New Special Partial Suspension Law: How this Affects How You Pay Your Employees in Cyprus.
For companies operating in Cyprus, it is important to note that the Ministry of Labor, Welfare and Social Insurance, has passed the COVID-19 Pandemic Law 27(1) of 2020 (herein “the Law”), which provides for payment of employees’ salaries in the event of a suspension or partial suspension of business activity.
Accordingly, if business has been partially suspended (i.e. it has reduced its turnover beyond of 25% in the month of March 2020 and foresees a corresponding decrease in turnover for the month of April 2020, compared to the corresponding months of the previous year and its decrease in turnover is exclusively due to the situation of the company due to the COVID 19), the employer is entitled to file to participate in the program allowing for employees to be paid partial disability for a period of 1 month.
Businesses that employ up to 50 persons may join the Special Suspension Plan and declare 75% of their total number of employees to be paid a Special Unemployment Benefit (section 3(d) of the Law). If a business employs more than 50 people, then they can declare 60% of their total number of employees to be paid under the scheme.
Section 3(c) of the Law provides, “The basic requirement for participation in the Special Business Partial Suspension Plan is that no employee has been fired since March 1, 2020, and if the application is approved, any employee should not be dismissed for both the business participation period and an additional period. Equal to the period of participation in the Plan plus one additional month (except for reasons justified without notice). It is understood that businesses will not be able to fire employees for financial reasons during the above period.”
It is important to note that companies that are part of the Special Inactive Allowance is not granted to shareholders, partners who hold more than 20% of the shares, general managers and executives, who either fall under 25% or 40% of staff, as the case may be, in which the Special Inactive Benefit cannot be paid (does not apply to companies employing up to two persons) (section 3(g) of the Law).
Furthermore, for the period for which the Special Unemployment Benefit is to be paid, the employer shall be relieved of his obligation to pay the salary to his employees who received the allowance. Where a salary has been paid and for the period for which the Employees receive the Special Inactive Benefit, the portion of the salary corresponding to that period may be offset by the employer (section 3(j) of the Law).
If your company would like to participate in the scheme then the company needs to submit, on application (Form ESA.4) a list of both the employees for which a Special Employment Benefit payment is requested for the period of partial suspension of the business and a list of employees for which they will not paid the Special Inactive Allowance (section 3(i) of the Law).
This Special Partial Suspension Plan will be valid from 16/03/2020 to 12/04/2020. The aim of this new program to ensure people will remain employed and help alleviate the financial burden on companies.
For advice on how to employ this policy for your firm, contact an experienced attorney.
This is for informational purposes only and does not constitute legal advice.