An employment contract establishes the framework of the relationship between an employer and an employee. It will usually deal with matters such as salary, working hours, duties, leave, probation and termination, but its importance goes considerably further. A carefully drafted contract can prevent uncertainty over matters which might otherwise only become contentious months or years after employment has commenced.
In Cyprus, the employment relationship is not governed by the contract alone. Contractual terms operate alongside mandatory employment legislation, applicable collective agreements and principles arising from Cyprus and European Union law. A contractual provision cannot simply override a statutory employment right.
The legal framework governing employment terms was significantly updated by the Transparent and Predictable Working Conditions Law of 2023, Law 25(I)/2023, which transposed Directive (EU) 2019/1152 into Cyprus law. Among other matters, the legislation sets out the information which employers must provide to employees, the time limits within which it must be provided and minimum requirements concerning probation, parallel employment and predictable working conditions. The Law was subsequently amended in 2024.
For both employers and employees, it is therefore important that the written terms accurately reflect not only what has commercially been agreed but also the requirements of current Cyprus employment law.
Does an Employment Contract in Cyprus Have to Be in Writing?
The absence of a formally signed document headed “Employment Contract” does not necessarily mean that no employment relationship exists.
Law 25(I)/2023 defines an employee in terms sufficiently broad to include a person working under circumstances from which an employer-employee relationship may be inferred. The existence of employment therefore depends on the substance of the relationship and not simply on whether the parties signed a particular form of agreement.
That should not be confused with the employer’s separate obligation to provide written information about the essential terms of employment.
The employer must provide the required information either in paper form or electronically. Where it is provided electronically, the employee must be able to access, store and print it. The employer is also required to retain evidence of its transmission and receipt.
In practice, employers will often satisfy these requirements through a written employment agreement, supplemented where necessary by policies or other written documentation. A comprehensive agreement also provides useful evidence of what the parties actually agreed if a dispute later arises.
What Information Must Be Given to an Employee?
The 2023 Law contains a detailed list of information which an employer must provide.
This includes the identity of the employer and employee, the place of work and the registered office or address of the employer. Where there is no fixed or principal place of work, the documentation must indicate that the employee will work at different locations or, where applicable, is free to determine his or her place of work.
The employee must also be informed of the title, grade, nature or category of the work, or alternatively be provided with a brief description of the work to be performed.
Other required information includes the commencement date and, for fixed-term employment, the expiry date or expected duration of the arrangement. Where probation applies, its duration and conditions must be stated.
The employer must provide information concerning remuneration, including the basic salary and any other components of remuneration separately identified, together with the frequency and method of payment.
Where the employee’s working pattern is wholly or predominantly predictable, the information must cover the normal working day or week, arrangements relating to overtime and its remuneration and, where applicable, arrangements for changing shifts.
Different and more detailed requirements apply where the working pattern is wholly or predominantly unpredictable, including information concerning guaranteed paid hours, reference hours and days during which the employee may be required to work, and the minimum notice which will ordinarily be given before a work assignment.
Employees must additionally receive information concerning matters including paid leave, termination procedures and notice, relevant collective agreements, training rights where applicable and prescribed social insurance information.
When Must the Written Terms Be Provided?
The legislation distinguishes between core information and supplementary information.
Unless it has already been supplied before employment begins, the core information must be provided individually to the employee beginning on the first working day and no later than the seventh calendar day from commencement of the employment relationship.
This category includes, amongst other matters, the parties’ identities, place of work, job description, commencement date, duration of fixed-term employment, probationary arrangements, remuneration and the principal working-time arrangements.
The remaining specified information must generally be provided within one month of the first day of employment.
In practice, the principal terms are best agreed and documented before or when employment commences, both to comply with the statutory timetable and to reduce uncertainty between the parties.
Can the Contract Give an Employee Less Than the Law Provides?
No contractual drafting can remove mandatory employment rights.
Law 25(I)/2023 expressly provides that no term of a contract or employment relationship may be less favourable to the employee than the protection provided by the applicable legislation for the relevant matter. More favourable legislative, regulatory, administrative or collective-agreement provisions also remain unaffected by the Law.
This is an important practical distinction. A provision does not become lawful merely because an employee has signed it.
An employment contract must therefore be considered together with legislation governing matters such as working time, annual leave, remuneration, termination, equality and other statutory employment rights.
Salary, Bonuses and Other Remuneration
Salary provisions should leave as little room for misunderstanding as possible.
The agreement should normally identify the basic salary and whether the amount referred to is gross or net. Any material additional remuneration, including commissions, allowances, overtime or contractual bonuses, should be dealt with separately.
Bonus provisions deserve particular attention. Where a bonus is genuinely discretionary, the drafting should reflect that accurately. If, by contrast, an employee becomes entitled to a payment once specified conditions have been fulfilled, describing the payment as “discretionary” may not necessarily correspond with the real arrangement.
Commission arrangements should likewise explain how commission is earned and calculated, particularly where payment depends upon matters such as completion of a sale, receipt of funds from a client or continued employment at a particular date.
Any remuneration arrangements must also comply with applicable minimum-wage legislation and any sector-specific mandatory requirements.
Working Hours and Overtime
Normal working days and hours should be clearly identified, particularly where employees work shifts or where overtime is a regular feature of the position.
Under the general Cyprus working-time framework, average weekly working time, including overtime, may not exceed 48 hours, subject to the statutory rules, reference periods, derogations and sector-specific provisions.
Employment contracts should therefore not treat working time as a matter of unrestricted contractual discretion.
Where overtime may be required, the contract should address how overtime is authorised and, where applicable, how it is remunerated or compensated. The correct wording will depend upon the nature of the employment and any legislation or collective agreement applicable to the particular employee.
Annual Leave
Employees in Cyprus are entitled to minimum paid annual leave.
Under the general statutory framework, an employee working a five-day week is entitled to at least 20 working days of annual leave, while an employee working a six-day week is entitled to at least 24 working days. More favourable contractual or collective arrangements may of course apply.
A written employment agreement will commonly specify the contractual annual leave entitlement and the procedure for requesting and approving leave. Such provisions must nevertheless operate consistently with the employee’s statutory rights.
Probationary Periods
Probation is one of the areas in which older employment-contract templates can now be particularly misleading.
Under section 15 of Law 25(I)/2023, where an employment relationship provides for a probationary period, the general maximum is six months.
In fixed-term employment, the probationary period must also be proportionate to the expected duration of the employment and to the nature of the work. Where a fixed-term arrangement is renewed for the same position and the same duties, a fresh probationary period is not required.
If an employee is absent from work during probation, the employer may extend the probationary period, but the extension cannot exceed the period of the employee’s absence.
There is a specific exception from the statutory maximum for managerial officers of legal persons. For this purpose, the Law refers to persons holding positions such as director, chairman, manager, secretary or another similar position in a legal person, or appearing to act in such a capacity.
Employers using contracts drafted before the 2023 reforms should therefore review any probation provisions rather than simply continuing to rely upon older wording.
Fixed-Term and Indefinite Employment
An employment agreement should state clearly whether employment is indefinite or is intended to continue for a specified period.
If the arrangement is fixed-term, the agreement should identify the expiry date or anticipated duration. However, describing an agreement as “fixed-term” does not necessarily determine its legal status indefinitely.
Cyprus law contains specific provisions designed to prevent abuse of successive or prolonged fixed-term arrangements.
Under the Fixed-Term Employees (Prohibition of Unfavourable Treatment) Law of 2003, Law 98(I)/2003, where an employee who is employed under a fixed-term contract has previously been employed under fixed-term arrangements for an aggregate period of 30 months or more, the contract is treated for all purposes as being of indefinite duration, unless the employer proves that continued fixed-term employment is objectively justified.
The legislation gives examples of objective reasons, including genuinely temporary business needs, replacement of another employee and circumstances where the particular nature of the work, duties or sector justifies a defined duration.
The 30-month rule is therefore important for businesses which routinely renew short contracts for the same employee. Repeatedly issuing a document bearing a new expiry date will not, by itself, ensure that the employment remains legally fixed-term.
Job Description, Duties and Changes to the Role
The employee’s position should be described with sufficient clarity to establish what he or she has been employed to do. At the same time, a job description which is unnecessarily narrow can create practical difficulties when reasonable changes are required as a business develops. Employment agreements therefore often permit an employee to perform additional duties reasonably connected with the role.
Such flexibility is not unlimited. A broadly worded duties clause should not be assumed to entitle an employer to make any alteration it wishes to fundamental elements of the employment relationship. Changes to matters such as salary, working hours, location, status or substantial responsibilities may raise contractual and employment-law issues and, depending on the circumstances, may require agreement.
Law 25(I)/2023 separately provides that when particulars which the employer is required to give to an employee change, the employer must prepare the relevant document and provide it as soon as possible and no later than the date on which the change takes effect. There is an exception for specified changes resulting directly from legislation, regulations, administrative or statutory provisions or collective agreements to which the relevant documentation refers.
Documenting a change, however, is not the same thing as establishing a contractual right to impose that change. The two issues should not be confused.
Confidentiality and Business Information
Confidentiality clauses can be particularly important for employees who have access to customer lists, pricing, financial information, business strategies, technical material or other commercially sensitive information.
The provision should be tailored to what genuinely requires protection. A clause which identifies the categories of confidential information and explains the employee’s obligations will ordinarily be more useful than an indiscriminate provision attempting to characterise virtually everything connected with the employer as confidential.
The distinction is also important after employment has ended. Genuine confidential information may remain deserving of protection, but an employee’s ordinary experience, skill and knowledge acquired during employment should not automatically be treated as the former employer’s property.
Working for Another Employer
A contract should not automatically prohibit all secondary employment.
Section 16 of Law 25(I)/2023 provides that an employer may not prevent an employee from working for other employers outside the working schedule established with that employer, or subject the employee to adverse treatment merely because he or she does so.
The employer may, however, restrict parallel employment at the time of recruitment where specific objective reasons are stated in writing. The statute identifies reasons connected with health and safety, protection of business confidentiality, integrity of the public sector and avoidance of conflicts of interest.
For that reason, a carefully drafted restriction aimed at an identifiable conflict or legitimate concern is preferable to a standard clause purporting to ban all outside work regardless of the circumstances.
Post-Termination Restrictions
Post-termination non-competition clauses require particular caution under Cyprus law.
Section 27 of the Contract Law, Cap. 149 establishes the general rule that an agreement by which a person is restrained from exercising a lawful profession, trade or business is void to that extent, subject to the exceptions recognised by the legislation.
Employers should therefore not assume that a non-compete provision becomes enforceable simply because the employee signed it, or because the restriction has been limited to a particular period or geographical area.
This issue should also be distinguished from provisions protecting confidential information, intellectual property or other rights which may raise different legal considerations.
Post-termination clauses should consequently be drafted with reference to Cyprus law and to the particular interest which the employer is seeking to protect rather than copied from employment contracts prepared for another jurisdiction.
Termination and Notice
An employment agreement should set out the applicable termination arrangements, including contractual notice where appropriate.
The contract, however, operates within the wider statutory regime governing termination of employment in Cyprus. An employer cannot make a termination lawful merely by inserting a provision giving itself a broadly expressed contractual power to dismiss.
Similarly, contractual notice provisions must be read together with any mandatory statutory requirements.
Before terminating employment, an employer should therefore consider not only the wording of the contract but also the reason for termination and the employee’s statutory protections. Different issues can arise, for example, in cases involving redundancy, misconduct, discrimination, retaliation or other grounds protected by employment legislation.
Collective Agreements and Workplace Policies
Not every rule governing an employment relationship needs to appear within the employment contract itself.
Depending on the business and sector, a collective agreement may regulate remuneration, working hours, overtime, leave or other employment conditions. Law 25(I)/2023 itself requires relevant information concerning applicable collective agreements to be provided to the employee.
Employers also commonly maintain separate policies dealing with disciplinary matters, absence, expenses, use of IT systems, data protection, harassment, remote working and similar workplace issues.
It is important when drafting the employment documentation to distinguish between terms which are intended to be contractually binding and policies which the employer may legitimately need to revise from time to time. Otherwise, a policy intended to remain flexible may inadvertently become part of the contractual relationship.
Employees Working Outside Cyprus
Additional information requirements can arise where an employee whose employment relationship is formed in Cyprus, or otherwise falls within the relevant Cyprus legal framework, is required to work outside the Republic.
Before departure, the employee may need to be informed of the country or countries in which the work will be carried out, the expected duration, the currency in which remuneration will be paid, relevant benefits in cash or kind connected with the assignment and information concerning repatriation.
Employees falling within the legislation on the posting of workers are entitled to additional specified information concerning matters such as remuneration in the host Member State and certain expenses and allowances.
Importantly, these particular additional information requirements do not apply where each period of employment outside Cyprus lasts four consecutive weeks or less.
International assignments should therefore be considered separately rather than dealt with by simply leaving a standard domestic employment contract unchanged.
What Happens if the Employer Does Not Provide the Required Information?
The obligations under Law 25(I)/2023 are enforceable obligations rather than merely recommended administrative practice.
An employee who has not received the required documentation within the prescribed time may submit a complaint to the competent authority. The authority can require the employer to remedy the position, and the legislation provides a mechanism for investigation and attempted resolution through an inspector.
The Law also protects employees against adverse treatment for seeking to enforce their rights. An employer is specifically prohibited from dismissing an employee, taking an equivalent measure or initiating steps leading to dismissal because the employee exercised rights conferred by the Law.
Civil disputes arising from the Law fall within the jurisdiction of the Industrial Disputes Tribunal. An employer who breaches the Law may also commit a criminal offence and, upon conviction, may be liable to a fine not exceeding €5,500.
The 2024 amendments also introduced separate offences relating to obstruction of inspectors and certain failures to cooperate with an inspection, carrying their own penalties.
Why Employment Contracts Should Be Tailored to the Particular Employment
There is no single employment-contract template which is suitable for every position. The terms required for a senior employee with access to commercially sensitive information will not necessarily be appropriate for a salesperson, shift worker or employee who works regularly outside Cyprus.
The same applies to remuneration. A salesperson may need carefully structured commission provisions, while a senior employee’s agreement may need to address bonuses, confidentiality, intellectual property and responsibilities arising from the position. Remote and international working arrangements raise further issues which a standard template may not address.
A good employment contract does not need to be unnecessarily long. Its purpose is to identify the matters which actually govern the particular relationship and record them clearly, while remaining consistent with the applicable statutory framework. That gives both parties a clearer understanding of their rights and obligations and can reduce the scope for disputes later.
Legal Advice on Employment Contracts in Cyprus
Employment contracts should be reviewed against the current legislative framework rather than treated as documents which can be reused indefinitely without amendment.
This is particularly relevant following the changes introduced by Law 25(I)/2023 concerning written employment particulars, probationary periods, parallel employment and predictable working conditions.
A. Danos & Associates LLC advises employers and employees on Cyprus employment law, including the drafting and review of employment contracts, changes to terms and conditions of employment, workplace disputes and termination of employment.
Obtaining advice at the drafting stage can often resolve uncertainties before they develop into an employment dispute.
