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Termination and Severance Policies

Learn about the legal processes for employee termination and severance in Cyprus

Notice period

In Cyprus, the Termination of Employment Law (Chapter 126) stipulates minimum notice periods for employers intending to terminate an employee's contract. The duration of the notice period is dependent on the employee's length of service.

Notice Period Based on Service Length

The law sets out a minimum notice period, although a longer period may be provided by a collective agreement or employment contract. The minimum notice periods are as follows:

  • Less than 26 weeks: No notice required.
  • 26 to 51 weeks: 1 week's notice.
  • 52 to 103 weeks: 2 weeks' notice.
  • 104 to 155 weeks: 4 weeks' notice.
  • 156 to 207 weeks: 5 weeks' notice.
  • 208 to 259 weeks: 6 weeks' notice.
  • 260 to 311 weeks: 7 weeks' notice.
  • 312 weeks or more: 8 weeks' notice.

For instance, an employee who has been with a company for 3 years (156 weeks) would be entitled to a minimum of 5 weeks' notice before termination.

Probationary Period

The law also recognizes a probationary period, during which no notice may be required. However, there are certain restrictions:

  • The probationary period cannot exceed 6 months.
  • If the probationary period is longer than 26 weeks, a written agreement between the employer and employee outlining the extended period is necessary.

Severance pay

In Cyprus, employees are generally entitled to severance pay, also known as redundancy pay, upon termination of employment for reasons unrelated to their conduct. This entitlement is based on the Termination of Employment Law (Chapter 126).

Eligibility Criteria

To qualify for severance pay, an employee must have completed at least 26 weeks of continuous employment and must be dismissed for reasons other than gross misconduct or other serious fault.

Calculation of Severance Pay

The amount of severance pay is calculated based on a formula that takes into account the employee's length of service and their last gross salary. According to the Termination of Employment Law, the breakdown is as follows:

  • For 2-5 years of service: 2 weeks' gross salary for each completed year.
  • For 5-10 years of service: 2.5 weeks' gross salary for each completed year.
  • For over 10 years of service: 3 weeks' gross salary for each completed year.

For instance, an employee who has worked for 6 years and earns a gross salary of €2,000 per month would be entitled to: (2.5 weeks/year * €2,000/month * 6 years) = €30,000 severance pay.

Exceptions and Limitations

There are certain exceptions and limitations to the severance pay entitlement. An employer is not required to pay severance if the business ceases operations. Employees who resign voluntarily are generally not entitled to severance pay. Additionally, if an employee is offered suitable alternative employment by the employer and refuses, they may forfeit their severance rights.

Important Note

The legal framework surrounding severance pay in Cyprus can be complex.

Termination process

The termination of an employment contract in Cyprus is primarily governed by the Termination of Employment Law (Chapter 126). There are various methods of termination, including termination with notice, termination by mutual consent, immediate termination (summary dismissal), termination due to redundancy, and dissolution by the court.

Methods of Termination

  • Termination with Notice: This is the most common method and requires the employer to provide a written notice of termination.
  • Termination by Mutual Consent: In this case, the employer and employee agree to end the employment relationship amicably, with terms freely negotiated.
  • Immediate Termination (Summary Dismissal): This is applicable for grave reasons, such as gross misconduct by the employee. The cause must be communicated to the employee immediately, and it may not be based on discriminatory grounds.
  • Termination due to Redundancy: This is a dismissal due to economic, technical, or organizational changes within the company requiring a reduction in workforce.
  • Dissolution by the Court: Either the employer or employee can petition the Court of First Instance of Cyprus to dissolve the employment contract for strong reasons.

Procedures for Termination with Notice

  1. Notice of Termination: The employer must provide written notice to the employee, which clearly states the last day of employment.
  2. Right to be Heard: Generally, Cypriot case law recognizes the employee's right to have their views heard before a termination decision is finalized.

Additional Considerations

  • Employment Contracts and Collective Agreements: These documents often specify termination procedures and may provide more favorable terms for employees.
  • Special Protections: Additional protections exist for pregnant employees, those on maternity/parental leave, and employees with disabilities.
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