Insights: Cyprus Employment Law Heading into 2026

Cyprus employment law continues to evolve at a rapid pace. Over the past two years, employers have faced significant legislative changes affecting employment contracts, remote working arrangements, workplace conduct, whistleblowing procedures and payroll compliance. Further reforms are expected during 2026, including the implementation of the EU Pay Transparency Directive, which is likely to introduce substantial new obligations relating to remuneration practices and gender pay reporting.

These developments reflect a broader trend towards greater transparency, enhanced employee protection and increased regulatory oversight. Employers are increasingly expected not only to comply with their legal obligations but also to demonstrate compliance through properly maintained employment records, internal policies and documented procedures.

For businesses operating in Cyprus, employment compliance has become a strategic issue rather than a purely administrative one. Failure to comply with employment legislation can result in financial penalties, employment claims, reputational damage and increased regulatory scrutiny.

This article outlines the most significant recent developments in Cyprus employment law and highlights the key issues employers should consider as they prepare for 2026.

Digitalisation of Employment Records – The ERGANI System

One of the most significant recent developments is the introduction of enhanced digital reporting obligations through the ERGANI Information System, operated by the Ministry of Labour and Social Insurance.

Pursuant to Decree ΚΔΠ 455/2024, employers are required to register the essential terms of employment of their employees through the ERGANI platform. The system records key employment information, including working hours, remuneration, workplace location and other fundamental contractual terms.

The objective of the reform is to increase transparency in employment relationships, facilitate regulatory oversight and combat undeclared work.

The introduction of ERGANI represents a significant shift in the way employment relationships are monitored. Employment contracts, payroll records and information submitted through the platform must remain consistent and up to date. Employers should therefore ensure that any changes to essential employment terms are properly documented and reflected within the system.

Non-compliance may result in substantial penalties, including fines of up to €5,500 upon conviction.

Businesses should review their employment records regularly to ensure that contractual documentation, payroll information and ERGANI registrations accurately reflect the actual terms and conditions of employment.

Remote Working and Telework Arrangements

Remote working has become a permanent feature of the modern workplace, and Cyprus has introduced a comprehensive legislative framework regulating telework arrangements.

The Framework Regulating Remote Working Law of 2023 (Law 120(I)/2023) governs teleworking in the private sector. Under the legislation, telework is voluntary and must be agreed in writing between employer and employee, whether at the commencement of employment or subsequently through an amendment to the employment contract.

The law establishes a number of important protections and obligations, including:

• The employee’s right to disconnect outside agreed working hours.
• Protection against discrimination arising from refusal to participate in telework arrangements.
• Employer obligations to provide specific written information regarding teleworking conditions.
• Rules concerning equipment, communication and working arrangements.

Employers should pay particular attention to issues relating to working time, supervision, health and safety, confidentiality and data protection. Remote working often raises practical questions regarding employee availability, performance monitoring and the protection of sensitive business information.

The implementation of clear telework policies and appropriately drafted contractual provisions can significantly reduce the risk of disputes and regulatory issues.

In parallel, the public sector teleworking framework established under Law 215(I)/2025 will come into force in April 2026 as part of Cyprus’ broader public administration modernisation programme.

Workplace Violence and Harassment

Workplace conduct and employee wellbeing have become increasingly important areas of regulation.

The Prevention and Combating of Violence and Harassment in the Workplace Law of 2025 (Law 42(I)/2025) significantly expands employer responsibilities in relation to workplace behaviour and employee protection.

The legislation adopts broad definitions of both violence and harassment, covering conduct that causes or is likely to cause physical, psychological, sexual or economic harm. Importantly, the law applies not only within the traditional workplace but also to remote working environments and other work-related settings.

Employers are expected to take proactive measures to prevent inappropriate conduct and address complaints effectively. In practical terms, this requires employers to implement:

• Written workplace violence and harassment policies.
• Internal reporting mechanisms.
• Investigation procedures.
• Confidentiality safeguards.
• Protection against victimisation and retaliation.

Employers should review existing disciplinary, grievance and workplace conduct policies to ensure compliance with the new legislative requirements. Staff training and management awareness programmes should also be considered as part of a broader compliance strategy.

Failure to address workplace harassment appropriately may expose employers to both civil liability and criminal sanctions.

Whistleblowing and Protection Against Retaliation

The Protection of Persons Reporting Breaches of Union and National Law of 2022 (Law 6(I)/2022) introduced a comprehensive whistleblower protection regime in Cyprus.

The legislation protects individuals who report breaches of EU or national law that come to their attention in a work-related context. Protection extends beyond the reporting individual and may also cover facilitators, colleagues, family members and associated legal entities.

Private-sector employers with fifty or more employees are generally required to establish internal reporting channels that allow employees and other protected persons to raise concerns confidentially.

The law prohibits a wide range of retaliatory actions, including:

• Dismissal.
• Demotion.
• Reduction of remuneration.
• Changes to duties or responsibilities.
• Negative performance assessments.
• Any other adverse treatment connected to a protected disclosure.

Employers should ensure that whistleblowing procedures are properly documented, easily accessible and supported by clear internal policies. Organisations should also ensure that managers understand their responsibilities when handling protected disclosures.

A well-designed whistleblowing framework can assist businesses in identifying and addressing regulatory issues before they develop into more significant legal or operational problems.

Employment-Related Tax Changes

Recent reforms to the Cyprus tax system have introduced several changes that will affect employees and employers alike.

Among the most significant measures is the increase in the personal tax-free income threshold from €19,500 to €22,000, together with adjustments to the income tax bands and the introduction of additional deductions linked to family circumstances and household income.

Changes have also been introduced concerning the taxation of certain termination-related payments, including ex gratia compensation and severance arrangements exceeding specified thresholds.

These reforms may affect payroll administration, remuneration structures and employee benefits planning. Employers should review payroll systems and seek appropriate advice to ensure that withholding obligations and employment-related tax reporting requirements are properly addressed.

Looking Ahead: Pay Transparency

Perhaps the most significant employment law development on the horizon is the implementation of Directive (EU) 2023/970 on pay transparency and equal pay.

The Directive aims to strengthen the principle of equal pay for equal work and to address gender-based pay disparities through enhanced transparency obligations.

While the final form of the Cyprus legislation remains subject to the legislative process, employers should anticipate obligations in areas such as:

• Greater transparency during recruitment processes.
• Disclosure of salary ranges to job applicants.
• Restrictions on requesting salary history from candidates.
• Employee rights to obtain information concerning pay levels and pay differentials.
• Enhanced reporting obligations relating to pay gaps.
• Corrective measures where unjustified pay disparities are identified.

The reforms are expected to require employers to maintain more detailed remuneration records and to justify differences in pay through objective and non-discriminatory criteria.

Employers should not wait for the legislation to be enacted before beginning preparations. Early review of pay structures, job evaluation systems and recruitment practices can significantly reduce future compliance risks.

How Employers Can Prepare

The direction of employment law reform in Cyprus is clear. Legislators and regulators are placing increasing emphasis on transparency, accountability and documented compliance.

Employers should therefore consider undertaking a comprehensive review of their employment practices and internal procedures.

Particular attention should be given to:

• Ensuring that employment contracts and ERGANI records are accurate and up to date.
• Reviewing remote working arrangements and implementing compliant telework policies.
• Adopting workplace harassment and violence prevention procedures that satisfy the requirements of Law 42(I)/2025.
• Reviewing whistleblowing frameworks and internal reporting mechanisms.
• Assessing the impact of recent tax changes on payroll administration and termination arrangements.
• Preparing for forthcoming pay transparency obligations by reviewing remuneration structures and identifying any unexplained pay disparities.

As employment regulation continues to develop, proactive compliance remains the most effective way to minimise legal risk and avoid costly disputes. Early legal review of employment documentation, workplace policies and HR procedures can help businesses remain compliant while adapting efficiently to future legislative changes.

How We Can Help

Our firm advises on on all aspects of Cyprus employment and labour law. Our services include drafting and reviewing employment contracts, advising on workplace policies and procedures, assisting with disciplinary and termination matters, advising on remote working arrangements, workplace investigations, whistleblowing compliance and employment-related regulatory obligations.

This article is provided for general information purposes only and does not constitute legal advice. It reflects the position as at the time of writing, including the status of draft legislation that remains subject to change; readers should seek specific advice on their circumstances.

Theodorou Law is a Cyprus law firm with Cyprus lawyers and other legal experts on legal matters involving Cyprus law, EU law and international law. The above should be used as a source of general information only. It is not intended to give a definitive statement of the law.