Redundancy and severance pay in Cyprus 2026: your exact legal entitlements

Losing your job is one of the most stressful things that can happen. The second most stressful thing — for many people — is not knowing what you are legally owed when it happens. This guide answers the specific questions precisely: how much redundancy pay, how much notice, who pays it, what the Redundancy Fund does, and what happens if the dismissal was not legitimate.

Legislative basis: The primary legislation is the Termination of Employment Law (Law 24/1967), as amended multiple times including by the Transparent and Predictable Working Conditions Law (Law 25(I)/2023). The Social Insurance Law (Law 41(I)/1980) governs Redundancy Fund contributions. The Industrial Disputes Tribunal (IDT) exercises jurisdiction over employment disputes under Law 8/1968. All figures below reflect the 2026 consolidated legal position.

What redundancy means in Cyprus law

Redundancy under Law 24/1967 exists when the employer terminates employment for one or more of the following reasons:

• The employer has ceased (or intends to cease) carrying on the business for which the employee was employed
• The employer has ceased (or intends to cease) operating at the specific location where the employee worked
• The requirements of the business for employees to carry out a particular type of work have diminished or ceased — due to modernisation, automation, reorganisation, reduced production, or changes in business methods

Critically: redundancy is about the role becoming unnecessary, not about the employee's conduct or performance. If an employer terminates for performance reasons, disciplinary reasons, or mutual agreement, different rules apply. Misclassifying a performance dismissal as redundancy does not give the employee redundancy pay rights — but it also does not absolve the employer of unfair dismissal liability if the real reason was illegitimate.

Who qualifies for redundancy pay

To qualify for a statutory redundancy payment from the Central Redundancy Fund, an employee must have completed at least 104 continuous weeks (2 years) of service with the same employer at the time of redundancy.

Employees who have not yet completed 2 years are not entitled to a statutory redundancy payment. However, their employment contract may contain more generous contractual redundancy terms — always check the employment agreement.

Part-time employees qualify for redundancy pay on a pro-rata basis if they meet the 104-week threshold.

Fixed-term employees whose contracts expire without renewal do not generally qualify for redundancy pay under Law 24/1967 unless the non-renewal itself constitutes constructive dismissal — a fact-specific question.

The notice period table

Before or alongside a redundancy payment, the employer must provide the statutory notice period (or pay in lieu of notice). The notice period under Law 24/1967 scales with length of continuous service:

Pay in lieu of notice: The employer can choose to end employment immediately and pay the employee's full salary for the notice period instead of requiring them to work it out. This is standard practice in Cyprus for professional roles. During a working notice period, the employee retains all employment rights (salary, benefits, accrual of leave).

Garden leave: Not explicitly codified in Cyprus statute but permitted by contract. An employee placed on garden leave during the notice period remains employed, continues to receive salary and benefits, but is not required to attend work.

How redundancy pay is calculated

The redundancy payment is calculated based on the employee's weekly insurable earnings and their length of continuous service at the time of redundancy. The formula under Law 24/1967 scales with service length:

Weekly pay for this calculation is capped at the insurable earnings ceiling — in 2026, this is €1,325 per week (€5,742/month), as revised by the Social Insurance Services announcement of 22 December 2025. Employees earning above this cap receive redundancy calculated on the cap, not their actual salary.

Worked example — employee with 6 years of service, weekly salary €800:

Worked example — employee with 12 years of service, weekly salary €1,500 (above cap):

Note: these figures represent the statutory minimum. An employment contract or collective agreement may provide a more generous calculation — the statutory formula is the floor, not the ceiling.

The Central Redundancy Fund: how it works

Cyprus operates a centralised Redundancy Fund administered by the Social Insurance Services. This fund is what makes the system work for employees even when employers face financial difficulty.

How the fund is financed: Employers contribute 1.2% of insurable earnings (on top of the salary) into the Redundancy Fund — this is included in the overall employer contribution rate covered in the social insurance guide.

How the payment flows:

1. The employer pays the full redundancy amount directly to the employee at or shortly after the date of termination
2. The employer then claims reimbursement of 60% of the statutory redundancy amount from the Central Redundancy Fund
3. The employer retains responsibility for the remaining 40%

This means the effective cost to a solvent employer of a statutory redundancy is 40% of the calculated amount — the Fund absorbs the rest.

If the employer is insolvent: If the employer cannot pay (insolvency, liquidation, receivership), the employee can claim the full statutory redundancy payment directly from the Redundancy Fund. The Fund acts as insurer of last resort. The claim is made to the Social Insurance Services with supporting documentation of employment history and the insolvency situation.

Time limit for claims: Claims to the Redundancy Fund must be submitted within 2 years of the termination date. Missing this deadline may forfeit the right to Fund reimbursement — employees should act promptly even if they are uncertain about their employer's ability to pay.

Unfair dismissal: when redundancy is used as a cover

Under Law 24/1967, a dismissal is automatically unfair if it is for reasons connected to:

• Trade union membership or activity
• Pregnancy, maternity leave, or the exercise of parental leave rights
• A complaint or protected disclosure (whistleblowing)
• Race, religion, nationality, sex, sexual orientation, disability, or age

A dismissal framed as "redundancy" but where the real reason is one of the above is an unfair dismissal. The Industrial Disputes Tribunal (IDT) — Cyprus's specialist employment court — hears these claims.

IDT compensation for unfair dismissal: The IDT can award:

• Reinstatement to the original role (rarely ordered in practice)
• Compensation — capped at a maximum that is reviewed periodically; the current ceiling in 2026 is approximately 104 weeks' gross pay (2 years' salary), though the actual award depends on the circumstances, length of service, and loss suffered

Time limit: An unfair dismissal complaint to the IDT must be filed within 3 months of the termination date. This is a strict deadline — late filing is almost always rejected.

The probation period: what changed in 2023

A significant change relevant to redundancy and termination: the Transparent and Predictable Working Conditions Law (Law 25(I)/2023) — implementing EU Directive 2019/1152 — capped the maximum probationary period in Cyprus at 6 months.

Before April 2023, probationary periods could extend up to 2 years (104 weeks) under the old Law 24/1967 interpretation. That is now unlawful. Employment contracts issued after the commencement of Law 25(I)/2023 cannot provide for probationary periods exceeding 26 weeks.

During probation: Either party can terminate without notice and without the notice period entitlements above. Redundancy pay does not apply during probation as the 104-week qualifying period has not been reached. However, a dismissal during probation that is connected to a protected characteristic (pregnancy, union activity, etc.) is still an unfair dismissal regardless of probationary status.

Annual leave accrual on termination

On any termination — including redundancy — the employee is entitled to be paid out for all untaken accrued annual leave up to the termination date. Cyprus's annual leave entitlement is a minimum of 20 working days per year (see the Cyprus annual leave guide), accruing from the first day of employment. The payout is calculated at the daily rate of salary for each outstanding day.

What to do if you are made redundant in Cyprus

Step 1 — Get everything in writing. Request a written termination letter specifying the reason as redundancy. This is your documentation for the Redundancy Fund claim and for tax purposes (redundancy payments in Cyprus are exempt from income tax up to statutory limits).

Step 2 — Calculate your entitlement. Use the formula above. If your employer offers a figure below the statutory minimum, this is a legal violation — not a negotiating position.

Step 3 — File for unemployment benefit. Register as unemployed with the Social Insurance Services within 3 working days of termination to preserve your right to unemployment benefit (60% of insurable earnings for up to 156 days — see the social insurance guide).

Step 4 — If the employer won't pay. File a claim directly with the Central Redundancy Fund (Social Insurance Services). If you suspect the redundancy was a pretext for an unlawful dismissal, consult an employment lawyer and file with the IDT within the 3-month window.

For your full employment rights picture in Cyprus, see the employee rights guide and the maternity leave guide.