Lexology: An interview with our Managing Partner discussing Labour & Employment in Cyprus

Nicholas Ktenas & Co LLC > News > Lexology: An interview with our Managing Partner discussing Labour & Employment in Cyprus

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Nicholas Ktenas is the managing partner of Nicholas Ktenas & Co LLC. He holds an LLB from the University of Sheffield and an LLM in EU law from the University of Nottingham. He is a member of the Cyprus Bar Association since 1999 and a licensed insolvency practitioner. He started his career in 2000 as in-house legal counsel for one of Cyprus’s largest cruise ship operators and a part-time university lecturer in business and corprorate law. In 2001, he joined a top-tier Cyprus law firm and was promoted to partnership in 2007. In 2021, he established Nicholas Ktenas & Co LLC. He is also a founder and director of the Cyprus Computer History Museum, operated by the non-profit company Retro Computing & Gaming.

Nicholas advises domestic and international organisations on a wide range of legal matters, including employment law. He has authored numerous articles and country chapters in international legal publications and received a string of distinctions and awards throughout his career. He is recognised by Best Lawyers in corporate law and labour and employment law and by Who’s Who Legal also in labour and employment law. He was also recognised by The Legal 500 as a ‘Leading Individual’ in EU and competition and employment law.

1 What are the most important new developments in your jurisdiction over the past year in employment law?

An amendment to the maternity protection law in 2021 extended the duration of maternity leave from 18 to 22 weeks for women who give birth to a second child, and to 26 weeks for women who give birth to a third and any subsequent child.

On a separate note, covid-19 prevention measures also introduced in 2021 had a significant impact on working conditions generally in Cyprus.

In May 2021, in a purposeful effort to achieve as much covid-19 vaccination coverage as possible amid increasing scepticism worldwide, the Cypriot government introduced the ‘safe pass’, a legal requirement for all persons over the age of 12 to be in possession of one of the following to enter certain premises, including retail shops and workplaces:

  • a covid-19 negative PCR test or rapid test within at least 72 hours;
  • a covid-19 vaccination certifiate with at least three weeks from the administration of the first dose; and
  • evidence of being released, in the case of persons who fell ill with covid-19, within the past six months from initially being diagnosed as positive.

Under threat of hefty fines, employers in Cyprus were required to ensure that all employees were in possession of a safe pass certificate before being allowed into the workplace.

Due to the intrusive nature of this measure on private life, the Cypriot Commissioner for Personal Data Protection initially took the view that employers do not have a right to ask to see such certificates and that the obligation of employees was only to inform their employer that they have been tested and what the result was. However, shortly after, in July 2021, the Commissioner took a very different approach, advising that employers no longer had a right to be informed but had an obligation to check the certificates of employees.

At the same time, limits were imposed on the number of employees who could be present at most workplaces, while the requirement for a certain percentage of government sector employees to work remotely was introduced, with private sector businesses having to follow suit to survive.

This was the first time the concept of remote work was acknowledged by some form of regulation in Cyprus. Until then, ‘working from home’ and the hybrid work models were unknown to Cyprus law. However, Greece, which was the role model on teleworking for the Cypriot government, implemented a comprehensive legal framework to regulate telework in the public sector in 2021, whereas Cyprus still has not.

Working from home presented a significant challenge for several businesses in Cyprus, who had to implement the technical and organisational infrastructure and to adopt the cultural mindset needed to support this type of work model. At the same time, the lack of a regulatory framework governing matters such as health and safety, working hours, benefits and other aspects of remote working presented a legal challenge to businesses both in the private and in the public sector.

Due to the novel and emergency character of these measures, employers and employees struggled to understand their respective rights and obligations, while the relevance and extent of application of existing employment laws had become unclear. In addition, there was pressure on employees to agree on salary and other benefit cuts and, on many occasions, employees were forced to leave their workplace and were required to take annual leave or work from home or were even suspended or dismissed.

2 What upcoming legislation or regulation do you anticipate will have a significant impact on employment law in your jurisdiction?

In a way, it can be said that the covid-19 pandemic acted as a catalyst, bringing out the need for reform and new legislation in certain areas of employment law in Cyprus, such as the introduction of a national minimum salary, the implementation of the Work-Life Balance (Directive (EU) 2019/1158), as well as a new law to regulate remote work.

On 2 September 2022, the government passed a ministerial order for a national minimum (monthly) salary of €940 (€870 for the first six months of employment), effective from 1 January 2023. The national minimum salary is subject to review after 12 months and subsequently every two years, to take into account the conditions and the cost of living.

Since 2012, the statutory minimum salary has been set by ministerial decree at €870 for the first six months of employment and increases to €924 thereafter. However, this decree currently applies only to employees in certain types of businesses (ie, office workers, nursery workers, salespersons, etc).

The importance of the new national minimum salary is that, in contrast with the previous legal regime, it will apply to all employees, subject to certain limited exceptions (ie, domestic workers, agricultural workers, shipping workers and certain workers in the hotel industry). Overall, the government expects that an additional 80,000 workers will benefit from this reform, some to a greater and some to a lesser extent.

In August 2022, the deadlines for implementation of the EU Directives on Work-life Balance for Parents and Caretakers and on Transparent and Predictable Working Conditions in the European Union expired. Draft law proposals to implement these in Cyprus are currently under consideration and are expected to be enacted soon, to avoid potential consequences of failing to implement EU law. As a result, substantial new employee rights and benefits are expected to be introduced, including paid parental leave (currently unpaid) as well as the right to flexible working conditions.

Employees will also have a right to receive accurate information in advance, concerning essential terms of employment, including place of work, working hours, probation periods, vocational training, etc, especially where such terms are not clear due to the nature of the work.

As regards remote work, also known as telework, a proposal for a new law to regulate this matter is currently being prepared with the aim of being presented to the House of Representatives by the end of 2022.

The new law is expected to be mainly based on its Greek counterpart, the main difference being that it will not only apply to the public sector like the Greek law, but also to the private sector. It will regulate certain employer obligations and employee rights, such as health and safety, special benefits and working hours. The main legal principles on which this law will be based will include the voluntary nature of telework, equal treatment, personal data protection and the respect for private life.

The right to disconnect consists of the employee’s right, after the end of their working hours, but also during their lawful holidays, to abstain completely from any activity related to their work and in particular not to respond to any email or other communication from their employer. Of course, the working hours of each employee may vary based on their individual contract – which may also include agreement to be prepared to work remotely – but, in any case, there must be abstinence from any work activity for 11 consecutive hours, as required by article 3 of Directive 2003/88/EC.

3 How has the #MeToo movement impacted on the investigation or settlement of harassment or discrimination claims in your jurisdiction?

Under Cyprus Law (Law 205(I)/2002, as amended), sexual harassment is defined as ‘any behaviour of a sexual nature, unwanted by its recipient, expressed in words or actions and having as its purpose or result the insult of a person’s dignity, especially when it creates an intimidating, hostile, humiliating environment, during employment or vocational education or training or when accessing employment or vocational education or training’.

Employers have an obligation to protect employees from any act by their supervisor or colleague that constitutes discrimination based on gender and in particular from harassment or sexual harassment. As soon as an employee becomes the recipient of sexual harassment, employers must, as it becomes known to them, take all appropriate measures to stop it and to ensure that it is not repeated and eliminate its consequences. Otherwise, they are jointly responsible with the perpetrator.

In 2019, the employers’ and the employees’ representatives agreed on a Code of Practice for the Prevention and Treatment of Sexual Harassment Cases, as a tool for contributing to the practical guidance of employers and employees and ascertaining the necessary procedures for dealing effectively with the prevention and repression of sexual harassment at work. This Code advises employers to implement a policy, lays down specific obligations that employers and employees should observe and suggests certain measures to be taken.

The #MeToo movement increased awareness in Cyprus, especially after several complaints were made against some very well-known faces in the showbusiness and sports fields in Greece last year. However, Cyprus is a small country and, although awareness may be increasing, many incidents of sexual harassment at work are not reported due to increased concerns regarding retribution and publicity.

In 2021, the Ombudsman’s Office, responsible for matters concerning the application of equal treatment legislation in Cyprus, led an information campaign called ‘Break the Silence’, to combat sexual harassment at work.

According to the Ombudsman’s Office, complaints about sexual harassment are quite common, although they are not always substantiated. In the past three years, 61 complaints of harassment or sexual harassment, or both, were submitted. Of these complaints, 28 were considered valid and were further investigated or other appropriate actions were taken by the Ombudsman’s Office, such as mediation interventions and filing of reports. Overall, of the total complaints, 68 per cent involved harassment at work because of gender and the remaining 32 per cent concerned sexual harassment. Eight per cent of the total complaints of sexual harassment at work were submitted by women and 20 per cent by men. The public sector accounted for 90 per cent. Private businesses accounted for only 10 per cent amid fears of unfavourable repercussions at work and concern that the complaint will be made public.

Furthermore, the Ombudsman’s Office reported receiving an increasing number of calls from potential victims, requesting specific guidance on how to deal with instances concerning them.

Upon receiving a complaint, the Ombudsman takes measures to ensure the protection of the employee and to prevent a repetition of the behaviour. Such measures may include the transfer of the complainant to another place or change of duties, to interrupt the cooperation or closeness between the victim and the perpetrator. At the same time, the employer is required to investigate the incident – which is its obligation under the Law – and to inform the Ombudsman in detail.

The investigation carried out and the measures taken are evaluated and if it is determined that: (1) the investigation was not sufficient or was not done in good faith, (2) the sexual harassment or its consequences continue, or (3) the procedures for holding the perpetrator accountable were not followed, then the Ombudsman’s Office can conduct its own investigation, gather evidence and issue a relevant finding with recommendations, which are binding on the employer. This conclusion can also be presented by the employee in the context of relevant court proceedings.

The Ombudsman’s Office emphasised the need for amendments to the Law, given that the harassment may be from a third party and not someone who qualifies as an employee, also urging quick action on a bill to criminalise harassment and stalking. As regards the private sector, employers’ associations and trade unions must step up efforts to address this issue.

4 What are the key factors for companies to consider regarding the enforcement of restrictive covenants against departing employees?

Non-competition clauses aimed at preventing an individual from undertaking any work after the termination of an employment relationship are considered ‘in restraint of trade’ and are void under section 27(1) of the Contract Law (Cap 149 as amended), which provides that ‘any agreement by which anyone is restrained from exercising a lawful profession, trade, or business of any kind, is to that extent void.’ Section 27(2) includes three exceptions that concern restrictions imposed in relation to the sale of the goodwill of a business and between partners, after the dissolution and during continuance of the partnership. These exceptions do not cover employment relationships or departing employees.

The Supreme Court of Cyprus has acknowledged that, under the Cyprus Contract Law, agreements in restraint of trade are void and that there are three specific exceptions under the Cyprus Contract Law. Cyprus law is thus a substantial departure from the English common law, under which an agreement in restraint of trade is valid if it is reasonable and not injurious to the public.

Employers in Cyprus should, therefore, keep in mind that they may not be able to rely on restrictive covenants against departing employees.

However, where it can be shown on the evidence that an employee made preparations for setting up a competing business while he or she was still employed by the employer, courts in Cyprus may be willing to acknowledge that the employee violated their duty of fidelity towards the employer, regardless of the existence of non-compete provisions.

Under Cyprus law, employees owe a duty of fidelity to their employers, while they are in their service. It stems from the duty of trust and good faith that must exist in every employment relationship and requires the employee not to act in a manner directly and substantially prejudicial to his or her employer’s interests or generally in a manner that is capable of causing real or substantial harm to the employer’s interests.

First instance courts in Cyprus have held that during his or her employment, an employee owes, among other things, a duty of loyalty to the employer. This includes the duty of not competing with their employer. However, it is not prohibited for the employee to make preparatory actions for the future activities they intend to undertake when their employment is terminated. However, in the case of directors or senior staff, such preparatory action is more likely to constitute a breach of fiduciary duties.

Therefore, as an alternative to relying on non-compete provisions that are likely to be considered void and unenforceable by Cyprus courts, depending on the circumstances, employers in Cyprus may be able to rely on a breach of the duty of fidelity to take preventive measures or obtain compensation from a departing employee.

5 In which industry sectors has employment law been a hot topic recently? Why?

The right to disconnect is a topic that has attracted substantial debate between social partners in Cyprus, since it is intertwined with the right of employees to have their private life respected on the one part and the legitimate expectations of employers on the other part. This topic is relevant to employees of all sectors, although it is more relevant to employees engaged in the provision of services, due to its nature.

With the example of Greece in mind, it is assumed that any regulation on this matter is likely to take into account and respect any (voluntary) agreement between an employer and an employee to be prepared to work remotely, to the extent that any such agreement does not violate existing legislation on working hours. In this case, however, the concept of free will and the voluntary character of any such agreement are likely to become relevant, considering the nature of an employment relationship and the inequality of bargaining power between employer and employee. Cyprus law recognises that employee consent, provided in certain cases where it is required by law, is not always freely given (such as in the case of certain personal data processing activities).

It is expected that this matter will be resolved in the context of the discussions between the social partners on the new laws on telework and the implementation of the Work-Life Balance Directive, that are currently under way.

6 What are the key political debates about employment currently playing out in your jurisdiction? What effects are they having?

The key political debates about employment in Cyprus currently include issues such as the viability and the need for reform of the social insurance scheme, early retirement benefits and the national minimum salary.

Old age pension currently received by workers who retire at 63 is substantially less than for workers who retire at 65, due to a 3 to 12 per cent proportionate deduction imposed by law. This is contested by private sector workers who otherwise qualify for a full pension at 65 but have chosen to receive a pension at 63, as opposed to the public sector where anyone who completes 400 months of work is entitled to retire and receive all their benefits, including a full pension. While the government acknowledges the issue, it claims that the current social insurance system would become unviable if this was to change, although there is currently an open discussion at social partner level concerning a comprehensive revision of the social insurance laws.

As regards a national minimum salary, all sides agree that this was a much needed and long overdue reform. However, trade unions requested, inter alia, to ensure that minimum wages agreed in collective agreements extend to all workers in the relevant sector, a decent minimum wage associated with fixed working hours, restoration of the cost of living allowance and its extension to all workers and regulation of the 13th salary. On the other hand, employers’ organisations asked for the minimum wage to be kept at low levels and for a transition period, as well as exceptions and footnotes.

The opposition is currently questioning whether the final result constitutes an improvement on the existing legal framework, criticising the levels fixed after lengthy discussions and negotiations between the social partners as being particularly low, considering the negligible increase after 11 years and questioning whether it will be of any real benefit to those concerned, taking into account the increase in the cost of living.

On the other hand, the government claims that 80,000 employees will benefit from this reform, seeing their monthly income increase, while half of those low-paid workers would benefit from raises that could be close to 20 to 25 per cent in some cases. According to the government, out of the 22 member states of the European Union that have a national minimum salary (including Cyprus), Cyprus ranks among the highest nine.

It is worth noting that the Commission prepared a study (based on the EUROMOD model), which showed that a monthly minimum wage of €1,000 is expected to significantly reduce the risk of poverty for the benefit of young and female workers.

The Inside Track

What are the particular skills that clients are looking for in an effective labour and employment lawyer?

An effective labour and employment lawyer is one who is always up to date with his or her subject, is readily available and has the knowledge and experience required to assist a client at any given time. Business acumen, communication skills, foresight as well as hindsight are also very important qualities for such a lawyer to possess.

This is an area of law where human relations play a crucial role and taking a decision is not always easy either for employers or for employees. Clients are looking for lawyers with basic knowledge and understanding of their relevant business sector, who should be able to assess a particular situation correctly, listen to their concerns and provide sound legal and practical advice to help them to make informed decisions.

What are the key considerations for clients and their lawyers when handling employment disputes?

When handling employment disputes, one of the key considerations for clients and their lawyers is the importance of being able to deal as effectively and proactively as possible with any situation that may arise in the workplace. Employers and employees should always be advised, as far as practicable, to explore the possibility of reaching an amicable settlement in any employment dispute, and only to pursue litigation as a last resort.

Even though the Labour Disputes Court in Cyprus offers a simpler and more expedient mechanism for resolving disputes than other civil courts, litigation proceedings can nonetheless be unpredictable and prove to be lengthy and costly for the parties. Litigation proceedings can also attract negative publicity, which the parties will normally prefer to avoid.

Furthermore, potential employee complaints against their employers for employment law violations can also carry penal law implications, which employers would be best advised to try to avoid or mitigate as far as possible.

What are the most interesting and challenging cases you have dealt with in the past year?

In the past year, we advised a very high-profile client on how to deal with an alleged harassment case that consisted of an unjustified complaint and several demands raised by an employee who was allegedly the recipient of such harassment and claimed that it had had serious consequences on his mental health.

We also advised a global market research firm with offices in Cyprus and internationally, on their obligations arising from applying a hybrid and full-time working from home model and the applicability and effect of existing Cyprus and international laws and regulations with respect thereto. We also reviewed their employment contracts and assisted in preparing an internal working from home policy and a health and safety questionnaire for employees.

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