The termination of employment in Cyprus can be considered as fair dismissal provided that an employee has been dismissed from employment for one of the following reasons:

The employee failed to carry out his/her employment tasks in a reasonably efficient manner.

The “reasonably efficient manner” shall be considered on the grounds of “reasonable efficiency” and not on “utmost efficiency”.  The test is subjective according to the circumstances.

It is expected that for termination of employment in Cyprus on the grounds of “lacking reasonable efficiency”, sufficient warning letters must be provided to the employee prior to termination of employment; every employee is entitled to be aware of his/her work and how can he/she improve.

Upon the employee’s failure to improve despite the warning letter(s), the employer shall provide the employee with a notice of termination of employment, according to the law on Termination of Employment in Cyprus.  The length of the termination notice depends to the weeks/years of employment, as follows:

The employee’s position within the employment has been made redundant.

An employee may lawfully become redundant in cases when his/her employment has been terminated for one of the following reasons:

• The business/operations/duties/department for which the employee was employed for have ceased, or will cease, operating.  This includes circumstances where the employee has ceased carrying on business in the place in which the employee was employed.
• Internal changes of the employer’s business which may result to reducing the number of employees (such internal changes can be reorganization, change in production operations (by, say, implementing new machinery which requires less manpower), modernization, etc.).
• Difficulties on business operations (less workload), decreased volume of work, credit difficulties, etc.

In cases of dismissal due to redundancy, where any of the above criteria are satisfied, the employer is then entitled to be compensated by the Redundancy Fund in Cyprus, and not by the employer.

Redundancy payments are calculated according to the years of employment and the last salary.  However, redundancy payments, according to the Redundancy Payment law, have a maximum payable compensation.  Click here for the currently applicable maximum payable compensation according to the Social Insurance Services of Cyprus.

The employee has been dismissed due to the completion of a fixed-term contract.

A fixed term contract has to be on objective grounds and not simply by having a contract of employment which provided for a termination date.  Fixed term contracts must have a maximum duration of 30 months, unless extension of such time frame is proved (burden of proof lies on employer).

Common types of fixed-term contracts are:

• Certain project is undertaken by the employer
• A new employee has been employed with a purpose of temporarily replacing an absent employee.

Other reasons of fair dismissal of employment, according to Cyprus law:

• The employee has been dismissed due to circumstances which could not be foreseen or avoided by the employee (i.e. force majeure events, war, act of God, uprising etc.).
• The employee has attained the age of retirement.
• The employee’s conduct during employment has render himself liable to dismissal without notice.  Such circumstances can be:
  • The employee has acted in a way that constitutes gross misconduct by the employee in the course of his/her duties;
  • The employee has committed a criminal offence in the course of his/her business, without the knowledge and/or agreement of the employer;
  • The employee’s attitude, character and general conduct during employment has caused a serious breakdown in the employer-employee relationship which cannot reasonably be expected to continue; this includes immoral behavior and serious disagreements and contraventions of work ethics or employment rules.