Question 1

Who pays redundancy compensation in Cyprus—the employer or the government?

Accepted Answer

In Cyprus, statutory redundancy compensation is paid directly by the state-managed Redundancy Fund (Ταμείο Πλεονασμού), administered by the Department of Social Insurance Services (YKA). Employers finance this fund through a monthly 1.2% payroll contribution, meaning the employer does not pay statutory redundancy out of pocket upon genuine redundancy.

Question 2

What is the statutory calculation formula for redundancy pay in Cyprus?

Accepted Answer

Under Termination of Employment Law No. 24 of 1967, compensation scales with continuous service: Years 1–4 receive 2.0 weeks pay per year; Years 5–10 receive 2.5 weeks per year; Years 11–15 receive 3.0 weeks per year; Years 16–20 receive 3.5 weeks per year; and Years 21–25 receive 4.0 weeks per year, subject to a lifetime statutory maximum of 75 weeks.

Question 3

Is there a ceiling on the weekly wage used for redundancy calculations?

Accepted Answer

Yes. The weekly wage used to compute statutory redundancy benefits is capped at the maximum statutory insurable earnings rate set by the Social Insurance Fund, currently capped at approximately €925.00 per week.

Question 4

Is redundancy pay subject to income tax or social security in Cyprus?

Accepted Answer

Statutory redundancy compensation paid by the Cyprus Redundancy Fund is completely 100% exempt from Cyprus Personal Income Tax (PIT), Social Insurance contributions (SIF), and GeSY healthcare contributions.

Question 5

What is the minimum statutory notice period for termination in Cyprus?

Accepted Answer

The statutory minimum employer notice period depends on tenure: 1 week (for 26–51 weeks service), 2 weeks (1–2 years), 4 weeks (2–3 years), 5 weeks (3–4 years), 6 weeks (4–5 years), 7 weeks (5–6 years), and 8 weeks for 6 or more years of continuous service.

Jurisdiction	Funding Mechanism	Statutory Rate per Year	Statutory Cap	Tax Treatment
Cyprus 🇨🇾 State Fund	Redundancy Fund (1.2% levy)	2.0 to 4.0 weeks/yr	75 Weeks (~€69,375)	100% Tax-Exempt
Greece 🇬🇷	Direct Employer Liability	Law 4093 scale	12 to 24 months wage	Graduated PIT after €20k
United Kingdom 🇬🇧	Employer / Insolvency Service	0.5 to 1.5 weeks/yr	20 Years / £21,000	First £30,000 Tax-Free
Ireland 🇮🇪	Employer (Social Fund backup)	2 weeks/yr + 1 bonus wk	€600/wk cap	100% Statutory Tax-Free
Malta 🇲🇹	Employer Contractual	Notice pay / settlement	Contractual	Taxable standard PIT

Cyprus Redundancy Fund & Severance Calculator

Service & Remuneration Parameters

Law 24/1967 Tiered Service Schedule Entitlement

European Redundancy & Severance Regimes Comparison

Engr. Muhammad Shahzad

📊 Cyprus Tax Department & Social Insurance Services (SIS) Matrix