Redundancy payment in Cyprus: who qualifies and how it is calculated
In Cyprus a redundancy payment is not paid by your employer out of goodwill: it is a statutory right under Part IV of the Termination of Employment Law of 1967 (Law 24/1967), and the money comes from the Redundancy Fund (Ταμείο Πλεονάζοντος Προσωπικού), which employers finance through contributions. You qualify if you worked continuously for the same employer for at least 104 weeks and your job ended for one of the reasons listed in section 18: the business closed, it stopped operating at the place where you worked, or the employer needed fewer staff because of modernisation, abolition of departments, market or credit difficulties, lack of orders or a reduction in the volume of work.
The amount is fixed by the Fourth Schedule to the Law: two weeks' wages for each of the first four years of service, rising step by step to four weeks' wages for years 21 to 25. On top of that the employer still owes notice (or pay in lieu), any unpaid wages and untaken annual leave. This guide explains how to check that the redundancy is genuine, how to calculate the payment, how to claim it from the Fund, and what to do if the Fund refuses or the employer used redundancy as a cover for an unlawful dismissal.
Key facts
Deadline
Application to the Labour Disputes Court: within 12 months from the date the right arose, or within 9 months from the Redundancy Fund's reply (section 12(10A) of Law 8/1967). Apply to the Fund promptly after your last working day so that its reply arrives well within these periods.
Other time points: at least 104 weeks of continuous service for entitlement; notice of 1 to 8 weeks under section 9 of Law 24/1967; the employer must notify the Minister of Labour at least one month before the planned redundancy (section 21); in collective redundancies the dismissals take effect no earlier than 30 days after notification to the authority (section 8 of Law 28(I)/2001); priority for re-hiring if the employer recruits for the same type of work within 8 months (section 22 of Law 24/1967); appeal against the Labour Disputes Court's judgment on a point of law only, within 42 days.
What to do
Check that you have at least 104 weeks of continuous service with the same employer. This threshold in section 16(1) of Law 24/1967 is higher than the 26 weeks that protect you against unfair dismissal, so an employee with 18 months' service has no redundancy payment from the Fund, although notice and any compensation for unlawful dismissal may still be due.
Continuity is assessed under the Second Schedule: a week counts if you worked at least 18 hours, and weeks of sickness, injury, childbirth or temporary stoppage of work also count. Seasonal workers employed by the same employer every year are treated as continuously employed if their annual average is at least 15 weeks. Collect your social insurance statement, which shows the weeks paid by each employer.
Read the termination letter and compare the stated reason with section 18. A redundancy exists only if the employer closed the business, stopped operating at your place of work, or reduced the number of employees needed because of modernisation, mechanisation, changes in products or methods, abolition of departments, marketing or credit difficulties, lack of orders or raw materials, or a reduction in the volume of work.
The employer must show that the reason was real and that it actually reduced the number of staff needed. If your duties were simply given to a newly hired person, the redundancy is doubtful. Section 23 leaves business decisions to the employer, but the Labour Disputes Court checks whether the reason given is genuine and whether you were fairly selected.
Make sure the formal steps were followed. Under section 21 the employer must notify the Minister of Labour of any planned redundancy at least one month before the termination date, on the prescribed form, stating the number of employees, the sections affected, their occupations and the reasons. Failure to notify without reasonable cause is a criminal offence under section 29.
If the employer dismisses at least 10 employees within 30 days in a business of 21 to 99 staff, at least 10% in a business of 100 to 299, or at least 30 in a business of 300 or more, the Collective Redundancies Law 28(I)/2001 also applies: the employer must consult employee representatives in good time on ways to avoid or reduce the dismissals, and the dismissals cannot take effect earlier than 30 days after notification to the authority.
Insist on written notice or pay in lieu. Redundancy does not cancel the notice required by section 9: 1 week after 26 weeks of service, 2 weeks after 52 weeks, 4 weeks after 104 weeks, 5 weeks after 156 weeks, 6 weeks after 208 weeks, 7 weeks after 260 weeks and 8 weeks after 312 weeks. Notice must be in writing, and a contract cannot shorten it. This sum is paid by the employer, not by the Fund.
During notice you may, by agreement with the employer, be absent without loss of pay for up to 8 hours a week, and up to 40 hours in total, to look for a new job (section 12). Ask the employer for a certificate of employment stating your dates of service and type of work; under section 8 it may contain nothing unfavourable to you.
Calculate the payment under the Fourth Schedule. For each complete year of continuous service you receive: years 1 to 4, two weeks' wages; years 5 to 10, two and a half weeks' wages; years 11 to 15, three weeks' wages; years 16 to 20, three and a half weeks' wages; years 21 to 25, four weeks' wages. A remaining period of 26 weeks or more counts as a full year. The scale ends with the 25th year, so the maximum is 75.5 weeks' wages.
Example: 12 years of service give 4 × 2 + 6 × 2.5 + 2 × 3 = 29 weeks' wages. The weekly wage is what you were entitled to in your last week of employment, calculated under the Third Schedule; any part above four times the weekly basic insurable earnings under the social insurance legislation is ignored, so very high salaries are capped.
Apply to the Redundancy Fund. The payment is made by the Fund, which is administered by the Social Insurance Services of the Ministry of Labour, on its official application form; the employer usually also has to confirm the dates and the reason for termination. Attach the termination letter, your employment contract, recent payslips and your social insurance number.
The Fund checks whether the termination was a redundancy within section 18 and how many weeks of service count. It may refuse if, before termination, you unreasonably refused suitable alternative employment offered by the employer, if a new owner of the business took you on under your existing contract, or if you were moved to suitable work in an associated company (section 20). The payment cannot be assigned or seized by creditors (section 20A).
Claim what the employer owes separately. The Fund pays only the statutory redundancy amount. The employer remains liable for wages up to the last day, pay in lieu of notice, untaken annual leave under Law 8/1967 and any 13th salary. If your contract, a collective agreement or custom gives a larger redundancy benefit, section 17 entitles you to the Fund's amount plus the difference from the employer; provident fund payments are not counted.
If the employer has become insolvent or is being wound up and cannot pay wages, notice or leave, you can claim from the separate Fund for the protection of employees' rights in the event of employer insolvency under Law 25(I)/2001.
If the Fund refuses or pays too little, or the employer disputes the reason, file an application with the Labour Disputes Court on Form I under the Court's 1999 Procedural Rules, setting out the grounds and the remedy sought; the Rules fix a small stamp duty on the application. The Fund itself is a party that can appear before the Court (section 24). The deadline is 12 months from the date the right arose or 9 months from the Fund's reply.
The Court decides summarily and is not bound by the strict rules of evidence. In Stavrou v. Cyprus Trading Corporation (2025) it ordered the Fund to pay 75.5 weeks' wages to an employee with 25 years' service, and ordered the employer separately to pay 4 weeks' notice.
Consider whether the redundancy was a pretext. If the employer cannot prove a genuine redundancy, the termination is treated as a dismissal without a lawful reason under section 3, and you can claim compensation under the First Schedule instead. That compensation is never less than the redundancy payment you would have received and never more than two years' wages; the Court weighs your wages, length of service, age, loss of career prospects and the circumstances of the dismissal.
In Stylianou v. Cyprometal (2023) the Court found that the reduction of staff had not been shown and awarded 45 weeks' wages. The employer pays compensation up to one year's wages and the Fund pays any excess (section 3(2)).
What to watch out for
- Missing the deadline: the 12-month period in section 12(10A) of Law 8/1967 runs from the date the right arose, not from the moment you learn the Fund will not pay. Waiting months for an informal answer can cost you the claim.
- Refusing an alternative job without good reason: if the employer offers suitable alternative employment before termination and you unreasonably refuse it, section 20(a) removes the right to a redundancy payment.
- Counting service wrongly: only continuous service with the same employer counts, and gaps that are not covered by the Second Schedule break continuity. Check your social insurance record before relying on a figure.
- Signing a settlement or receipt 'in full and final settlement' that mixes notice, leave and redundancy without a breakdown. Ask for an itemised statement of every sum before signing anything.
- Reaching pensionable age: no payment is due if you had reached pensionable age before termination, and within the last 12 months before that age the amount is reduced by one twelfth for each completed month (section 19).
- Assuming the Fund covers everything: notice, wages, annual leave and contractual benefits must be claimed from the employer (or, on insolvency, from the insolvency fund under Law 25(I)/2001).
- Accepting a vague 'restructuring' explanation: if your position was filled again soon after, or you were selected without objective criteria, you may have a stronger claim for unlawful dismissal under section 3 than for a redundancy payment.
Legal basis
Related court decisions
Frequently asked questions
How much redundancy pay will I get in Cyprus?
Under the Fourth Schedule to Law 24/1967 you receive two weeks' wages for each of years 1 to 4, two and a half for years 5 to 10, three for years 11 to 15, three and a half for years 16 to 20 and four for years 21 to 25. A remainder of 26 weeks or more counts as a full year. The maximum is 75.5 weeks' wages.
Who pays redundancy money in Cyprus, the employer or the government?
The statutory redundancy payment is paid by the Redundancy Fund, which employers finance through contributions and which is administered by the Ministry of Labour's Social Insurance Services. The employer pays notice, unpaid wages, annual leave and any extra redundancy benefit promised in the contract or a collective agreement.
How long do I need to work to get redundancy pay?
At least 104 weeks, roughly two years, of continuous employment with the same employer (section 16(1) of Law 24/1967). With shorter service you have no payment from the Fund, but you still have the right to notice after 26 weeks and may claim compensation if the dismissal was unlawful.
Is redundancy pay taxed in Cyprus?
Law 24/1967 does not deal with tax; the treatment of termination payments is set by the Income Tax Law and differs between the statutory payment from the Fund, pay in lieu of notice and extra sums agreed with the employer. Pay in lieu of notice and leave pay are normally taxed like salary. Confirm the treatment of your lump sum with the Tax Department or an accountant before relying on a net figure.
Is there a maximum weekly wage for redundancy calculation?
Yes. Under paragraph 4 of the Fourth Schedule any part of the weekly wage above four times the weekly basic insurable earnings under the social insurance legislation is disregarded. The basic insurable earnings are set each year, so check the current figure with the Social Insurance Services.
Do I still get notice if I am made redundant?
Yes. Notice under section 9 of Law 24/1967 applies to redundancy as to any other dismissal: from 1 week after 26 weeks of service to 8 weeks after 312 weeks. It must be in writing. The employer may pay in lieu of notice instead of letting you work it.
What if the Redundancy Fund rejects my application?
You can apply to the Labour Disputes Court within 9 months from the Fund's reply, or within 12 months from the date the right arose (section 12(10A) of Law 8/1967). The Fund is a party to the proceedings and the Court can order it to pay.
Can my employer make me redundant and then hire someone else?
If the employer recruits staff of the same type or specialisation within 8 months, it must give priority to the employees made redundant (section 22). If your job was never really abolished, the redundancy may be a cover for unlawful dismissal and you can claim compensation of up to two years' wages.
What happens to redundancy pay if the company goes bankrupt?
The redundancy payment comes from the Redundancy Fund, so it does not depend on the employer's solvency. Unpaid wages, notice and annual leave can be claimed from the separate insolvency fund under Law 25(I)/2001 if the employer is insolvent or in liquidation.
Are part-time and seasonal workers entitled to redundancy pay?
A week counts towards continuous service if you worked at least 18 hours in it (Second Schedule). Seasonal workers employed every year by the same employer are treated as continuously employed if their annual average is at least 15 weeks (section 16(1)).
Legal guide – individual how-tos
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