Sources of regulation
The main source of legislation covering termination of employment contracts
in Cyprus is the Termination of
Employment Law, 1967 (TEL),[1] as subsequently amended, most recently
in 2001.
Collective Dismissals Law No. 28(1) was adopted in 2001 in order to bring
Cypriot legislation in line with the Collective Dismissals Directive 98/59/EC.
In 1985, Cyprus ratified the ILO
Termination of Employment Convention, 1982 (No. 158).
Another instrument, the Industrial Relations Code (IRC), was negotiated
and signed by the Government, employers and trade unions in 1977. It is a
purely voluntary agreement, and any adherence to it is dependent on the goodwill
of the parties. Nevertheless, at least its procedural part is of considerable
importance in practice.
Collective labour agreements have a certain relevance.
They are concluded by sectors of industry and also at company level.
Scope of legislation
The TEL regulates the termination of the employment of “every person working
for another person either under a contract of service or under such circumstances
from which the relationship of employee and employer may be inferred” (sec.
2, TEL). The TEL does not distinguish between private and public employment.
However, the ordinary unfair dismissal rules do not apply to public servants,
as well as police and armed force personnel. Their employment is regulated
by special legal provisions contained in Public Service Law No. 1/90 and Municipal Corporations Law
No. 111/85.
Contracts of employment
Contracts of employment can be concluded orally between the employer and
the employee. There are no legal requirements for contracts to be evidenced
in writing either by contract documents or by statements of terms and conditions.
For employees at management level, individual agreements are in practice
expressed in writing.
The contract can be concluded for a definite or an indefinite period, and
it can provide for full- or part-time work, as well as temporary work.
Termination of employment
The contract of employment can terminate, not at the initiative of the employer,
in certain circumstances, including by:
- mutual
agreement;
- the
expiry of a fixed term;
- the
employee reaching the age of retirement; and
- force majeure.
Dismissal
The TEL makes no distinction between individual and collective termination
of contract; both are subject to the same rules. However, it does distinguish
between terminations of employment giving right to compensation, termination
not giving right to compensation and termination giving right to redundancy
payments.
The TEL stipulates that an employee is entitled to compensation if, and
only if, the termination is not for one of the reasons stipulated in sec.
5 (see below) and:
- he
or she has been continuously employed by his or her employer for at least
26 weeks (sec. 3, TEL); and
- he or
she has not yet attained the age of 65 years (sec. 4, TEL).
The
employer and the employee may, by agreement in writing made at the time
the employee enters into the employment, extend this period of at
least 26 weeks of continuous employment to a maximum of two years.
In its First Schedule, the TEL adds that the amount of the compensation
cannot exceed one year’s wages and depends on other income of the employee,
the length of his or her service, the loss of career prospects of the employee,
his or her age and the actual circumstances of the dismissal.
Sec. 5 of the TEL stipulates that an employee is not entitled to
compensation for termination of employment payable by the employer if:
- the
employee fails to carry out his or her work in a reasonably efficient manner
(not due to temporary sickness or illness);
- the
employee has become redundant (see sec. 3, TEL);
- the
termination of employment is due to force majeure;
- an
employee’s fixed-term contract has expired;
- the
employee has reached the normal age of retirement; or
- the employee’s
conduct is such as to render him or her liable to dismissal without notice
(e.g. cases of gross industrial misconduct, a criminal offence, immoral
behaviour, serious or repeated contravention or disregard of works or other
rules in
relation to employment).
In sec. 6, the TEL stipulates that in any tribunal proceedings, the burden
of proof is on the employer to show that the termination of employment has
been for one of the above-mentioned reasons.
The same section sets out the grounds that may not, inter alia,
constitute valid reasons for termination. Thus, an employer may never terminate
employment for:
- membership
in trade unions or a safety committee established under the Safety at Work
Law of 1988;
- activity
as a workers’ representative;
- the
filing in good faith of a complaint, or the participation in proceedings,
against an employer involving alleged violation of laws or regulations,
both civil or criminal;
- race,
colour, sex, marital status, religion, political opinion, national extraction
or social origin; or
- pregnancy or
maternity.
Notice and prior procedural safeguards
Statutory notice periods are laid down in secs. 9 and 10 of the TEL. The minimum
periods of notice to be given by the employer depend on the length of service
in employment and are as follows:[2]
- one
week’s notice for six months to one year of service;
- two
weeks’ notice for one to two years of service;
- four
weeks’ notice for three years of service;
- five
weeks’ notice for three to four years of service;
- six
weeks’ notice for four to five years of service;
- seven
weeks’ notice for five to six years of service; and
- eight weeks’
notice for more than six years of service.
An employee who has been given notice by his or her employer is entitled
to time off without loss of pay during normal working hours (not exceeding
eight hours per week and 40 hours in total), in order to seek new employment
(sec. 12, TEL). The employer may give the employee a payment in lieu
of notice.
In cases of redundancies, the employer is required to notify the Minister
of Labour and Social Security of the proposed redundancies at least one month
prior to the date they are due to be implemented
(sec. 21, TEL). The notification must include the number of employees
likely to become redundant (and, where possible, their occupation, names
and responsibilities), the branch which is affected and the reasons for the
redundancies.
The TEL does not require employers who are contemplating redundancies to
consult with and provide information to employees’ representatives. However,
Collective Dismissals Law No. 28(1) adopted in 2001 introduced a new procedure
under which the employer who contemplates mass redundancies must in good
time inform and consult with workers’ representatives in order to reach an
agreement on means of avoiding or limiting dismissals, as well as mitigating
their adverse effects on the workers concerned.
Otherwise, provision for such information and consultation is made in Part
II of the IRC. This Code is not legally binding, so no legal sanctions can
be imposed on those not complying with its provisions. The IRC stipulates
that the employer should notify the trade union at least two months before
the date of redundancy. After notification, consultations should be – as
early as possible – carried out with the unions and the employees in accordance
with the provisions of the ILO Termination of Employment Recommendation,
1963 (No. 119).[3]
There is no special procedure in case of dismissal for disciplinary reasons.
However, courts apply principles of natural justice. This means that the
employee should be informed about the allegations made against him/her, as
well as have sufficient time to prepare his/her defence.[4]
Any employee whose employment has been terminated for any reason is entitled
to receive, on request at the time of termination, a certificate from the
employer specifying the dates of his or her employment and the type of work
at which he or she was employed. Nothing unfavourable to the employee may
be inserted in this certificate (sec. 8, TEL).
Severance pay
Any employee who has been employed by the same employer for at least two
years, who has not yet attained the age of 65 years and who is declared redundant
within the terms of the statutory definition, is entitled to a redundancy
payment out of the Government’s Redundancy Fund. This Fund is exclusively
financed by employers’ contributions in respect of each employee (secs. 16-25, TEL). The TEL sets out in sec.
18 that an employee is redundant when his or her employment has been
terminated:
- because
the employer has ceased or intends to cease carrying on the business (or
business in the place) in which the employee has been employed;
- because
of modernization, mechanization or any other change in products or methods
of production or of organization which reduces the number of employees
necessary;
- because
of changes in the skills needed on the part of employees;
- because
of marketing or credit difficulties;
- because
of lack of orders or raw materials;
- because
of scarce means of production; or
- because of
contraction of the volume of work or business.
The redundancy payments are calculated according to years of employment
as follows:
- two
weeks’ wages for each year of service up to four years;
- two
and a half weeks’ wages for each year of service from five to ten years;
- tree
weeks’ wages for each year of service from 11 to 15 years;
- three
and a half weeks’ wages for each year of service from 16 to 20 years; and
- four weeks’
wages for each year of service beyond 20 years.
The employee’s compensation for redundancy is limited
to 75,5 weeks’ wages.
Where an employer wishes to expand its workforce with employees of the same
type and skill as those made redundant within the previous eight months,
the employer must give priority to employees previously made redundant, subject
to the operational needs of the enterprise (sec. 22, TEL).
Avenues for redress
All disputes and ancillary matters arising out of the operation of the TEL
are dealt with by the Industrial Disputes Court set up by the Council of
Ministers under sec. 12 of the Annual Holidays with Pay Law 1967.
The complaint is to be brought within one year from the date of termination
of employment.
The employee is also entitled to institute proceedings before the civil
courts. Such actions for breach of the employment contract (wrongful dismissal)
must be initiated within six years following the date of termination of employment.
In case of unjustified dismissal, the tribunal may award compensation and/or
order reinstatement (sec. 3, TEL, as amended in 1994). Compensation
for unfair dismissal is calculated following the scheme of redundancy payment.
It depends on the numbers of years of service and is limited up to two years’
wages. As regards reinstatement, this right remains theoretical and is never
ordered in practice.[5]
In any tribunal proceedings concerning termination of employment, the burden
of proof is on the employer (sec. 6, the TEL). However, in case of constructive
dismissal, the employee has to bring evidence that his/her resignation was
forced and due to a serious breach of employment agreement by the employer.[6]
Procedures for the settlement of disputes in relation to collective agreements
are provided for in the IRC.
Further information
[1] Long title: A Law to regulate the termination of employment at
the initiative of the employer, to provide for minimum periods of notice
for employed persons and to establish a fund for the payment of benefits
to employees declared redundant. No. 24, dated 27 May 1967.
[2] These statutory periods
are minima and longer periods may be applied where these are set out by custom,
collective agreement or otherwise.
[3] This
ILO Recommendation was revised and replaced by the ILO Termination of Employment
Recommendation, 1982 (No. 166).
[4] Christophoros Christophi. 2006. Termination
of Employment Relationships: the Legal Situation in Cyprus.
Study of the European Commission, p. 19.
[5] Christophoros Christophi, op.cit., p.
21.
[6] Christophoros Christophi, op.cit., p.
3.
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