The Labour and Employment Disputes Review: Cyprus
Cyprus is characterised as a mixed legal system,2 albeit a unique mixed legal system, whereby common law dominates in the field of private law, whereas continental law dominates in the field of public law. Labour law is generally classified as part of private law3 and, accordingly, is common law oriented. Employment relationships in Cyprus are governed by ordinary contract law principles and are supplemented by statutory rights and obligations where appropriate.4 Thus, labour law is closely associated with contract law. However, there are also aspects of labour law that are governed by public law, such as the constitutional safeguards for the right to strike and the freedom of workers to organise. Furthermore, the government, through the Ministry of Labour, Welfare and Social Insurance, actively participates in the mediation procedures for resolving disputes between employers and trade unions. In light of the peculiarities of labour law, specialised courts, specifically the industrial disputes tribunals (IDTs), were introduced for the adjudication of labour law disputes.5
The most typical category of employment in Cyprus is an employment contract of indeterminate or indefinite duration. During the first 26 weeks of employment under such a contract, the employee is considered to be on probation and can, subject to specific provisions in the contract of employment or special grounds, be dismissed without notice and without cause. A contract of employment is a contract and, as such, the conditions for its conclusion are governed by the provisions of the Contract Law, Chapter 149, to the extent that there are no conflicting provisions in other specific legislation. No formality is required for the conclusion of employment contracts. As far as the content of an individual employment contract is concerned, all statutory rights and obligations are generally implied into employment contracts and the parties may not waive mandatory statutory provisions by agreement. However, they may agree to terms or conditions of employment that are more favourable for the employee than those provided by statute or by existing collective agreements.
Collective agreements are an important source of labour law; however, the general rule is that collective agreements between trade unions and employers are not legally binding upon them. One of the most defining characteristics of the Cypriot corporatist model6 is its reliance on collective bargaining agreements, which involve negotiations between the parties concerned. The Industrial Relations Code (IRC), which was adopted in 1977, incorporated the main conventions of the International Labour Organisation. The IRC is essentially a soft-law document, a gentlemen's agreement that regulates the collective bargaining process, and provides a conflict resolution mechanism when employers' and employees' representatives fail to reach a mutually acceptable outcome. While a violation of the IRC does not involve any legal sanctions, deviations from it have been relatively rare. The IDTs have judicial knowledge of the IRC and matters of good industrial relations practice need not be proven before an IDT.7
Collective agreements that have not been incorporated in legislation do not, as a principle, create rights and obligations under public law.8 Accordingly, a collective agreement may not amend the rights of the employee under public law, unless it has become part of the practice of the administrative body in question.9 However, their terms may be incorporated into individual employment contracts and thus become binding on the parties thereto.10 Moreover, a collective employment agreement may not prevail over an individual employment agreement, unless the terms of the collective agreement have been incorporated, expressly or implicitly, in the individual employment agreement.11
The IRC provides that personal complaints, including complaints about dismissals, should be presented in the first instance by the employee to his or her immediate supervisor and if the complaint is not settled, or if it is of such a nature that direct discussion between the employee and his or her immediate supervisor is not considered appropriate, the employee has the right to demand that the complaint may be examined at one or more higher levels, depending on the nature of the complaint and the structure and size of the undertaking, provided that there is a real possibility of settling it. A grievance not settled at the stage of direct negotiations may be submitted for mediation to the Ministry of Labour, Welfare and Social Insurance, in which case the Ministry undertakes to deal with it within a reasonable time and in any case not later than 15 days from the date of submission. If no settlement of the dispute is achieved by the Ministry within 15 days of the date it began dealing with it, the dispute should be submitted to binding arbitration. Grievances about dismissals should be dealt with as expeditiously as possible and the time limits should be half as long as those provided for the resolution of other grievances.
The IDTs have exclusive jurisdiction to adjudicate on private industrial disputes arising by virtue of labour law legislation. Except in a case of a claim for damages for wrongful dismissal exceeding two years' emoluments (for which the district court has jurisdiction), the IDTs have exclusive jurisdiction to decide on all industrial disputes. The IDTs therefore have jurisdiction with regard to contracts of employment of both definite and indefinite duration,12 as well as part-time contracts.
The district courts, which are the general jurisdiction courts of the Republic of Cyprus, do not have jurisdiction to adjudicate disputes by virtue of specialised labour law legislation; yet they retain their general jurisdiction to adjudicate private law disputes arising out of contracts of employment on the basis of general legislation, such as the Contract Law, Chapter 149, or even the principles of common law. The district courts have jurisdiction for claimed damages in excess of the employee's emoluments for two years, which an IDT is empowered to award. In addition, the district courts have jurisdiction for all criminal prosecutions for violations of labour law legislation; the IDTs do not exercise criminal jurisdiction.
With regard to collective labour law, the two main ways of resolving disputes are mediation and arbitration. The Department of Labour Relations (Industrial Relations Service) of the Ministry of Labour, Welfare and Social Insurance is responsible for providing mediation assistance by intervening in a dispute after negotiations have reached a deadlock and the two sides (employers and trade unions) have formally requested the mediation of the Ministry. The Industrial Relations Service mediates approximately 250 to 300 such cases annually and has succeeded in resolving more than 90 per cent of cases without a strike; the low number of strikes registered in Cyprus confirms that the existing conflict resolution mechanisms enjoy a high degree of effectiveness. The mediation process is governed by the procedures of the IRC, which provides detailed procedures for dispute resolution in the private and semi-public sectors; the public sector adheres to a different set of rules. The mediation process governed by the IRC is not a mandatory procedure and is not governed by legislation; however, collective agreements between employers and their employees may expressly provide that any labour law dispute is to be subject to mediation. The aim of mediation is to assist employers and employees in reaching a mutually acceptable solution.
There are two types of industrial relations disputes that the Ministry mediates: industrial disputes about interests (concerning the conclusion of a collective agreement or the renewal of an existing one); and industrial disputes about rights that refer to the interpretation of a collective agreement (grievances). If mediation fails to produce results in disputes about interests, then the unions may go on strike or employers may lock out their employees. However, this is not an option in the case of grievances, as both parties have agreed not to proceed to strike or lockout for disputes over grievances; in these cases, the mediator shall refer the matter to binding arbitration.
In relation to arbitration, the IRC provides that, where both parties so agree, they may refer all or any of the issues of a dispute about interests to arbitration instead of mediation, at any time either before or after the submission of the dispute to the Ministry. By so doing, they both accept that the decision of the arbitration shall be binding on the parties. A dispute about grievances may be referred to arbitration instead of mediation, if the parties so wish; if a dispute about grievances has been submitted for mediation, and no settlement of the dispute by mediation has been achieved, the dispute is submitted to binding arbitration.
Types of employment disputes
The most important types of disputes relate to dismissal. If the employer dismisses, without just cause, an employee who has been continuously employed by that employer for not less than 26 weeks, the employee shall have a right to compensation calculated in accordance with the First Schedule of the Termination of Employment Law.13 However, the minimum period of continuous employment required may be extended from 26 weeks to a maximum of 104 weeks, by a written agreement made at the time the employee commences employment. The calculation of continuous employment is therefore of importance for determining whether an employee has a right to compensation; further, it remains relevant to assess the amount of the compensation to be awarded. The principles for calculating continuous employment remain the same in cases of redundancy, where the employee has a right to compensation from the Redundancy Fund if he or she had been continuously employed for at least 104 weeks.
The IDTs have a wide discretion in determining the compensation awarded; in exercising its discretion, an IDT should take into account the daily wages and other earnings of the employee, the period of employment, the employee's loss of career, the factual circumstances of the termination of employment and the employee's age. The discretion of the IDTs to award compensation does not depend upon the general contractual principles for awarding compensation, but is wider.14 The compensation shall be further calculated on the basis of the salary the employee received on the day employment was terminated.15
A termination of employment shall not provide a right to compensation, if the employer dismissed the employee for a just cause, namely where:
- the employee fails to carry out his or her work in an adequately satisfactory manner;
- the employee's post becomes redundant;
- the termination of employment is due to force majeure, warfare, insurrection, disaster or destruction of the facility due to fire not intentionally or negligently caused by the employer;
- the employment is terminated at the end of a fixed-term contract of employment, or when the employee attains the normal age of retirement on the basis of the law, custom, collective agreement, contract, employment regulations or otherwise; or
- the employee so conducts himself or herself as to render himself or herself liable to dismissal without notice.
When the employment of an employee, who was continuously employed for at least 104 weeks by the same employer, has been terminated on grounds of redundancy, the employee shall be compensated by the Redundancy Fund.16 Accordingly, redundancy can only be justified if the employee has been continuously employed by the same employer for a continuous period of at least 104 weeks. Redundancy will only be declared if it is based upon at least one of the following grounds:
- the employer has ceased, or intends to cease, to operate the business or the place (location) where the employee is employed;
- modernisation, mechanisation or any other change in the method of production or organisation;
- abolition of a specific department;
- reduction in the turnover of the business; or
- difficulties in placing products in the market, or credit difficulties, or lack of orders or raw materials.
These are the only grounds on the basis of which redundancy may be declared.
Other than dismissal cases, cases dealing with the protection of certain categories of worker are also important.
Maternity rights are safeguarded by the Protection of Maternity Law (Law 100(I)/1997), which implemented Directive 92/85/EEC. The rights under Law 100(I)/1997 are safeguarded only for mothers, not for fathers. In the event of conviction for violation of any of the provisions of Law 100(I)/1997, the employer is subject to a fine not exceeding €6,834. The IDTs are the competent courts for adjudicating disputes of a civil nature, whereas the Minister of Labour, Welfare and Social Insurance may appoint inspectors to monitor the application of Law 100(I)/1997. An employer is prohibited from terminating the employment of a woman from the time she has notified her employer of the fact that she is pregnant by producing the relevant medical certificate. The prohibition lasts for a period of three months following the expiry of maternity leave.
The Equal Treatment of Men and Women in Employment and Vocational Training Law (Law 205(I)/2002) partly harmonises Cypriot law with Directive 2006/54/EC. Law 205(I)/2002 provides for the application of the principle of equal treatment of men and women in the field of employment and, in particular, as regards access to vocational guidance, vocational education and training (as well as the terms and conditions under which they are carried out), access to employment, the terms and conditions of employment (including career development) and the terms and conditions of dismissal. There are certain exceptions in occupational activities where, by reason of the context in which they are carried out, gender constitutes a determining factor.
The Equal Pay between Men and Women for the Same Work or for Work to which Equal Value is Attributed Law (Law 177(I)/2002) partly harmonises Cypriot law with Directive 2006/54/EC. The purpose of Law 177(I)/2002 is to ensure the application of the principle of equal pay between men and women for equal work or equal value work. It applies to all employees, for all activities relating to employment. Every employer must provide equal pay to men and women, by virtue of Section 5 of Law 177(I)/2002, for the same work or for work to which equal value is attributed, irrespective of the gender of the employee. If a system of professional classification is used for the determination of pay, the system must be based on common criteria for male and female employees and must be designed in such a manner that discrimination based on gender is excluded.
The Republic of Cyprus has further enacted non-discrimination legislation in harmonisation with EU law that prohibits discrimination, such as the Equal Treatment (Racial or Ethnic Origin) Law,17 which harmonised Directive 2000/43/EC, and Law 58(I)/2004, which harmonised Directive 2000/78/EC. Law 58(I)/2004 prohibits discrimination, specifically in the spheres of employment and occupation. According to Section 3 of Law 58(I)/2004, the purpose of the Law is to set out a framework to prevent discrimination on grounds of race or ethnic origin, religion or belief, disability, age or sexual identity in the area of employment and occupation such that the principle of equal treatment might be effected. However, different treatment on grounds of nationality is not prohibited, in principle.
Year in review
The cases described in this section are considered to be the most significant in the past 12 months.
In the Iacovides case,18 the respondent submitted an application to the IDT claiming that he had been wrongfully dismissed from the position of general manager. The respondent held the position of general manager at the appellants' business on the basis of successive contracts of definite duration. Prior to the termination of the respondent's employment, all of the appellants' shares were obtained by the Republic of Cyprus. The main grounds upon which the appellants based their action to terminate the respondent's employment were the mismanagement of the company, the respondent's failure to carry out his work in an adequately satisfactory manner and, in general, the serious misconduct of his duties, which led the company to the brink of bankruptcy and to financial disaster.
The IDT held that the appellants had failed to prove their allegations with a clear, convincing and acceptable testimony. However, even if the IDT was of the opinion that any of the reasons that led to the respondent's dismissal were proven and accepted, the time that had elapsed from the day that the alleged facts had taken place until the respondent's actual dismissal was sufficient for the appellants to lose their right to dismiss the respondent, according to the proviso of Section 5(e) of the Termination of Employment Law 24/67. The decision of the IDT was appealed before the Supreme Court.
The Supreme Court noted that the IDT had not applied the test adopted by the relevant case law19 (i.e., whether the dismissal fell within the ambit of the reaction of a reasonable employer on the basis of the material available before him), bearing in mind that the burden on the employer is to prove this on the balance of probabilities. However, it was held that this was not sufficient for the appeal to succeed. The Supreme Court held that the time that had elapsed from the actual occurrence of the alleged facts until the final dismissal of the respondent should lead to the conclusion that the appellants did not have a right to dismiss the employee.20
In the Erotokritou case,21 the Supreme Court rejected the appellant's application that he had been wrongfully dismissed by the respondent company – of which Erotokritou owned 50 per cent of the share capital and was one of the two directors. It was held that her alleged coercion to relinquish her shares to the third respondent – who was an employee of the company – could not lead to a decision that there had been constructive dismissal, when taking into account the company structure of the appellant. In view of the appellant's participation to the board of directors of the defendant, which acts as a collective organ, the Supreme Court held that it was not sufficient to consider the status of the appellant as an employee of the defendant. Such a dispute should be resolved by virtue of the relevant provisions of the Companies Law Chapter 113. Consequently, the Supreme Court rejected the appeal.
In Askanis22 and Gregoriou,23 the Supreme Court reiterated the well-established principle that the assessment of factual evidence by the IDT falls within its exclusive jurisdiction and that accordingly the Supreme Court shall not intervene, since IDT decisions are subject to appeal only on the basis of legal grounds.24 However, such intervention is possible where the assessment is the result of improper legal guidance.
The Koukoutsika case dealt with the repudiation of the employment contract.25 The respondent had been employed for years by the appellants as general manager. During a meeting of the board of directors, the chairman of the board blamed him for having irrevocably exposed the appellants and suggested that the respondent should tender his resignation. The latter submitted his resignation and left. During the assessment of the evidence presented before it, the IDT found that there had been no evidence of reprehensible behaviour by the respondent and concluded that the appellants, with their behaviour and for the reasons they submitted, expressed their desire to the applicant that it was impossible to continue the employment relationship. In view of this, the IDT held that, from a legal perspective, the appellants had violated the relationship of trust and confidence the employee is reasonably entitled to have in his employer and, thus, the respondent justifiably considered that he was forced to resign.
The Supreme Court upheld the IDT judgment, pointing out that the appellants, during the aforementioned meeting of the board of directors, had irrevocably violated the implied obligation of trust and confidence that the employee is reasonably entitled to have in his employer. Furthermore, the Supreme Court accepted that the implied obligation of trust between the employee and the employer governs every employment agreement and it dictates that the parties should not behave in a manner that can shake the foundations of the employment relationship or destroy that relationship. The Supreme Court concluded that the respondent's belief that he was not desired as general director of the appellants was justified, and it was upon him to decide whether he should insist on the continuation of the employment relationship or to choose to terminate it. His choice to terminate the employment relationship amounted, under the circumstances, to constructive dismissal pursuant to Section 7(1)(2) of the Termination of Employment Law 24/67.26
Outlook and conclusions
In last year's edition , we noted that many employers had viewed the economic crisis as an opportunity to restrict the rights of employees previously established by collective agreements, and to violate their obligations towards them.27 Moreover, fear of unemployment has led many employees to accept various forms of violations of their rights. At the same time, the maintenance of industrial peace in a period of economic crisis remains a major challenge for the future of the Cypriot corporate model. Whereas the financial situation has definitely improved and the unemployment rate has been reduced significantly, with the memory of the financial crisis and the bank collapse that followed the decisions of the Eurogroup meetings in March 2013 still vivid, the Cypriot labour market is still in turmoil and now trying to get back on its feet.
1 Christina Ioannou is a legal consultant and Anna Charalambous-Katsaros is a manager–advocate at A&EC Emilianides, C Katsaros & Associates LLC. The information in this chapter was accurate as at February 2019.
2 A Emilianides, 'Cyprus: Everything Changes and Nothing Remains Still' in S Farran, et al., A Study of Mixed Legal Systems: Endangered, Entrenched or Blended (Aldershot: Ashgate, 2014), 215–240; S Symeonides, 'The Mixed Legal System of the Republic of Cyprus' (2003) 78 Tulane Law Review, 441.
3 In A Emilianides, An Introduction to the Bibliography of Cypriot Law (2nd Edition, Nicosia: Hippasus, 2017), the employment law references are subcategorised under the general heading of 'Private Law'.
4 For a more detailed analysis of labour law in Cyprus, see A Emilianides and C Ioannou, Labour Law in Cyprus (The Hague: Kluwer, 2016), P Polyviou, The Contract of Employment in Cypriot Law (Nicosia: Chrysafinis and Polyviou, 2016, in Greek) and S Yiannikourou, Cypriot Employment Law (Athens: Nomiki Vivliothiki, 2016, in Greek).
5 An industrial disputes tribunal is composed of two lay members who have knowledge of industrial relations from the view of both the employer and the employee.
6 C Ioannou, 'The Development of the Cypriot Corporatist Model, the Emergence of a Corporatist Culture and its Impact on the Process of Europeanization' (2009) 10 Cyprus and European Law Review, 700–736
7 United Hotels Ltd v. Stavrou and others  1 CLR 515 (in Greek).
8 Kontemeniotis v. CyBC  3 CLR 1027; Papadopoulos and others v. CyBC  3 CLR 1 (in Greek), Evangelou and others v. CyBC  3 CLR 1410; Angelides v. CYTA, Case 46/2011, dated 1 September 2014 (in Greek); Mesaritis and others v. TEPAK, Case 1322-1333/2011, dated 11 June 2015 (in Greek).
9 DerParthogh v. CyBC  3 CLR 635.
10 Lanitis Bros Co Ltd v. Ioannides and others  1 CLR 815.
11 Hatzikonstanti v. Golden Coast Ltd, Civ. Appeal 314/08, dated 24 January 2012 (in Greek); Loizou v. Stylson Engineering Co Ltd  1 CLR 2077 (in Greek).
12 Panayiotou v. DS Artokoulouropoieion Ltd  1 CLR 1381 (in Greek).
13 Law 24/67.
14 Louis Tourist Agency Ltd v. Elia  1 CLR 98 (in Greek).
15 Famalift Shipyard Ltd v. Pavlides and others  1 CLR 161 (in Greek).
16 See in general A Emilianides, 'Redundancy Law in Cyprus' in Van Kempen, et al., eds., Redundancy Law in Europe (The Hague: Kluwer, 2009), 29–37.
17 Law 59(I)/2004.
18 Iacovides as receiver of the company Eurocypria in Eurocypria Airlines v. Souroulla, Supreme Court of Cyprus, Civil App. 188/2012, 18 November 2018.
19 Kakofeggitou v. Cyprus Airways Ltd  1 CLR 1478.
20 Thanos Hotels Ltd v. Andreou  1 CLR 1000.
21 Erotokritou v. Elva Medical Imports Ltd, Supreme Court of Cyprus, Civil App. 289/2011, 4 April 2018.
22 Antonis Askanis Ltd v. Avgoustinou Avgousti, Supreme Court of Cyprus, Civil App. 265/2012, 2 February 2018.
23 Pollis Gregoriou Ltd v. 1. Michael Kounnafi 2. Redundancy Fund, Supreme Court of Cyprus, Civil App. 321/2012, 25 January 2018.
24 The United Automotive Dealers Ltd v. Petrou, Supreme Court of Cyprus, Civil App. 442/11, 25 October 2017; Sourailidou v. Kikis A. Demetriou Properties Ltd, Supreme Court of Cyprus, Civil App. 239/2012, 22 November 2017.
25 Sport Union of 'Nea Salamina' Famagusta v. Koukoutsika, Supreme Court of Cyprus, Civil App. 240/12, 28 November 2018.
26 See Alouet Clothing v. Athanasiou  1 CLR 626 and Louis Tourist v. Elia  1 CLR 98.
27 C Ioannou and A Charalambous-Katsaros (2018), Cyprus chapter in The Labour and Employment Disputes Review, N Robertson (editor), (London: Law Business Research, 2018): pp. 27 to 32.