Cyprus and the United Kingdom have a history of long lasting mutually beneficial relations. UK nationals regularly choose Cyprus as a business and holiday destination as well as a place of retirement. The UK is the most popular choice for Cypriot nationals and residents to pursue their studies and many choose to stay and follow a career path.
It is important to understand the main systems and procedures used in each country when it comes to employment and how they may differ from one another.
What employment taxation requirements are prescribed by law?
The core employment tax responsibilities provided for by statutory instruments are social insurance and income tax. Employers are required to register with a social securities company of their choice and pay social insurance contributions for their employees once every week or every month. Employers are obliged to withhold Social Insurance Contributions, Income Tax for every employee and Special Contribution Tax for any employee with monthly gross employment income above ?1,500 through the Pay as You Earn tax (PAYE) scheme. The tax rates that will be applicable to each employee's remuneration will of course depend on their gross income including benefits and bonuses earned.
Employers are required to calculate every taxation duty of their employees at the start of each year based on the employees' income declaration.
Employers in the UK are obliged to apply employee income tax deductions, National Insurance payments and student loan repayments (if applicable) from every employee's monthly PAYE bill. Her Majesty's Revenue & Customs (HMRC) uses the PAYE scheme for the collection of National Insurance Contributions (NICs) and Income Tax from employees' incomes, concurrently with the time that income is earned. Similarly with Cyprus, every employer will be required to withhold both NICs and tax from employees' incomes each period and ensure the payment of the Employer's 1st Class NICs of 13.8% for each employee whose earnings and bonuses are above the threshold of £169 per week, £732 per month or £8,722 per year for the years 2020 & 2021.
Employers are also required to enroll employees who are ordinarily employed in the United Kingdom, into a workplace pension scheme if they are classified as employees, are aged between 22 and state pension age and receive at least ten thousand pounds per annum.
The PAYE system though widely used and relatively effective as it may be, it doesn't come without its own drawbacks. For instance, in the UK complications arise through the PAYE system when employees switch from one job to another. In fact, if for any reason or unfortunate circumstance the previous employer fails to provide on time (or at all) the required P45 form to the employee and therefore the new employer does not receive the form on time, the employee's tax contributions may in many cases be wrongly calculated by the PAYE system. Additionally, another disadvantage that widely affects employers in the UK is that because the PAYE system heavily depends on employers operating payrolls, the costs of these payroll activity operations are high, thus deterring employers from employing more employees in their companies. Nevertheless, even though the PAYE system is not perfect, as no system really is, its simplicity for employees ensures that employees' taxation is dealt swiftly and efficiently and in most cases without the fear of having to pay Back-Taxes to the tax authorities due to any potential previous miscalculation of tax contributions.
Under what circumstances an employee's termination of employment is lawful?
Unlike civil cases, in which the burden of proof is on the claimant, Article 6 of the Termination of Employment Law places the burden of proof on the employer. Consequently, the employer must satisfy the Court that the dismissal was fair on the balance of probabilities. If the employer fails to prove that the dismissal of the employee was made for any of the reasons found in section 5 of the Law, the employee will be entitled to compensation for unfair dismissal.
An employee will have a right to compensation, calculated upon the period of continuous employment and in accordance with Table 4 provided under Article 9 of the Law, where he can prove that he faced unlawful employment dismissal which cannot be justified under any of the grounds highlighted in Article 5 of Law No. 24/67 and referred below:
- The employee's performance is not satisfactory enough (these excludes a non-permanent incapacity due to injuries, child delivery or illness). Here, the employer must have in mind that the Law's required standard is one that requires the employee to carry out his work in a reasonable competent way, depending on the situation of each given case, and not in the uttermost efficient way;
- The employee is made redundant;
- The termination is a result of an act of war, force majeure, act of God or civil commotion;
- The employer terminates the employee's employment when the fixed period employment agreement has expired or the retirement age of the employee has been reached (or exceeded);
- The employee's misconduct has led to his summary dismissal;
- Upon the employee committing a serious criminal or disciplinary offence, repeated violation or ignorance of the rules of employment, indecent and inappropriate conduct and finally any other type of conduct that renders that the current employer-employee relationship cannot be expected to be maintained.
Based on the period of continuous employment of any employee, the table on the left shows the minimum notice that should be provided by any employer to his/her employee.
Figure 1: Republic of Cyprus, Ministry of Labour, Welfare and Social Insurance, 'Termination of Employment Guide'
In the United Kingdom, the burden of proof in respect of an unfair dismissal is on the employer who must prove that he had a fair reason to dismiss the employee. However, in terms of constructive unfair dismissal, the burden is upon the employee to prove that the employer has fundamentally breached the employment contract.
An employee's dismissal cannot be unfair if the employer can demonstrate that the principal reason of dismissal falls into one of the following categories set out in section 98 of the Employment Rights Act 1996:
- The employee was lacking qualification or capability related to the job he/she were employed to fulfil;
- The employee was dismissed as a consequence of his/her conduct/behaviour;
- The workplace/enterprise in question was genuinely in a necessity to render employees redundant;
- The continuation of such employment would be in breach of a legislative instrument. For instance, the employee is a taxi driver but lost his driving licence due to a driving offence;
- Due to some other substantial reason. For instance, where the employee has come into a personal clash/conflict with his/hers employer, or where the employee has irrationally refused to accept new changes to the terms and conditions of his employment contract. Each case will be decided/determined on its own facts.
What are the statutory instruments prohibiting discrimination in the employment environment?
Along with harassment, any form of discriminative behaviour in the workplace is illegal under numerous statutory instruments. These include:
- The Law ratifying the Convention Relating to Discrimination (Occupation and Profession) of 1958, (Law No. 3 of 1968);
- The Persons with Disabilities Law of 2000 (No 127(I)/2000) as amended by Law 57(1) of 2004;
- The Law on Equal Pay for the Same or Equal Work of 2002 (No 177(I) of 2002) which provides for equal salary to male and female employees at the same workplace or at employment of equal value;
- The Equal Treatment in Employment and Occupation of 2004 No. 58 (1)/2004 which has as its scope to fight every form of discrimination in the workplace including age, race, religion, sex orientation and ethnic origin.
- Importantly, under Cyprus employment law there is no distinction between a local or foreign employee, and, as such, there can be no discrimination in the terms and conditions of employment.
In the UK employees are mainly legally protected from discrimination by the Equality Act 2010 under which, it is against the law to discriminate against any individual because of: age, gender reassignment, race, marriage and civil partnership, disability, maternity and pregnancy, sexual orientation, sex and religion or belief.
Nevertheless, and even if discrimination in the work environment has been falling worldwide, it is still clear that for certain employment groups and people with certain backgrounds, workplace discrimination still persists in Cyprus, the UK and around the world in general. And even though people and legal professionals can nit-pick on whether the aforementioned laws are thorough enough to protect all employees, the one thing that can't be argued is the fact that there is still a lot to be done when it comes to employees being informed of their rights and understanding what classifies as job discrimination in their respective country of employment. In fact, both in the UK and Cyprus, the main disadvantage of statutory instruments prohibiting discrimination has nothing to do with the instruments themselves, but the fact that certain employee groups have no knowledge of the existence of these instruments.
Therefore, it is up to every government to build a stronger information system by encouraging agencies and other entities through which foreign employees pass through before ending in Cyprus, to ensure that these employees have full knowledge of their rights and have no fear of speaking up when they feel they have been victims of discrimination.
How is employee privacy and personal data protected?
Following the 88th Article of the General Data Protection Regulation (GDPR) European Union members are granted the permission, by collective agreement or by provisions of the law, to make provisions to more specific laws and regulations on the procession of personal information with respect to labour and employment. However, the Law providing for the Protection of Natural Persons with regard to the Processing of Personal Data and for the Free Movement of such Data of 2018 (Law 125(I)/2018) which is supplementing to the GDPR in Cyprus, does not provide for more specific measures in relation to the procession of personal data in the employment context. The procession of private and personal information within the framework of labour and employment relations is consequently regulated in accordance to the generic laws of the EU GDPR.
In 2005, the Commissioner published a Directive for the Processing of Personal Data with regards to Employment Relations, by which employers are bound. Employers should make sure that any information processing is done according to the provisions of the law and for reasons that are explicit and legitimate. When it comes to processing purposes, all data or any information held must be appropriate and non-excessive.
After England's and Wales' exit from the EU, we are almost certain that a new UK Data Protection Regulation, ratifying or amending the Data Protection, Privacy and Electronic Communications (Amendments etc) (EU Exit) Regulations 2019 and the UK-GDPR, will be introduced to guarantee enough data protection in the UK. For sure, any organisation must have a genuine and reliable purpose to keeping personal data and such data should not be held longer than needed.
According to the Data Protection Act 2018, personal data must only be kept in line with the following six (6) data protection laws. It must:
- be processed fairly, lawfully and transparently;
- be collected and processed for no reason other than for the specified, explicit and legitimate purpose it was kept;
- be adequate, relevant and limited to what is necessary for the purpose for which it is processed;
- be accurate and updated. Mistaken or inaccurate information must be deleted or rectified, with no delays;
- not be held longer than it is necessary for the purposes for which it is processed;
- procession is secured.
Who is eligible for granting a work permit?
The process for granting employment permits for foreign employees is largely governed by the Law on the Aliens and Immigration (Cap.105) as well as by every decision taken by the members of the Council of Ministers and the Parliamentary Committee. The appropriate authority for granting entrance permits and either permanent or temporary residence authorisations is the Civil Registry and Migration Department of the Ministry of Interior. For every non-EU resident it is compulsory to submit an application for residence and work permits if they aim to stay or be employed in Cyprus.
The conditions for the approval of a work permit include criteria such as no criminal record, a valid passport, a valid contract of employment and crucially valid proof that the foreign individual's skillset and qualifications required for the job position cannot easily be found within the current Cypriot labour market.
Individuals are eligible to work in the UK, and therefore do not need to submit an application for a work permit, if one of the following criteria applies:
- The individual is a British national;
- The individual is a European Economic Area (EEA) citizen;
- The individual is a Swiss national.
An EEA citizen will have the right to work in the UK after applying for the EU Settlement Scheme.
A foreign national which is not under one of the above categories of citizens, may need to find and apply for the appropriate work visa. More information concerning UK work visas.
It is clear that there are many similarities between Cyprus and the UK when it comes to labour and employment regulations. Both are attempting to combat discrimination and allowing for employees to be in safe and comfortable environments. Systems such as the PAYE are constantly being implemented and improved in order for certain operations to be completed more efficiently.
Through standardisation and harmonisation of regulations across countries a better understanding can be achieved of what exactly employees are entitled to and how they can protect their rights.
Employers will also benefit through a standardised system as there won't be any doubt on how to handle employment matters.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.