Hiring Employees in Cyprus: A Guide to Labour Law
For businesses operating in Cyprus, understanding the local labour law is a crucial part of legal compliance and a successful operation. The Cypriot labour market is a mix of a highly skilled local workforce and a growing number of international professionals. Navigating the rules and regulations, from employment contracts to payroll taxes, is essential for any employer. This guide provides a detailed look at hiring employees in Cyprus, covering the key aspects of labour law, employment contracts, and the compliance requirements for employers in 2025. For a broader overview of the local business environment, you can read our guide on The AI-Powered Marketer: Business Adviser.
1. Employment Contracts and Legal Requirements
The employment relationship in Cyprus is governed by a number of laws, with the most important being the Termination of Employment Law and the Minimum Wages Law. The laws are designed to protect the rights of employees and to ensure a fair and safe working environment. For any employee, an employment contract is a legal requirement. You can find more information about this in our FAQ Guides section.
Employment Contracts
An employment contract in Cyprus can be written or verbal, but it is highly recommended to have a written contract that clearly states all the terms and conditions of employment. The contract should include the following information:
- Job Description: A clear description of the employee's duties and responsibilities.
- Salary and Benefits: The employee's salary, benefits, and a number of other allowances.
- Working Hours: The employee's working hours, a number of holidays, and a number of other allowances.
- Termination Clause: A clear clause that states the terms for the termination of the contract.
The contract is a crucial part of the employment relationship, and it is best to have it reviewed by a lawyer to ensure that all the terms are legally compliant. You can find a professional to help with this in our directory of Professional Corporate Services.
Minimum Wages and Working Hours
Cyprus has a minimum wage that is set annually by the government. The minimum wage is applicable to all employees, regardless of their position or their industry. The working hours are also regulated by law, with a maximum of 48 hours per week, including overtime. The law also provides a number of paid holidays, sick leave, and maternity leave. For more on the local business environment, you can check out our guide on Cyprus Company Registration.
2. Payroll Taxes and Social Insurance
For employers, understanding payroll taxes and social insurance contributions is a crucial part of legal compliance and financial planning. The Cypriot system is designed to be straightforward, but it requires a clear understanding of the various contributions from both the employer and the employee. You can find a suitable accounting or auditing firm in our business directory.
Social Insurance Contributions
Social Insurance is a mandatory contribution for all employees and employers in Cyprus. It is a key part of the social welfare system and provides benefits such as pensions, unemployment benefits, and sickness benefits. The contributions are calculated as a percentage of the employee's gross monthly salary. The contributions for 2025 are:
- Employee Contribution: **8.3%** of gross salary.
- Employer Contribution: **8.3%** of gross salary.
The employer is responsible for deducting the correct amount of social insurance from the employee's salary and remitting it to the Social Insurance Services on a monthly basis. You can also explore our business directory of all businesses.
General Healthcare System (GHS) Contributions
The General Healthcare System (GHS), or GeSY, is a new healthcare system in Cyprus that provides universal access to healthcare services. The system is funded by contributions from both employees and employers. The contributions for 2025 are:
- Employee Contribution: **2.65%** of gross salary.
- Employer Contribution: **2.90%** of gross salary.
The GHS contributions are a key part of the social welfare system and are mandatory for all employees and employers. This is a very important part of the legal and financial requirements and should be handled by a professional. You can also explore our guide on Payroll Taxes in Cyprus for a deeper dive.
3. Compliance and Reporting
Employers in Cyprus have a number of compliance and reporting obligations that they must adhere to. These are designed to ensure the transparency and integrity of the business environment in Cyprus. For more on the local business environment, you can check out our guide on Cyprus Company Formation Requirements for Foreigners. You can also get more help on Cyprus Headquartering: Incentives for Global Firms in our guide.
- Registration: An employer must register with the Social Insurance Services, the Tax Department, and the Ministry of Labour.
- Monthly Remittance: An employer must deduct the correct amount of social insurance, GHS, and income tax from an employee's salary and remit it to the relevant authorities on a monthly basis.
- Annual Reporting: An employer must submit an annual tax return for each employee and for the company. These reports are a crucial part of the legal and financial requirements and should be handled by a professional.
