Cyprus Compliance Hub: Employment, Payroll & Tax Guide
Key Law Terms Overview in Cyprus
Labor Law of the Republic of Cyprus
Cyprus does not have a single comprehensive Labor Law; labor protections derive from multiple statutes and EU directives.
Key Legal Provisions
Employment Contracts: Employers must provide written terms of employment under Transparent and Predictable Working Conditions Law, Law 25(I)/2023, including duties, salary, working hours, leave, and probation.
Working Hours & Rest: Organisation of Working Time Law (2002) sets maximum weekly hours (48 hours), rest periods, and overtime rules.
Leave Entitlements: Employees are entitled to annual leave, maternity/paternity leave, and other statutory leaves, governed by separate laws (e.g., Annual Paid Leave Law 8/1967, Maternity Law 100(I)/1997).
Termination & Severance: Termination of Employment Law 24(I)/1967 governs lawful termination, notice periods, and severance; unfair dismissal is prohibited.
Anti-Discrimination & Equal Treatment: Equal Treatment in Employment and Occupation Law 58(I)/2004 prohibits discrimination based on gender, age, race, religion, disability, or sexual orientation.
Disclaimer: This content is provided for general informational purposes only and does not constitute legal advice.
The Social Insurance Law
The Social Insurance Scheme covers compulsorily every person gainfully occupied in Cyprus either as an employed person or as a self-employed person. Persons working abroad in the service of Cypriot employers and persons who interrupt their compulsory insurance are allowed, under certain conditions, to be insured voluntarily. The insured persons are classified in three categories; employed persons, self-employed persons and voluntary contributors.
The Scheme is financed by contributions payable by the employers, the insured persons and the State. The rate of contribution for the employed persons as from the 1st of April 2009 is 17,9% and for the self-employed persons as from the 6th of April 2009 is 16,9% on their insurable earnings.
The Scheme provides cash benefits for marriage, maternity, sickness, unemployment, widowhood, invalidity, orphanhood, old age, death and employment injury. The Scheme provides also free medical treatment for persons receiving invalidity pension and for employed persons who sustain injuries as a result or an employment accident or an occupational disease.
Official Source: Cyprus Social Insurance Services – Legislation page (Social Insurance Law and Regulations)
Disclaimer: This content is provided for general informational purposes only and does not constitute legal advice.
General Healthcare System (GHS) Law – Compulsory Health Contributions
GHS Law 89(I)/2001 – Key Points for Employers (EOR Focus)
Mandatory Coverage:
All employees in insurable employment in Cyprus must be covered by the General Healthcare System.
Employer of Record (EOR) providers are responsible for ensuring compliance.
Employer Contribution Obligation:
Employers must pay a statutory share of GHS contributions based on employees’ insurable earnings.
Contributions are separate from, but collected alongside, social insurance contributions.
Employee Withholding:
Employers must deduct the employee portion of GHS contributions from payroll and remit to the government.
Contribution Limits & Calculation:
Contributions are calculated as a percentage of insurable earnings, subject to an annual earnings cap.
Contribution rates and caps are periodically updated by regulation.
Compliance & Penalties:
Failure to remit contributions or withhold employee amounts can lead to administrative fines and legal enforcement.
Benefits to Employees:
Payment of GHS contributions entitles employees to state healthcare services under the national system.
Official Legal References: Full text: CyLaw – Law 89(I)/2001
Disclaimer: This content is provided for general informational purposes only and does not constitute legal advice.
Income Tax Law of the Republic of Cyprus
Key Legal Provisions
Law 118(I)/2002, as amended, governs the taxation of income in Cyprus, including employment income.
PAYE Withholding: Employers are legally required to withhold income tax from employees’ remuneration and remit it to the Cyprus Tax Department.
Employment Income Taxation: All monetary and non-monetary benefits provided to employees are subject to income tax.
Tax Residency: Employees’ tax liability depends on residency status, determined by 183-day or 60-day presence rules.
Exemptions & Incentives: Certain exemptions apply (e.g., first employment exemptions, partial tax reliefs) under Articles 8(21A) and 8(23A).
Compliance: Failure to deduct or remit PAYE can result in administrative penalties and legal enforcement.
Full text of Law 118(I)/2002 (PDF): https://www.nexus.ua/images/legislation/Cyprus_Income_Tax_2002.pdf
Disclaimer: This content is provided for general informational purposes only and does not constitute legal advice.
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Regulation Updates in Cyprus
Draft amending regulation on coordination of social security systems (Regulations 883/2004 and 987/2009)
What it is: A draft amending regulation on coordination of social security systems updates EU rules on applicable legislation for posted workers and people working in multiple member states.
What it changes: It creates changes that employers must implement for social contributions and payroll compliance related to coordination of social security across posted work and multi-state employment.
Who is affected:
- Employers with posted workers or employees working in more than one member state.
What employers should do:
- Align payroll and social contributions practices with the updated coordination rules.
- Prepare to implement changes in how applicable social security legislation is determined for workers operating across borders.
Notes: Effective month: 2026-04. Manual verification recommended.
Discover the latest employment and compliance updates in Cyprus — helping you stay ahead in a changing regulatory landscape.