Looking for an Employer of Record in Cyprus? Here’s what you need to know

If you’ve discovered suitable talent living in Cyprus, it’s important that you understand how to hire and pay them correctly. This can be a complex process due to evolving local labor laws, but it’s essential to understand this right to keep your business compliant.

Global companies often use an Employer of Record (EOR) to engage talent compliantly abroad, but local laws may not permit the use of an Employer of Record in Cyprus.

As it’s not possible to work with an EOR in Cyprus, companies can choose to use a workforce management solution like Payoneer Workforce Management. 

Find out more about Payoneer Workforce Management, or keep reading to learn about the process of engaging talent in Cyprus.

How to hire employees in Cyprus

There are three ways to engage talent in Cyprus.

1. Set up a local entity: Registering your business in Cyprus means you can employ talent directly, but this can be a time-consuming and expensive option.

2. Hire independent contractors: Freelancers and contractors are a great solution for short-term projects. You’ll need to be careful that their role doesn’t resemble an employee, though, or you could risk misclassification penalties.

3. Workforce management platform: While you can’t work with an Employer of Record, Cyprus workforce management platforms are a great way to engage local talent without needing to set up a local entity.

Payoneer Workforce Management is a streamlined option for employers looking to engage talent in Cyprus. We help you set up localized benefits as per local laws and requirements.

How to onboard employees in Cyprus

The onboarding process is essential to helping your new hire feel settled into the company, as well as ensuring you fulfil your legal responsibilities as their new employer.

Onboarding employees in Cyprus involves complying with local employment regulations and completing several administrative steps. This includes issuing employment contracts that meet Cyprus labor law requirements, registering employees with the Social Insurance Services, and arranging payroll and statutory contributions.

A structured onboarding workflow helps ensure a smooth start for every new candidate. An effective onboarding process in Cyprus typically includes the following key stages:

• Payroll and benefits setup: Register the new employee with the local Social Insurance system and enroll them in the appropriate payroll processes. Ensure all mandatory contributions, tax declarations, and benefit-related registrations are completed in accordance with national requirements.
• Device provisioning and workspace readiness: Provide the new employee with all necessary devices, software tools, and access credentials before their first working day. Ensuring their workspace, onsite or remote, is fully prepared.
• Structured first‑week orientation: Organize a comprehensive orientation during the employee’s first week. This typically covers company policies, workplace procedures, organizational culture, compliance guidelines relevant to Cyprus, and a clear overview of the responsibilities associated with the employee’s role.
• Introductions to teams and key stakeholders: Arrange initial meetings with the employee’s direct team, manager, and relevant cross-department partners. These introductions help the new employee integrate smoothly, foster early collaboration, and understand how their work connects with broader organizational goals.

Payoneer Workforce Management enables companies to compliantly engage talent across borders through its technology platform.

Pay employees in Cyprus

Employees in Cyprus are paid in euros (EUR). Typically, pay day falls on the last day of the month, and companies have to pay employees in Cyprus at least the minimum wage of EUR 979 per month for the first 6 months of employment, and EUR 1,088 per month following this.

It is also customary to pay employees in Cyprus a 13th salary payment in December. However, this is not mandatory.

Taxes

Employees in Cyprus can earn up to EUR 19,500 tax-free each year. Beyond that, income tax rates increase depending on salary. An employee earning over EUR 60,000 per year will have an income tax rate of 35%.

Social security

Employees who contribute to social security in Cyprus benefit from pensions and unemployment coverage, as well as public health insurance (General Healthcare System – GeSY or GHS). 

Although not mandatory, standard contributions are as follows:

• Employee – 2.65% of gross income
• Employer – 2.9% of the employee’s gross income

Other employer contributions are:

• Social Insurance Pension Fund – 8.8%
• Industrial Training Fund – 0.5%
• Social Cohesion Fund – 2%
• Redundancy fund – 1.20%
• Industrial training fund – 0.50%
• Employer’s Liability insurance (EL) – 2%

Our unified, all-in-one platform gives you a single dashboard to manage a global workforce.

Employment laws in Cyprus

Anyone employing workers must always comply with local laws and regulations. Here are some of the laws to be aware of when hiring employees in Cyprus.

• Working hours: Up to 48 hours per week
• Overtime hours: Permitted, but must be outlined in the employee’s contract
• Probation period: 180 days; However, this can be skipped if the employer and employee agree

Get support to stay compliant with local labor laws by using Payoneer Workforce Management’s infrastructure.

Minimum wage in Cyprus

The minimum wage in Cyprus depends on how long the employee has worked for your business. 

For the first 6 months of an employee’s contract, the legal minimum wage is EUR 979 per month. Following this, the minimum wage increases to EUR 1,088 per month.

Minimum wage laws in Cyprus may change over time, so it’s best to check these regularly to make sure your business stays compliant.

Employment contracts in Cyprus

Employment contracts in Cyprus should clearly outline the key terms and conditions of employment, including the following details:

• Hours of work
• Salary information
• Job title and duties
• Overtime pay
• Holidays
• Other benefits

Onboard talent quickly and securely with localized contracts and payroll.

Leave policy in Cyprus

In Cyprus, employers must offer leave, including vacation time, public holidays, sick leave, and more.

Vacation leave and public holidays

Employees in Cyprus are legally entitled to 20 days of vacation leave per year. If they don’t use all of their leave entitlement, they may carry these days forward for 2 years.

There are also 14 public holidays in Cyprus.

Sick leave

In Cyprus, sick leave has no bounds. Moreover, if an employee takes sick leave for more than 3 consecutive days, they may claim benefits from the social security from day 4.

Parental leave

New mothers are entitled to 22 to 26 weeks of paid maternity leave in Cyprus. New fathers are entitled to 2 weeks of paid paternity leave.

Cyprus labor laws also entitle parents to 18 weeks of childcare leave, capped at 5 weeks per year.

Other leave

Employees in Cyprus are entitled to wedding leave and compassionate leave, as per employer policy.

Work permit in Cyprus

The rules for acquiring a work permit in Cyprus differ based on the employee’s country of origin. 

Citizens of EU Member States, the European Free Trade Area (EEA), or Switzerland may work and live in Cyprus without a visa. However, other foreign nationals will need to obtain a work permit to be employed in Cyprus.

The employer must apply for this permit on the employee’s behalf and typically prove that neither a Cypriot nor an EU national can fill the role instead. Further details can be found on the government website.

Background check in Cyprus

Background checks can be a useful way to verify that your prospective employee is who they say they are.

Background checks in Cyprus may include checks on employment, education, or criminal history, or even checks on the person’s social media presence. 

You will likely need consent from the prospective employee, and consult local regulations before running any background checks in Cyprus.

Employment termination in Cyprus

Employers in Cyprus are able to terminate an employment contract, but this must be based on valid grounds. Termination without a valid reason may be considered unfair dismissal, and this can lead to significant legal consequences for the employer.

Employment terminations are possible in the following scenarios:

• Employee resignation
• Mutual agreement between the employee and the employer
• Termination during probationary period
• Termination by the employer due to misconduct, performance issues, absence without leave, etc

Termination notice

If you wish to terminate the contract of an employee who is still in their probation period, no notice is required. 

After they have passed their probation, the legal notice period increases with the length of employment:

Severance pay

If you decide to terminate someone’s employment, it’s important to be aware of what severance pay they may be owed. 

Severance pay in Cyprus varies based on the length of employment:

Company registration in Cyprus

If you are looking to build a significant business presence in Cyprus, you may be considering company registration. To do this, you need to understand the business structures available to you and the associated legal obligations. Detailed steps on how to do this can be found on the relevant government website.

However, if you’re looking for an easier and more affordable way to engage talent in Cyprus, consider using a workforce management platform. Payoneer Workforce Management enables compliant onboarding and engagement of talent in 160+ countries without having to set up a legal entity.

PEO in Cyprus

A PEO is designed to help you with HR and admin tasks for employees you already employ through your local entity.

While some countries allow the use of EORs, in Cyprus, companies should use compliant workforce management solutions. These platforms help manage HR and compliance processes for companies without a local entity. This is invaluable for international companies seeking global talent.

Explore Payoneer Workforce Management services in Cyprus

Working with a partner like Payoneer Workforce Management helps support global operations and access local talent. 

Our unified platform offers support with:

• Onboarding
• Payroll & Taxes
• Local compliance
• Benefits administration
• Timesheets and more

Book a demo to find out more.

FAQs

1) Are EORs legal in Cyprus?

Cyprus may not permit employers to work with an Employer of Record. Cyprus employers can instead use a workforce management platform like Payoneer Workforce Management.

Payoneer Workforce Management enables companies to compliantly engage talent across borders through its technology platform.

2) How much does it cost to hire Cypriot talent?

The cost to engage talent in Cyprus will depend on the employee’s salary. Typically, the cost to engage an employee on an annual salary of USD 60,000 is approximately 17.40%.

Visit our cost calculator tool for an employment cost breakdown.

3) Why hire Cypriot talent through a workforce management platform?

For instance, Payoneer Workforce Management allows you to onboard and pay talent across the globe in 70+ currencies. We offer a transparent pricing structure. Get in touch for more details.