Problems we solve

Services

Solutions

Why CXC

Resources

Connect

Global Hiring Contact us

OUTLINE

Hiring in Cyprus

Background checks in Cyprus

Hiring options in Cyprus

Language requirements in Cyprus

Corporate presence requirements and payroll setup in Cyprus

Easily hire employees in Cyprus with our EoR solution

Employer of record in Cyprus

Hiring employees in Cyprus typically means setting up a local legal entity, which can be both expensive and time-consuming. It may also not be feasible for small companies or those seeking a quick and flexible hiring solution. One alternative is to engage workers as independent contractors. However, this carries the risk of misclassification, which could lead to legal and financial complications. There is another solution: engaging employees through an employer of record (EoR).

What is an employer of record (EoR)?

An employer of record (EoR) is a third-party service provider that assumes the legal responsibilities of employing workers on behalf of another company. This includes managing tasks such as payroll processing, tax withholding, benefits administration, and ensuring compliance with local labour laws. While the EoR handles these formalities, the client company retains control over the day-to-day management and direction of the employees’ work.

Working with an employer of record in Cyprus

Using an EoR in Cyprus is a legal and efficient way for foreign companies to employ workers without establishing a local subsidiary. The EoR acts as the official employer for tax and legal purposes, allowing businesses to expand their operations into the Cypriot market swiftly and compliantly. When you work with an employer of record in Cyprus, they will handle everything from compliance assurance and risk mitigation to benefits administration, payroll management, and other HR services on your behalf — leaving you free to focus on your business.

Hiring in Cyprus without an employer of record

Whether or not you choose to work with an employer of record in Cyprus, it’s important for employers to understand the labour landscape, regulations, and cultural norms of a country before hiring local talent. In this section, we will cover everything you need to know to hire compliantly in Cyprus, including information on employment background checks, language requirements, corporate presence requirements, and the different hiring options available to Cypriot employers.

Hiring in Cyprus

Cyprus is a diverse country in the Anatolian Peninsula, occupying a unique strategic location at the crossroads of Europe, Asia, and Africa. It also offers a stable economy, strong English language proficiency and several business-friendly laws that make it a popular destination for international expansion.

However, employers hiring in Cyprus must have a thorough understanding of the local labour laws, as well as the cultural norms that apply to work in the country. Here are some of the basics you’ll need to know to hire in Cyprus.

Labour laws and regulations in Cyprus

Cyprus employment law is a blend of common law principles and statutory regulations, ensuring fair treatment for employees while accommodating the dynamics of the employer-employee relationship. The legal framework encompasses various aspects, including hiring practices, working conditions, and employee rights. Key employment legislation in Cyprus includes:

Termination of Employment Law (Law 14/67).
Social Insurance Law (Law 59/80).
Annual Paid Leave Law (Law 8/67).
Protection of Maternity Law (Law 100(I)/1997).
Health and Safety at Work Law (Law 89(I)/1996).
Equal Treatment at Work and Employment Law (Law 58(I)/2004).

Social security and tax compliance in Cyprus

In Cyprus, both employers and employees are required to contribute to the national social insurance system, which funds benefits such as pensions, unemployment benefits, maternity leave, sickness allowances, and healthcare under the General Health System (GeSY). Employees also pay income tax on the money they earn in Cyprus (and worldwide income if they are tax residents in Cyprus). Employers must withhold both taxes and social security contributions from employees’ wages and remit them to the relevant authorities.

Collective bargaining agreements in Cyprus

Collective bargaining is a fundamental aspect of Cyprus’ industrial relations system, characterised by tripartite cooperation between employers, employees, and the government. Collective agreements are the primary method through which terms and conditions of employment are determined. They often cover areas such as wages, working hours, and benefits. Employers hiring in Cyprus should verify whether any collective bargaining agreements apply to their employees to ensure their contracts and practices are compliant.

Employee benefits in Cyprus

Employees in Cyprus are entitled to a range of mandatory benefits, including statutory paid leave, social insurance contributions, and healthcare coverage under the General Health System (GeSY). The Equal Treatment at Work and Employment Law 2004 ensures that all employees receive equal pay for equal work, prohibiting discrimination based on sex. Additionally, the Health and Safety at Work Law 1996 outlines the responsibilities of both employers and employees to maintain a safe working environment.

Background checks in Cyprus

Employers can conduct background checks in Cyprus to verify information gathered during the recruitment process and confirm a candidate’s suitability for the role. However, there are some limitations that employers should be aware of. Read on for everything you need to know about employment background checks in Cyprus.

Required background checks in Cyprus

Employers in Cyprus are required to verify the immigration status of each employee they engage. This means checking that they have the relevant permit to work in the country if they are not a Cypriot or EU national.

Other types of background checks might be mandatory depending on the nature of the work. For example, employees may be required to undergo criminal records checks for positions involving working with vulnerable populations, and credit checks for roles that come with significant financial responsibility.

Other permissible background checks in Cyprus

The following other types of background checks are permissible and fairly common in Cyprus:

Employment verification: Confirming previous employment history to assess experience and reliability.
Education verification: Validating academic qualifications relevant to the job role.
Reference checks: Gathering insights into a candidate’s work ethic and performance from previous employers.
Criminal record checks: Assessing any past criminal convictions, particularly for roles requiring high trust. These checks should only be performed in Cyprus when directly relevant to the job position.
Credit checks: Evaluating financial responsibility for positions involving financial decision-making.
Medical examinations: Determining physical and mental fitness for specific job requirements. These are typically only permissible when necessary for the performance of a role.
Social media screening: Reviewing public online presence to assess professionalism and cultural fit. To avoid breaching privacy laws, employers should limit their search to factors that are relevant to the role in question.

Limitations on background checks in Cyprus

Employment background checks in Cyprus are legal and common, but employers must ensure they comply with the General Data Protection Regulation (GDPR) and other local data protection laws. Generally speaking, this means ensuring background checks are relevant and proportional to the role in question. Employers should also obtain the candidate’s explicit consent before carrying out any sort of background check.

Hiring options in Cyprus

When considering hiring in Cyprus, it’s essential to determine the most suitable engagement structure for your business needs. Depending on your requirements, you may opt to hire employees, engage independent contractors, or utilise the services of temporary labour agencies. Each option has distinct legal and operational implications. Below, we explore these hiring methods in detail to help you make an informed decision.

Main hiring options in Cyprus

Here are the main engagement structures employers have to choose from in Cyprus:

Employee: Employees are individuals linked to their employer through an employment contract. In Cyprus, employees can be engaged on either a fixed-term or indefinite basis and may work full-time or part-time hours. While employment contracts can be verbal, it is advisable to have a written agreement to avoid misunderstandings.
Independent contractor: Independent contractors in Cyprus are individuals engaged to provide services to businesses without being considered employees. They are responsible for their own taxes, social insurance contributions, and other statutory obligations. These professionals typically have control over their work schedule and are not subject to employment protection laws such as those governing notice periods, termination procedures, or paid leave.
Agency worker: Agency workers in Cyprus are employed by a licensed temporary employment agency but work under the supervision and direction of client companies. This arrangement allows employers to meet short-term staffing needs while ensuring compliance with labour regulations. Temporary agency work is regulated by the Temporary Agency Work Law, which aims to ensure equal treatment of agency workers in terms of basic working and employment conditions.

Employee misclassification risks in Cyprus

As in many countries, independent contractors in Cyprus are not entitled to the same employment rights and protections as permanent employees. Employers are also not obliged to collect and remit taxes and social security contributions on their wages. For these two reasons, the Cypriot government takes the issue of employee misclassification very seriously.

Employers in Cyprus must ensure that each of the workers they engage is correctly classified according to local labour law. This is not just a question of the contract or agreement that exists, but the actual nature of the working relationship. For example, courts may take into account the following factors:

Degree of control: Whether the employer has the right to direct and control the work performed, including the manner and methods used.
Integration into the business: Whether the worker is integrated into the employer’s business operations or operates independently.
Economic dependency: Whether the worker depends on the employer for a significant portion of their income.
Provision of tools and equipment: Whether the worker provides their own tools and equipment or relies on the employer’s resources.
Right to substitution: Whether the worker has the freedom to delegate tasks to others.

Misclassifying an employee as an independent contractor in Cyprus can lead to significant penalties, including back taxes, social contributions, and potential claims related to employment rights.

Language requirements in Cyprus

There are two official languages in Cyprus: Greek and Turkish. The island is divided into two sections, with Greek Cypriots living predominantly in the south and Cypriot Turks primarily in the north. Minority languages include Russian, Romanian, Bulgarian, and Arabic.

Statutory language requirements for employment documents in Cyprus.

There are no statutory requirements in Cyprus mandating employment documents to be drafted in either Greek or Turkish. Employers have the flexibility to prepare contracts and other employment-related documents in any language, provided that all parties involved can understand them.

English language in Cyprus

English holds a significant presence in Cyprus, primarily due to historical ties with the United Kingdom and the country’s status as a popular tourist destination. These days, English is also widely used in business and legal contexts. Approximately 73% of the population possesses conversational proficiency in English, and the country is ranked at #29 out of 116 countries (and #22 out of 35 countries in Europe) according to the EF English Proficiency Index 2024.

Language requirements for visas, work and residence permits in Cyprus

In general, applicants for work permits in Cyprus are not required to show proficiency in the local language in order to obtain a permit. However, as of 2024, applicants for the long-term residence permit must pass exams in the Greek language at the A2 level, as well as demonstrating knowledge of local culture. Applicants for Cypriot citizenship must prove that they have at least B1-level proficiency in Greek.

Corporate presence requirements and payroll setup in Cyprus

Foreign companies are technically able to hire employees in Cyprus, subject to certain regulatory requirements. There are also corporate tax planning considerations that must be kept in mind. In some cases, it may be necessary to open a local branch or entity in order to compliantly engage employees. Read on to learn more about the process of payroll setup in Cyprus.

Steps to set up payroll in Cyprus

Businesses registered in Cyprus must follow the steps below in order to begin paying employees. There may be additional requirements for foreign companies.

Register with the relevant authorities: Employers must register with the Tax Department and the Social Insurance Services to obtain the necessary identification numbers to withhold and remit employee payroll deductions.
Declare each new hire: Companies in Cyprus must register each new employee with the Social Insurance Services before they start work.
Calculate and deduct contributions: Employers are responsible for calculating and deducting employee contributions for social insurance, the national health system, and other applicable taxes.
Maintain accurate records: Employers must keep detailed records of payroll transactions and employee information for compliance and auditing purposes.

Do you need to open a local bank account to run payroll in Cyprus?

It is not strictly necessary to open a local bank account to run payroll in Cyprus. Employers can process payroll and make payments to employees, tax authorities, and social security bodies using a foreign bank account. However, some payroll services in Cyprus require local bank accounts. Maintaining a corporate bank account in Cyprus can also serve as evidence of your company’s operational presence in the country.

Using an employer of record (EoR) as an alternative to setting up payroll in Cyprus

Companies that want to hire in Cyprus without the hassle of setting up payroll can do so by working with an employer of record (EoR). When you work with an EoR in Cyprus, they’ll take on the responsibility of ensuring compliant, accurate payroll for your workers. They’ll also handle other HR tasks such as benefits administration, onboarding, absence management, and more. Hiring employees through an EoR in Cyprus helps you avoid the need to incorporate a local entity, which means it can be a faster, more streamlined way to access local talent.

Easily hire employees in Cyprus with our EoR solution

Hiring employees in Cyprus usually means setting up a legal entity, which can be costly and time-consuming. Employers can avoid this hassle by working with an Employer of Record (EoR), like CXC.

Through our EoR solution, you can confidently hire employees in Cyprus, without worrying about compliance issues. We’ll handle everything from payroll to benefits to employment contracts on your behalf — so all you have to think about is finding the right person for the job.

Read about EoR services

Compliantly hire workers anywhere with CXC

With our EoR solution, you can engage workers anywhere in the world, without putting your business at risk. No more worrying about local labour laws, tax legislation or payroll customs — we’ve got you covered.

Learn more

DISCLAIMER: The information contained on this website is provided for general informational purposes only and should not be construed as legal, tax, or other professional advice on any subject matter. While we endeavor to ensure that the content is accurate and up to date, we make no warranties or representations of any kind regarding the completeness, accuracy, reliability, suitability, or availability of the information contained herein. The content on this site is not intended to be a substitute for professional advice. Users should not act or refrain from acting based on any information on this website without seeking the appropriate legal, tax, or other professional advice tailored to their specific circumstances from qualified professionals. We expressly disclaim all liability in respect to actions taken or not taken based on any or all of the contents of this website. Use of the information on this site does not create an attorney-client, tax advisor-client, or any other professional-client relationship between the user and the website or its authors.

BLOG

Helping businesess to compliantly engage talent since 1992