Hiring international employees can be an attractive option for growing companies. Countries like Cyprus offer a diverse, skilled talent pool to boost business competitiveness.
While salaries are important, there are many other costs to keep in mind when it comes to global hiring. For example, employers are typically required to make mandatory contributions to social security. They may also provide staff with benefits like healthcare when competing for top talent.
This article will walk you through the various fixed and variable costs of hiring in Cyprus.
Costs to Consider When Hiring Around the World
The basic hiring costs in Cyprus include:
- Employee’s gross salary
- Taxes and benefits
- Vacation pay and other leaves
- Overtime pay
- Severance pay
You may also want to add optional costs like benefits, bonuses, and extras.
Mandatory Costs of Hiring an Employee in Cyprus
Let’s first look at what you must pay your staff in Cyprus in compliance with local laws and regulations.
Salary
In recent years, Cyprus revamped its individual and corporate taxation systems to attract businesses and talent to the island. With some of the lowest taxes in the EU, Cyprus is attractive for both employees and employers.
The island boasts a high quality of life and a comfortable minimum wage of €940 per month for most workers.
Mandatory Taxes and Benefits
Payroll costs in Cyprus add up to about 14.9% of the employee's gross salary. These include:
- 8.3%: Social Insurance Fund
- 2%: Social Cohesion Fund
- 1.2%: Redundancy Fund
- 0.5%: Industrial Training Fund
- 2.9%: National Health System
- 8%: Holiday Fund (only applicable in specific sectors)
Employers must also withhold taxes and other contributions from their employees:
- 0-35%: Individual Income Tax
- 8.3%: Social Insurance
- 2.65%: National Health System
Mandatory Bonuses
There are no mandatory bonuses in Cyprus. However, it is customary for employers in Cyprus to pay a thirteenth-month bonus. This is usually paid to employees around the winter holidays.
Paid Leave
There are several types of paid leave in Cyprus.
- Public holidays: There are 14 public holidays in Cyprus.
- Paid time off: Full-time employees receive 20 days of paid vacation after completing 48 weeks of employment.
- Sick leave: Cypriot employees can take up to 156 days of sick leave per year. They receive full pay from day three onwards, covered by social security, not the employer.
- Parental leave: New mothers are entitled to 18 weeks of maternity leave. The employer does not have an obligation to pay for leave. Instead, the social insurance fund supplements payments at 75% to 90% of the woman’s average pay. New fathers are entitled to paternity leave of up to 13 weeks, which may be split with the second parent.
- Force majeure leave: Employees may take up to seven days of unpaid leave due to unexpected circumstances.
Overtime Pay
The standard working hours in Cyprus are eight hours per day for up to six days per week. Overtime is paid at time and a half on weekdays and double time on weekends and holidays.
Severance Pay
If fired without just cause, employees are entitled to severance pay that ranges depending on their tenure. Employees are paid two weeks' worth of salary for every year worked in the first four years of employment. This figure then increases up to four weeks of pay for every year over twenty years of service.
Additional Costs of Hiring Cypriot Talent
Today’s talent market is extremely competitive. Employers may also want to offer a benefits package to hire top Cypriot talent. This will help during both search and retention. Here are some benefits you might consider offering Cypriot employees, along with other possible costs.
Benefits
Offering the right benefits package can help you stand out from the competition. In Cyprus, many employers offer private health insurance for employees and their families. Prices for this vary greatly, depending on the type and extent of coverage. However, you can expect to pay anywhere between €300 and €1500 per year for private health insurance.
For highly competitive roles, you may also want to consider added vacation time, flexible schedules, extra pension benefits, etc.
Bonuses and Extras
Finally, you’ll want to consider smaller expenses like gifts for your staff for special occasions, comped meals or coffees for meetings, among other things.
If you hire one or two employees in Cyprus, they’ll likely do remote work. Even so, it can be beneficial to pay for a membership at a coworking space or provide funding to set up a home office. Coworking spaces in Cyprus will run you about €20 per day.
However, you might be hiring an entire team to work on larger projects such as software development. If that’s the case, renting an office space to facilitate collaboration among your staff can be wise.
Average Cost Of Hiring One Employee in Cyprus (Annual in USD)
Below is an estimate based on a salary of USD 100,000 for an employee in Cyrpus. This salary is for ease of calculation and will change based on several factors specific to your hiring goals, including employment contract details, the candidate’s experience and education, and the type of position.
Mandatory Pay
- Salary: $100,000
- Employer Taxes: $14,900
- Social Insurance Fund
- Social Cohesion Fund
- Redundancy Fund
- Industrial Training Fund
- National Health System
Discretionary Pay
- Private Health Insurance: $990 (median based on range)
- Other Benefits and Bonuses
TOTAL: $115,890 + Benefits and Bonuses (discretionary)
Note that these totals do not include other standard costs like soft benefits commonly offered in Cyprus.
A Global EOR Can Help You Manage International Payroll
With so many costs to consider, it may feel overwhelming to start with global hiring. An Employer of Record (EOR) can help. An EOR like Borderless can help you compliantly hire and pay employees in Cyprus.
If you’d like to get started with global hiring but aren’t sure how then book a demo with Borderless. We’ll walk you through every step so that you can reap all the benefits without the added headaches.
Disclaimer
Borderless does not provide legal services or legal advice to anyone. This includes customers, contractors, employees, partners, and the general public. We are not lawyers or paralegals. Please read our full disclaimer here.
