Cyprus Fact-File Part 6:
Individual Business Employment Issues

6.4 Cyprus Employee Dismissal Rules

The termination and dismissal of employees

The rules governing the dismissal of employees are mainly contained in the Termination of Employment Law 1967, although various other pieces of legislation, including the Collective Dismissals Law No. 2, the 1982 ILO Termination of Employment Convention, and the (voluntary) Industrial Relations Code may also be relevant, depending on the situation.

Employers seeking to terminate the contract of one of their employees need not provide said employee with any compensation if:

They have consistently failed to carry out their duties in a “reasonably efficient manner”;
They have become redundant (although a redundancy payment is likely to be due in this instance);
Their termination is due to force majeure (an ‘act of God’, or unexpected natural event or catastrophe);
Their fixed-term contract has ended, or they have reached retirement age;
They have committed gross misconduct, or consistently disregarded workplace rules.

An employee whose contract is being terminated for reasons other than those given above, and who has been employed for a minimum of 26 weeks, and hasn’t reached retirement age, is entitled to compensation, the amount of which will vary according to the salary of the employee, their age and length of service, and other factors, but which cannot exceed one year’s wages.

An employer in Cyprus is not permitted to discriminate against an employee (including dismissing them) for:

Participation in trade union activity or actions taken as a workers’ representative;
Complaints made or procedures launched against the employer in good faith regarding alleged violations of either civil or criminal law by the employer;
Pregnancy or family status;
Race, sex, marital status, religion, class, nationality, or political views.

Where an employee (under the retirement age, and employed for more than two years) is declared redundant, they can be eligible for payment from the government’s Redundancy Fund (financed by employer social insurance contributions for each employee).

Disputes relating to dismissals are normally dealt with by the Industrial Disputes Court, although the employee is also permitted to initiate civil proceedings.