How to Hire Remote Employees In 

Cyprus

The Basics

Currency
Euro (EUR)
Employer Taxes
22.9%
Payroll Frequency
Monthly
Official Language
Greek & Turkish

Employment in 

Cyprus

Hire Independent Contractors

Independent contractors or freelancers are self-employed individuals who provide services to companies as a non-employee. This is one of the most common ways companies tend to hire non-local designers, engineers, support reps, etc.

For legal and tax purposes, independent contractors are not classified as employees. They may work for multiple clients, set their own work hours, negotiate their pay rate, and decide how a job gets done.

For example, the IRS says that if an independent contractor or freelancer does work that can be controlled (what will be done and how it will be done) by an employer then they are, in fact, classified as an employee.

As you can imagine, hiring someone as an independent contractor versus an employee is a fine line to tread.

While there are benefits when you choose the contractor route, there are quite a few drawbacks to consider and you’ll need to weigh them carefully to determine the best fit for your company.

Benefits of Hiring Independent Contractors
Reduced overhead: Lower cost in expenses, payroll, benefits, and more.
Greater flexibility: Contractors can be brought on as-needed. If not a good fit, you simply don’t have to move forward with the contract.
Reduced legal risk: Contractors aren’t usually protected by employment anti-discrimination and workplace safety laws.
Disadvantages of Hiring Independent Contractors
Risk of Misclassification: Not only does this deny workers their proper protections, it can also result in steep penalties and damage to your company. If the IRS determines that employee misclassification has occurred, you will be liable for a percentage of the employees wages, FICA contributions, penalty fines, unpaid taxes, up to a year in prison, and more.
Lack of Control: Contractors are drawn to being independent because it gives them greater control over the work they perform and who they work with. Because they’re not employees, you can’t tell them what to work on and how it should be done.
Lack of Loyalty: Contractors come and go as-needed. Many companies hire contractors for short-term work, which makes it difficult to cultivate loyalty.
Increased Scrutiny: Using Independent Contractors typically leads to an increased risk of being audited.

Set up a subsidiary in 

Cyprus

A foreign subsidiary is a company that operates overseas as part of a larger company who’s HQ is in another country.

Establishing a foreign entity is great for having an international presence and accessing new markets. Though, setting up a subsidiary in Cyprus can be expensive, stressful, and time-consuming. It's not for the faint of heart.

To set up a subsidiary in Cyprus, you have to:

  1. Register your business name and file articles of incorporation
  2. File for local bank accounts
  3. Learn and keep track of the local employment laws
  4. Set up local payroll
  5. Hire local accounting, legal, and HR people

If you're lucky, this process can take months. If you're not so lucky, it can take up to a year. And on average, it costs about $50k-$80k, all-in-all, to get setup. And that's just for Cyprus.

Use an Employer-of-Record (EOR)

An employer-of-record (EOR) is a company that hires and pays an employee on behalf of another company.

An EOR is typically used to overcome the financial and regulatory hurdles that often come with employing remote workers.

Each country has its own payroll, employment, and work permit requirements for non-resident companies doing business in their jurisdiction. Meeting those demands can be a huge obstacle when it comes to hiring remotely.

At Panther, we help companies employ and pay people in over 160 countries, without having to set up a foreign subsidiary. Payroll, benefits, taxes, compliance, and more are all handled by us, at a fraction of the cost.

Outside of saving you months and tens of thousands of dollars, other advantages of using Panther are:

  • Ability to attract talented and motivated employees from all over the world.
  • Full legal compliance: There is no risk of violating local employment laws.
  • Transparency: Employees are still your employees. All the work, processes, operations and day-to-day business belong to you, the company, just like with any other employee. Panther just takes on all of the responsibilities, obligations and admin work related to your team's employment.
  • No risk of misclassification

Because you no longer have to set up your own subsidiary, you’ll save a ton of time and tens of thousands of dollars using Panther.

Paying Remote Employees

Paying employees in Cyprus is not the same as paying workers in your own country. Employees have to be paid using Cyprus’s employment and payroll standards.

This means that you have to know, understand, and keep up with 1) fluctuating currency changes, and 2) local payroll and tax laws in the countries you’re looking to hire in.

Outside of the laws and regulations around payroll, there may be different conditions surrounding leave, overtime, termination, and more. As you can imagine, maintaining this kind of regulatory knowledge can be challenging. But it is crucial and necessary to follow local legislation.

After, you’ll have to determine the best way to pay your international employees. This can be done in a number of ways, including but not limited to:

Pay through a local entity

One of the most challenging (and expensive) parts of paying international employees is setting up the infrastructure to do so.

Before you start to run payroll, you have to register your company as the local employer in the country the worker resides in. As you can see in the “Set up a subsidiary” section, this is a multi-step process that can take up to a year and put you on your way to bankruptcy.

Work with an EOR

Outside of EORs acting as the full admin employer, many also provide remote payroll.

For example, at Panther, in just 1-click, you’re able to pay your entire global team, anywhere in the world. We send you an invoice each month, charge you in US Dollars, and pay your employees the same amount in their local currency.

We factor in currency fluctuations and use the mid-market rate plus any applicable fee passed on by our provider at cost at the time of billing.

Cyprus

 Specific Information

Working Hours

A full-time workweek is 44 hours or 8 hours per day.   

Overtime

Overtime should be outlined in the employment contract as there are no applicable laws in Cyprus.

Payroll Tax

Employer

Employer Contributions

  • Social Insurance
  • Social Cohesion
  • Redundancy
  • Training & Development
  • National Health System (NHS)
  • Holiday Fund (if not exempt)

Minimum Wage

The lowest gross monthly salary is 870 EUR. After 6 months of continuous employment, this rises to 924 EUR.

Payroll

Pay Cycle

The payroll cycle is monthly.

13th Salary

While not mandatory, it is customary to pay employees a 13th salary in December.

Leave

Paid Time Off (PTO)

PTO is calculated by the:

  • The minimum annual leave is 20 days for employees who work a 5 day work week and 24 days for employees who work a 6 day work week. 

Public Holidays

There are 14 public holidays.

Sick Days

The duration of sick leave entitlement provided to workers is dependent on how long they have been employed by their employer:

  • Sick leave and its payment are not subject to rules except for specific areas where there are relevant regulations in place or where this is provided in the employment contract.
  • The social insurance legislation provides for sick pay from the 4th day of leave. 

Maternity Leave

Female employees are entitled to 18 weeks of maternity leave and are extended to 22 weeks when there are twins, and 26 weeks when there are at least 3 births.

During this time the employee receives 72% of their salary and it is paid by the government. 

Paternity Leave

Fathers are entitled to a total of 16 weeks of paternity leave, where 2 consecutive weeks can be taken with 16 weeks of the birth of a child. 

Parental Leave

Parents are entitled to unpaid parental leave of up to 18 weeks for childcare purposes until the child reaches 8 years of age.

Other Leave

None.

Marriage Leave

None.

Bereavement Leave

None.

Termination

Termination Process

The termination process should be specified in the employment agreement. 

Notice Period

The notice period in Cyprus is:

  • 26-51 weeks of employment- 1 weeks’ notice
  • 52-103 weeks of employment- 2 weeks’ notice
  • 104-155 weeks of employment- 4 weeks’ notice
  • 156-207 weeks of employment- 5 weeks’ notice
  • 208- 259 weeks of employment- 6 weeks’ notice
  • 260- 311 weeks of employment- 7 weeks’ notice
  • 312 weeks or more- 8 weeks’ notice

The only time a notice is not required is when the employee has committed a serious offense. The notice period must be given in writing.

Severance Pay

The severance pay varies based on length of employment:

  • 2 weeks’ severance for each year of employment up to 4 years
  • 2.5 weeks of wages for each year between 5-10 years of employment
  • 3 weeks of wages for each year between 11-15 years of employment
  • 3.5 weeks of wages for each year between 16-20 years of employment
  • 4 weeks of wages for each year over 20 years of employment

Probation Period

The common practice is 6 months – 2 years and must be outlined in the employment agreement.