Employee benefits are the extra perks employers offer their employees besides standard salaries. These benefits may be monetary or non-monetary based on the employees’ requirements and the company’s budget. These benefits include insurance (health, dental, life, etc.), retirement benefits, loans, leaves, and others.
The meticulous planning of employee benefits in Cyprus assists you in developing your company globally. A well-planned benefits and compensation package in Cyprus will aid you in enriching workplace morale, developing a reputation as a trustworthy employer, and motivating more job seekers to replenish vacancies in your company.
The employees in Cyprus are entitled to mandatory protections as agreed in their employment contracts. These benefits entail statutory minimum wage, leave entitlements, medical benefits, sickness benefits, maternity and paternity leaves, disability benefits, annual leave, working hour limits, overtime compensation, death in service, and more.
Employers should perform comprehensive market research before shortlisting employee benefits in Cyprus. The below guide streamlines the setup process of compensation and benefits policy in Cyprus and retains the employees’ motivation to work more efficiently.
Compensation Laws in Cyprus
Various compensation laws in Cyprus manage employee benefits in the country. These include:
- The Termination of Employment Law 24/1967: It includes the obligation for compensation to redundant employees who worked continuously with the same employer for a minimum of 104 weeks. The compensation amount provided to redundant employees is calculated based on the employment duration.
- The Hours of Employment Law (Cap 182): It specifies that the minimum annual leave is 24 days for employees working a 6-day week and 20 days for employees working a 5-day week.
- The Social Insurance Law 1980: It covers benefits and social security that includes sickness benefit (in cash), unemployment benefit, old age pension, employment injury benefit (in cash and in-kind), maternity benefit (in cash), invalidity benefit (in cash and in-kind), and survivors´ benefit.
- The Annual Paid Leave Law 1967: It covers compensation offered to employees based on work hours, paid leave, and weekly rest.
- The Protection of Maternity Law 1997: It specifies the amendment of maternity leave from 18 weeks to 22 weeks for the second child and up to 26 weeks for the third child (and any successive children).
- The Minimum Salaries Law: It mentions that the pay rates should be agreed upon by the employer via collective bargaining or other approaches to convey a fair living wage.
- The Equal Treatment at Work and Employment Law 2004: It specifies that all employees in Cyprus have the right to be paid equally for the equal work done. It prohibits unequal pay based on sex.
- The Health and Safety at Work Law 1996: It provides for the responsibilities and obligations of the employer and the employee. It also covers measures of protection in the context of the working environment and protective equipment.
How to Design an Employee Benefits Program for Employees in Cyprus?
It is crucial to note a few important considerations before designing a compensation package in Cyprus. They are discussed below.
Step 1: Outline your business goals and budget
Before drafting the compensation policy, outline the objectives you anticipate from the compensation structure in Cyprus. You should evaluate collective bargaining agreements or employment contracts to meet the contractual terms. Moreover, you must evaluate your budget to capitalize on employee benefits. Before preparing the benefits policy in Cyprus, you should also consider the company’s size, commercial environment, and the economic sector it works in.
Step 2: Learn employee requirements
To guarantee employee satisfaction, try to cover the optimum benefits in the employee benefits plan within the specified budget.
Your designed compensation and benefits policy in Cyprus confirms that you support your employees. You can arrange interviews or send questionnaires to determine their requirements and expectations. Consequently, the employees can assertively express their opinions in the questionnaire.
You can perform detailed research to discern the existing industry standards and the benefits your competitors offer their employees. Based on the relevant findings, you can design an all-inclusive compensation and benefits policy in Cyprus that meets the industry standards and the market competition.
Moreover, the internal survey denotes the areas that need improvements and recommends changes in the compensation and benefits policy in Cyprus. You can discard some redundant benefits and curtail company costs.
Step 3: Organize your benefits plan
After carefully learning the employees’ needs and expectations, you should conduct a gap analysis to identify the existing picture of the benefits plan. Prepare and design a flexible benefits plan that assists you in maintaining the volatile nature of business. Moreover, the flexible benefits framework assists employees in selecting necessary benefits and guides the employer on discovering optimum benefits from it.
When designing a benefits plan for worker’s compensation in Cyprus, you must cover employee contributions, organizational costs, and outsourcing requirements.
Step 4: Inform the benefits to the stakeholders and obtain feedback
This step involves expressing the advantages of the drafted benefits plan to all the employees and stakeholders. You must share the plan’s draft with them and obtain their feedback. This approach helps you implement a plan that is favorable to the workforce and the organization overall.
If you encounter any valuable feedback, you can include them in the compensation policy. If a particular benefit is superfluous, you can update or discard it as per the feedback.
Step 5: Plan research
Companies in Cyprus are focused on providing more benefits to their employees to boost their competitive advantage in the employment market. Hence, you must regularly evaluate the overall compensation structure in Cyprus, which also assists you in learning the benefits plan’s viability and efficiency.
Make sure to check for any errors before implementing the employee compensation policy in Cyprus. You should comprehensively evaluate all the benefits plan elements and implement them. Besides, you can consider several precise metrics to learn the effectiveness of the benefit plan for the employees. The list below mentions these metrics.
- Add relocation expenses
- Determine the employee’s base salary
- Ensure that the provided benefits satisfy the employee’s individual and family requirements
- Ensure that your benefits package is more lucrative than that of the competitors in your industry
- Ensure that the benefit plan facilitates learning and development
Types of Guaranteed Benefits in Cyprus
Employers offer their employees several types of employee benefits in Cyprus. The mandatory benefits are discussed below:
- The minimum monthly wage in Cyprus is 940 EUR.
Working hours and overtime
- In Cyprus, the standard work week includes up to 44 working hours over five days (Monday-Friday).
- Employees are allowed to work on a six-day week. If the employee intends to increase their working hours, they must send written permission to the employer.
- All work exceeding standard workweek hours is to be paid as overtime. The maximum number of hours permitted in a workweek is 48; it is averaged over a 4-month duration.
- The overtime compensation is controlled by collective bargaining agreements or employment contracts.
Paid time off
- The paid annual leave entitlement in Cyprus depends on the duration of the workweek.
|Number of annual paid leaves||Duration of work week|
|20 days||Five-day week|
|24 days||Six-day week|
- Employees are eligible for paid annual leave after 48 weeks of their employment.
- The employer has the right to accept or reject any leave request according to the business’s demands.
- The public holidays are valid for all employees in Cyprus, irrespective of the sector and industry they are working.
Employees in Cyprus get 14 public holidays per year, and they are listed below:
|1 Jan||New Year’s Day|
|27 Feb||Green Monday|
|25 Mar||Greek Independence Day|
|1 Apr||National Day|
|14 Apr||Good Friday|
|16 Apr||Easter Sunday|
|17 Apr||Easter Monday|
|1 May||Labour Day|
|5 Jun||Whit Monday(Pentecost)|
|15 Aug||Assumption Day|
|1 Oct||Cyprus Independence Day|
|28 Oct||Ochi Day|
|24 Dec||Christmas Eve|
|25 Dec||Christmas Day|
|26 Dec||Boxing Day|
- Employees are eligible for paid sick leave from the fourth day of their sickness.
- Social Security covers an employee’s sick leave.
- The employee should submit a medical certificate to the Social Security Administration within 48 hours of beginning the sick leave.
- Female employees in Cyprus are entitled to 18 weeks of maternity leave.
- The duration of maternity leave is 22 weeks for twins and 26 weeks for triplets.
- The maternity leave of 11 weeks is compulsory. Generally, female employees can take maternity leave two weeks before the due date and the remainder after that.
- To be eligible for maternity leave, the pregnant employee should provide a medical certificate confirming her pregnancy and the expected due date.
- Male employees in Cyprus are entitled to 2 successive weeks of paid paternity leave within 16 weeks after the child’s birth.
- It is compensated by the Social Insurance Fund at a 75.20% rate of the employees’ standard salary.
- 18 weeks of paternal leave per child (unpaid) is offered to all employees in Cyprus.
- It is applicable to all employees who have children below the age of 8.
- An employee may be entitled to additional leave types based on the employment contract or collective bargaining agreements.
- Employees willing to adopt a child under the age of 12 are eligible for up to 16 continuous weeks’ leave.
- The leave duration begins when they start taking care of the adopted child.
- In case of a death of a direct family member, employees can receive up to 5 days leave.
Employee Benefits for Expatriates
Foreign employees in Cyprus receive the same benefits as provided to local employees. Ex-pats can receive benefits like travel allowances and health insurance throughout their employment in Cyprus. A majority of employers offer these benefits. The ex-pats are also eligible for relocation, lodging expenses, and travel benefits.
The ex-pats repeatedly moved abroad to accomplish their short-term projects. Hence, businesses adopt a simple, economical alternative to enroll and compensate ex-pats through their local subsidiaries.
How are Employee Benefits Taxed in Cyprus?
Along with determining what benefits to offer, you must also know how taxes are calculated on the benefits provided to employees in Cyprus. The employee compensation package in Cyprus details many of these benefits.
The income tax rate in Cyprus ranges from 0 to 35%. Employees must make social contributions as well. Typically, the employer calculates these deductions from the employee’s salary. The amount is directly funded by the institutions managing the social security accounts.
The employee benefits in Cyprus are taxed on income derived from any business, trade, profession, vocation, or employment. It may also include dividends, pensions, rents, interest, royalties, annuities, and salaries. Commonly, all remuneration is subject to income tax, including bonuses. Although, certain exceptions to the taxation of benefits exist, and they are:
- Capital sums to approved funds
- Lump sums for pension or gratuity
Restrictions for Cyprus Benefits and Compensation
The vast majority of the benefits provided to employees in Cyprus are taxable. Thus, you should be accustomed to these benefits’ monetary value to calculate the tax amount payable by the employer perfectly. An employer should also ascertain that all tax payments are released timely and delivered to the respective authorities.
Validate that your business is integrated in Cyprus and working legally in the country before designing a benefits plan for your employees. Furthermore, companies should pay minimum wages to employees per their sectors. The benefits and compensation package in Cyprus must abide by all the labor laws managed by the government.
Supplemental Benefits for Employees in Cyprus
The following section discusses some additional benefits offered to employees in Cyprus.
Although not mandatory, it is customary for employers in Cyprus to pay their employees a 13th salary in December.
Certain employers provide a holiday fund that allows them to contribute as part of the social insurance contributions. Essentially, the holiday fund contribution is an extra 8% of the employee’s monthly gross salary funded by the employer. Subsequently, it could be available for an employee to claim from Social Insurance whenever they take leave.
Other supplemental benefits:
- Free lunch at the company canteen
- Gym memberships
- Free snacks and fruit all through the day
- Monthly corporate events like team days out for staff to partake in fun activities
- Schooling of employee’s children
- Study allowances to employees to follow a study course pertinent to the industry
- Transport allowance or company cars to compensate for work-commuting
- Extended vacation duration for employees after 3 or 4 years of employment
- Massages at the office, with either an in-house masseuse or somebody regularly visiting the office
How Multiplier Can Help with Benefits Management in Cyprus?
Establishing a business abroad and recruiting top talent may impose several challenges. Employers should obey local laws and regulations before preparing employment contracts and finalizing employee benefits to ease this process. You can simplify this process by contacting a global EOR platform like Multiplier.
Multiplier fosters compliance with Cyprus labor rules. We also help in hiring a proficient workforce. Our proficient staff can support you in effectively handling the workforce without establishing a subsidiary in the country. Therefore, you can curtail your employment expenditures and discover new markets.