of an employee in continuous employment and must be in writing.

Length of service

Notice period

More than 26 weeks but less than 52 weeks

1 week

More than 52 weeks but less than 104 weeks

2 weeks

More than 104 weeks but less than 156 weeks

4 weeks

More than 156 weeks but less than 208 weeks

5 weeks

More than 208 weeks but less than 260 weeks

6 weeks

More than 260 weeks but less than 312 weeks

7 weeks

312 weeks or more

8 weeks

No notification is required to be given to an employee on probation (provided that the trial period does not last longer than 104 weeks).

By amendment of the Termination of Employment Law 1967 (Law 14/67) on 25 July 2016, giving notice to an employee who is absent from work owing to incapacity for work for a period up to 12 months is prohibited for a period that commences on the first day of the absence and ends the last day of the time period, which is calculated as the period of absence plus one-quarter of the period of absence.

Furthermore, the employer has the right to pay in lieu of notice, for which the sum paid is equivalent to the applicable notice period, but there is no obligation for any severance or dismissal indemnity. Private settlement agreements between the employer and the employee can be concluded provided that such agreements do not violate the minimum amounts set by the law.

Any provision in a contract or agreement providing for the reduction of the length of the statutory notice period is void ab initio, although the parties have the right to extend the notice period by contract, collective agreement or for any reason established by law, custom or otherwise.

ii Redundancies

Redundancy compensation is calculated according to Table 4 of the Termination of Employment Law. An employee who is made redundant as part of a collective redundancy plan under the Collective Redundancy Law of 2001 has the same termination payment rights as an employee who is individually made redundant under the legislation of 1967.

Redundancy payments are calculated according to years of employment as follows:

  • a two weeks' wages for each year of service up to four years;
  • b two-and-a-half weeks' wages for each year of service from five to 10 years;
  • c three weeks' wages for each year of service from 11 to 15 years;
  • d three-and-a-half weeks' wages for each year of service from 16 to 20 years; and
  • e four weeks' wages for each year of service beyond 20 years.

The upper limit for redundancy compensation is 75.5 weeks' wages. The minimum statutory compensation for unlawful dismissal payable by the employer is also calculated in the same way. Depending on the circumstances of each case, the Court may award anything between the minimum (the redundancy amount) and the maximum (two years' wages), taking into account all the facts of the case. The Court may, inter alia, consider the age, family situation, career prospects and circumstances of termination before deciding. In the event of redundancy, the payments are made from the government redundancy fund. The Redundancy Fund was established by the Termination of Employment Law.8 It is a national fund to which employers pay contributions for the purpose of the payment of compensation upon redundancy. The Redundancy Fund is wholly financed by contributions from employers.

Collective dismissals under Cypriot law9 are dismissals for one or more reasons not related to the employees, and where the number of employees dismissed within a 30-day period is:

  • a at least 10 employees, if the establishment employs more than 20 but fewer than 100 employees;
  • b at least 10 per cent of the workforce, in cases where the establishment employs at least 100 but fewer than 300 employees; or
  • c at least 30 employees, in cases where the establishment usually employs at least 300 employees.

An employer intending to implement a collective redundancy has a statutory obligation to notify and engage in consultations with the employees' representatives as soon as possible to reach a settlement agreement.

The employer must also give notice to the Minister of Labour and Social Insurance of any proposed redundancy dismissal at least one month before the intended date of termination. Notice must be given on a standard form and include the following particulars:

  • a the reasons for any proposed collective dismissal;
  • b the number and the description of the employees it proposes to make redundant;
  • c the total number of employees and the description of employees normally employed at the establishment;
  • d the time period during which the proposed redundancies are to take place;
  • e the criteria for selecting the employees that are to be dismissed; and
  • f the calculation method of any redundancy payment, other than the redundancy payments provided by the Termination of Employment Law.

If the number of dismissals is less than the number provided in the law, the Termination of Employment Law applies. As regards notice periods, the rules of the Termination of Employment Law, as amended, apply.

XIII TRANSFER OF BUSINESS

The Law Providing for the Preservation and Safeguard of the Rights of Employees on the Transfer of Business, Facilities or Sections of Businesses, Law 104(I)/2000, as amended, applies to the transfer of a business or part of one, plus any business facilities, as a result of a legal transfer or merger. The legislation covers both public and private businesses irrespective of whether or not they have profitable economic activities and applies to employees and their representatives.

For the Law to apply, a business transfer must involve the transfer of an economic entity that retains its identity. The Law does not apply to:

  • a vessels and ships;
  • b transfers by share takeovers;
  • c transfers involving insolvent businesses; and
  • d reorganisation or redistribution of functions between public bodies.

Employees are not entitled to object to a transfer. Objecting to working for a new employer may constitute a material breach of the employment contract. If the working conditions or the contract of employment are changed to the employee's detriment (e.g., if the employee's duties radically change) this may be a breach of contract by the employer. Both the transferor and transferee must consult either the employees affected by the transfer or their representatives.

All rights and duties of the transferor stemming from the employment contract or work relationship as it exists at the date of the transfer must be transferred to the transferee. The transferee must retain the same terms that have been agreed upon in any collective agreement, in the same way as was done by the transferor, for the remainder of the term of the collective agreement and for at least one year after the transfer. The employees do not retain the rights that they had with the transferor regarding old age and disability benefits, or any rights to supplementary occupational retirement benefits except those provided by the Social Insurance Legislation (Section 4(3)(a)).

XIV OUTLOOK

In 2016, unemployment showed a decrease of 8.9 per cent in comparison to the last year, but it is still high. Employers and employees are looking forward to a better 2017 thanks to the economic recovery, as there are indications for further increase in development rates and financial growth.

Employers, however, are still very cautious to increase salaries; they are still trying to reduce costs. Unions, however, have started pressing for salary increases and reinstatement of benefits.

A revamp of the state pension system is an especially hot topic, as is there is an increased need for second pillar pension schemes.

Footnotes

1 George Z Georgiou is the managing partner and Anna Praxitelous is a lawyer at George Z Georgiou & Associates LLC.

2 Law Providing for an Employer's Obligation to Inform Employees of the Conditions Applicable to the Contract or Employment Relationship (Law 100(1)/2000), as amended.

3 Social Insurance Law 2010, as amended.

4 Cyprus Constitution, Article 21.

5 The Processing of Data (Protection of Individual) Law of 2001 as amended, Article 7(6).

6 Termination of Employment Law of 1967, as amended.

7 Termination of Employment Law of 1967, as amended, Article 6(2).

8 Termination of Employment Law 24/1967, as amended.

9 Collective Redundancies Law of 2001 (Law 28 (I)/2001), as amended.