Employer of Record in Cyprus

Hiring independent contractors has boomed in popularity because of the cost savings and flexibility they offer. It can be a great option if you require niche skills or short-term project support. Contractors allow businesses to access specialized skills quickly, without the time and cost of setting up a local entity.

However, it’s important to know the limits of this model: contractors are not a substitute for full-time employees. Relying on them for ongoing, long-term roles can create serious compliance risks, including employee misclassification, which can lead to fines, back taxes, and reputational damage.

Playroll’s contractor management solutions make it simple to compliantly engage, onboard, and pay contractors around the world. We provide clear visibility into agreements, streamline payments, and reduce compliance risks – so you can focus on getting the work done. And when you’re ready to take the next step, we can help seamlessly convert contractors into full-time employees through our global Employer of Record service.

Businesses can only operate smoothly in Cyprus if they comply with local labor laws including drafting compliant employment contract agreements and meeting taxation and payroll obligations. Learn more about the employment laws and regulations in Cyprus below, to avoid any compliance issues.

Employment Contract Requirements

In Cyprus, the Labour Law does not require employment contracts to be in written form. However it is compulsory for employees to receive a written statement detailing their obligations, encompassing all aspects of the job. The key components included in the contract include:

• Registered details of the company
• Commencement date and duration of employment
• Job role and workplace specifics
• Compensation and benefits

Onboarding Process

We can help you get a new employee started in Cyprus quickly, with a minimum onboarding time of just 1-2 working days. The timeline starts once the employee submits all required information onto the Playroll platform and completes any necessary local authority registrations. For non-nationals, the Right to Work assessment (if applicable) may add up to three extra days. Additional time may be needed for follow-ups on this assessment. Please note, payroll cut-off dates can impact the actual start date. Playroll's payroll cut-off date is the 10th of each month unless otherwise specified.

Probation Period in Cyprus

The maximum probation period in Cyprus is 6 months. The duration of the notice period depends on the employee's continuous length of service.

The working hours in Cyprus differ across various employment sectors and are subject to collective agreements, with standard working hours set at 40 hours weekly while allowing flexibility up to 48 hours including overtime when necessary. A minimum meal interval of 30 minutes must be observed by employees who work more than 6 hours in a day. In typical working hours, Monday through Friday, the hours are 8:00 AM to 5:00 PM.

In Cyprus, overtime is defined as any work performed beyond the standard 40-hour workweek or 8-hour workday. For overtime worked on regular weekdays, employees must receive at least 1.5 times their normal hourly rate (time-and-a-half). This increases to double time (twice the normal rate) for work performed on Sundays and public holidays.

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Global expansion shouldn't mean losing time to paperwork or dealing with complicated, country-specific HR systems. An Employer of Record helps you keep your focus on talent by handling the operational side of employment in Cyprus. That includes onboarding, contract management, payroll processing, and statutory compliance, all aligned with local laws and best practices. The EOR guarantees that employees are legally employed and properly supported from day one.

This streamlined setup allows you to prioritize recruiting the best people and integrating them into your company culture. Your team stays lean, and you avoid getting caught up in the details of local processes or shifting regulations. For founders, global hiring managers, or HR teams working across borders, an EOR multiplies your impact, reducing admin time, preventing errors, and helping ensure that new hires have a smooth experience from the get-go.

Managing payroll in Cyprus requires careful attention to several mandatory contributions and tax obligations. Employers must handle Social Insurance (8.3%), GESY (2.9%), Redundancy/Severance Fund (1.2%), Industrial Training Fund (0.5%), and Social Cohesion Fund (2%) contributions, totaling approximately 14.9% on top of employee salaries. Monthly submissions are required for all contributions, typically due by the end of the following month.

Cyprus's progressive income tax system exempts the first €19,500 of annual income, with rates increasing for higher income brackets. Compliance with these regulations is essential to avoid penalties and legal complications.

Using payroll management software like Playroll can help employers consolidate payroll data, automate calculations, and ensure timely compliance with all Cyprus tax and contribution requirements, reducing the administrative burden and minimizing the risk of costly errors.

Hiring in Cyprus means taking on local payroll obligations, which often include unique tax rates, contribution rules, and strict documentation. If you're not familiar with the system, or don't have a local entity, it’s easy to make mistakes. That’s where an Employer of Record ccomes in. The EOR manages payroll for your team on your behalf, ensuring every process is accurate, timely, and legally compliant.

Key Ways an EOR Supports Payroll in Cyprus:

• Full Legal Compliance: Ensures all payments, deductions, and filings meet country-specific requirements.
• Payroll Setup & Processing: Handles salary calculations, tax withholdings, and local reporting obligations.
• Statutory Benefit Contributions: Pays into required social programs and manages country-mandated benefits.
• Employee Documentation: Generates compliant contracts and manages hiring and termination paperwork.
• Local Currency Payouts: Delivers salaries in local currency, avoiding delays or exchange rate issues for employees.

In Cyprus, work permits and visas are essential for employers hiring foreign workers. The process includes submitting applications, meeting specific requirements, and paying fees. Key visa types include the Short Stay Visa, Multiple Entry Visa, Long Stay Visa, EU Blue Card, and Digital Nomad Visa. Employers must ensure compliance with Cypriot labor laws and immigration regulations while sponsoring foreign employees.

Mandatory Leave Entitlement in Cyprus

The annual leave entitlement in Cyprus is 20 days for a full time worker. These can include public holidays on top of that or within those days, which would otherwise be unpaid.

Public Holidays In Cyprus

In Cyprus, public holidays that happen to fall on the weekend are typically not carried over or observed.

Paid Time Off in Cyprus

Employees on a five-day workweek are entitled to 20 working days of leave, while those on a six-day workweek are entitled to 24 working days of leave. These entitlements apply to employees who have worked for their employer for at least 48 weeks during the calendar year. The employment contract or collective agreement may stipulate additional days of annual leave with pay.

Maternity Leave In Cyprus

Under Cuba’s new Decree-Law 84, employers are now required to support an extended maternity and paternity leave period of up to 15 months following the birth of a child. This includes ensuring that female employees receive 60% of their average monthly salary during standard maternity leave, calculated based on earnings from the previous 12 months. In cases of high-risk pregnancies, employers must provide full salary compensation. They are also obligated to honor medical certifications that entitle pregnant women and mothers of sick children to both financial and social benefits. Additionally, employers must accommodate caregiving responsibilities taken on by other family members, as permitted by existing regulations, and facilitate access to medical care throughout pregnancy, breastfeeding, and early child-rearing. These responsibilities reflect Cuba’s broader commitment to family welfare and demographic sustainability.

Paternity Leave In Cyprus

Employees with 180 consecutive days of work for the same employer are eligible for 14 days of paid paternity leave. This leave must be taken at a time between the birth of the child and 2 weeks after the end of the maternity leave. During this period, the employee will receive 72% of their salary, with Social Security being responsible for providing this pay.

Sick Leave In Cyprus

Employees are eligible for paid sick leave for a maximum of 156 days. The payment rates and responsible payers vary based on the length of the sick leave:

1. 0 to 3 days: 100% of the base salary (paid by the Employer)
2. 4 to 156 days: 60% of the base salary (paid by Social Security)

Sickness benefit cannot exceed 156 days.

Parental Leave In Cyprus

Parents employed continuously with the same employer for six months or more are entitled to unpaid parental leave for a duration of 18 weeks per child, applicable to children up to the age of eight.

Bereavement Leave

In the event of the death of a direct family member, employees are eligible for: 5 days of paid leave for the death of a child or spouse, 3 days for the death of a parent or sibling or 1 day for the death of another family member.

Military Leave

Employees called to perform military service are covered by assimilated insurance, provided by the Social Insurance Services.

When hiring across multiple countries, maintaining consistency in how you deliver employee benefits quickly gets tricky. Each country, including Cyprus, has its own legal rules, cultural norms, and contribution systems. An Employer of Record helps you strike the right balance between global structure and local compliance. They take over the complexity of delivering benefits that are aligned with Cyprus’s legal requirements and competitive with local market expectations.

From ensuring statutory benefits are in place to managing local onboarding timelines and enrollment systems, the EOR provides a seamless experience for both employer and employee. This makes it easier to grow your team across borders without reinventing your benefits process in each new location. You stay in control of your overall benefits strategy, while the EOR takes care of executing it in a way that works legally and culturally in Cyprus. It’s a smarter way to scale benefits globally without losing local relevance.

Termination Process in Cyprus

Employment contracts may be terminated based on valid reasons. Termination without notice may also occur in situations involving a breach of the employment contract. The reasons for termination include but not limited to:

• Employee underperformance
• Gross misconduct
• Long-term illness
• Redundancy or other business-related reasons
• Incapacity to perform job duties
• Mutually agreed exit

Notice Period in Cyprus

Notice periods are contingent on the duration of an employee's tenure with the employer. The breakdown is as follows:

• 26 - 51 weeks of employment: 1 week's notice
• 52 - 103 weeks of employment: 2 weeks' notice
• 104 - 155 weeks of employment: 4 weeks' notice
• 156 - 207 weeks of employment: 5 weeks' notice
• 208 - 259 weeks of employment: 6 weeks' notice
• 260 - 311 weeks of employment: 7 weeks' notice
• 312 weeks and above: 8 weeks' notice

Severance in Cyprus

Severance pay entitlements is determined by the employee's duration of service with the employing organization. The scale is structured as follows:

• 2 weeks' pay for each year: Employment for up to 4 years
• 2.5 weeks' pay for each year: Employment for 5 to 10 years
• 3 weeks' pay for each year: Employment for 11 to 15 years
• 3.5 weeks' pay for each year: Employment for 16 to 20 years
• 4 weeks' pay for each year: Employment for over 20 years