The rules on severance pay in detail

In Cyprus, employees who have been unfairly dismissed are entitled to statutory termination pay, provided that they have worked for at least six months. Six months is the minimum probation period under law, but the maximum that can be agreed is two years, provide the parties agree to this at the beginning of the contract. If they agree an extended probation period, statutory termination is only payable at the end of that period.

Employees who are made redundant are not entitled to any compensation, since under the Termination of Employment Law L.24/67, terminations for reasons of redundancy are considered to be fair. Nonetheless, redundant employees who have worked for their employer for over 104 weeks (two years) have the right to receive a payment from the Redundancy Fund (a private law fund, set up under L.24/67, in which employers provide contributions for each employee).The amount they are entitled to is listed in the Redundancy Table contained in L./24/67, which provides the following:

 

Years of service

Weekly wage

Maximum pay for redundancy in EUR

2

4

2,790.08

3

6

4,185.12

4

8

5,580.16

5

10,5

7,323.96

6

13

9,067.76

7

15,5

10,811.56

8

18

12,555.36

9

20,5

14,299.16

10

23

16,042.96

11

26

18,135.52

12

29

20,228.08

13

32

22,320.64

14

35

24,413.20

15

38

26,505.76

16

41,5

28,947.08

17

45

31,388.40

18

48,5

33,829.72

19

52

36,271.40

20

55,5

38,712.36

21

59,5

41,502.44

22

63,5

44,292.52

23

67,5

47,082.60

24

71,5

49,872.68

25

75,5

52,662.76

 

The pay is calculated based on the employee’s length of service, multiplied by the last week’s wage. The employee’s weekly wage is calculated based on the gross monthly salary plus any other benefits received with a monetary value.

According to the provisions of L.24/67 the amounts listed in the Redundancy Table are the minimum compensation that an employee is entitled for being unfairly dismissed. However, L.24/67 gives the Court the discretion to order compensation (aggravated damages) of up to two years’ salary. Before ordering any aggravated damages the court will take into account the following factors: i) salary, ii) duration of service, iii) loss of career, iv) real circumstances of termination, v) the age of the employee. The absolute maximum that the employer is liable to pay is one year’s salary (52 weeks) and anything above that is paid by the Redundancy Fund.

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Author: George Z. Georgiou & Associates LLC

Date: December 2018

 

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