Staff matters can often be rather complicated, especially in jurisdictions where clients are not familiar with local requirements. Any organisation entering a foreign market faces a number of employment related challenges. Furthermore, payroll can take a considerable part of valuable time and resources, something which is of particular importance to start-ups and small to medium sized firms. It is widely proven that outsourcing the payroll function can lead to a multitude of benefits, including the following:
- Free up time: Outsourcing payroll can free up staff to pursue other important value-added and revenue-generating activities.
- Reduce costs: The direct costs of payroll processing can be greatly reduced by working with an efficient payroll provider.
- Relief from compliance worries: Businesses need to have an in-depth understanding of various regulations to avoid running afoul of pertinent regulations, in various legal areas such as labour, immigration, tax, social insurance and discrimination, which can be greatly minimized in case Payroll is handled externally.
- Avoid penalties: By outsourcing payroll, you can free yourself from worrying about fines and penalties.
- Walkouts cause no panic: Losing an employee involved with the Payroll is no longer a big deal if you outsource your payroll system.
- Confidentiality and increased security: Data storage and protection measures, multiple server locations and backup facility offered by a credible provider ward off any potential possibility of payroll fraud.
- Minimise risk: Handling payroll inhouse is indeed a risky process as confusing aspects of payroll, like updating tax tables, submitting reports and making payments need to be taken care of. This diverts attention from important work and at the same increases the chance of occurrence of mistakes.
Seamark can take care of all of these requirements when it comes to Cyprus and also offer additional employment and payroll support to clients according to their needs. We can assist in the below and other areas related to staff remuneration:
- Registering an entity as employer with the Tax Department and the Social Insurance Department
- Registering employees of the company
- Setting up and maintaining the payroll function of an entity , including monthly payroll computations, preparation of payslips, making relevant payments for Income Tax (Pay As You Earn - PAYE) and Social Insurance Contributions
- Setting up and administering a bonus scheme on an ad-hoc basis
- Advising on legal and regulatory obligations as well as tax issues affecting expatriate employees
- Advising on employment contracts and employment law issues
- Assisting in obtaining work permits
- Assisting in setting up and administering provident funds
Cyprus legislation governing an employment relationship
Employers are obliged to inform an employee in writing, within one month after commencement of the employment, of the essential conditions applicable to his/her contract of employment or employment relationship in respect of the following legislation:
- Employment Contract or Relationship Laws of 2000 and 2007
- Organisation of Working Time Laws of 2002 and 2007
- Protection of Wages Law of 2007
- The Fixed-Term Work Laws of 2003 and 2007
- The Part-time Work Laws of 2002 to 2007
- Maternity Protection Law
- Redundancy Law
- Termination of Employment Law
Other Employment Related Obligations
Employers should also consider the following employment-related obligations:
- Social Insurance: this is compulsory and covers all persons gainfully employed in Cyprus. Social insurance contributions are made by the employer, the employee and the state.
- Annual Paid Leave: every employee is entitled to a minimum annual leave of 20 days.
- Termination of Employment: this law regulates all matters, obligations and rights relating to terminating a staff member’s employment.
- Social Pension: a state pension is available to individuals above the age of 63 for women and 65 for men. The monthly amount depends on the contributions made during the working life of a pensioner.
- PAYE: the system applies to all salaries, wages, directors emolument, pensions and fringe benefits. PAYE is applicable to all resident and non-resident employees in Cyprus. Tax residents in Cyprus get taxed on their worldwide income while non-resident employees are taxed on the income they generate in Cyprus. It is an obligation of the employee to pay it, and the employer deducts it at source every month.
- Maintenance of proper records
EU Directives which govern Payroll Services
In addition to the above, employers need to consider the provisions of the below EU Directives in relation to employees:
- Working Time Directive
- Data Protection Directive
- Acquired Rights Directive