Recent amendment of the Protection of Wages Law of 2007
January 2023
Following the much-discussed reform which came into force at the start of this year with the roll out of the national minimum wage now being applicable in Cyprus, a further reform has been implemented on Friday 16th December 2022 through a law which amended the Protection of Wages Law of 2007 (the “Law”).
The major changes introduced by the amending legislation concern:
- how wages should be paid
- salary deductions
- the issuance of payroll statements
- the obligation to keep records
- the offences and penalties for non-compliance
Method of payment of wages
Strict guidelines have been implemented regarding the method of payment of wages to employees - allowing such payments to be made in cash only in exceptional and specific cases as outlined in the Law.
An employer must pay employees either through a deposit in a bank account or other payment account designated by the employee, or through a bank cheque in the name of the employee. Exceptionally, the payment of wages in cash is permitted only in the following cases:
(a) where an employee is still in the process of opening a bank account or other payment account (and for a maximum period of four (4) months from the date of hiring the employee); or
(b) where an employee’s application for opening such an account has been rejected for whatever reason (conditional on the employer providing the Director of the Labour Relations Department of the Ministry of Labour with confirmation from the financial institution that has rejected an employee’s application); or
(c) where an employer and employee have entered into a collective or other written agreement which provides that wages will be paid in cash on a weekly basis (conditional on the written agreement being signed by both parties).
Salary deductions
Article 10(1)(e) of the Law introduces the ability to carry out salary deductions in accordance with the terms of any applicable collective or general agreements, entered into by the representatives of the affected parties.
Furthermore, the consent of an employee regarding ‘other salary deductions’ not explicitly provided under the relevant Law now needs to be obtained separately in written and signed form. Records of employee consent documents should be kept by the employer, in a form specified by the Director of the Labour Relations Department.
Issuance of payroll statements
Employees must be provided with a copy of the payslip in written or electronic form, within five (5) working days from the date of payment. This payslip should contain specific information listed in the Law and a record should be maintained and made available within fifteen (15) calendar days from the date of any request from an appointed Inspector.
Data, record and proof keeping
The records maintained by an employer regarding employees’ net and gross incomes, any salary deductions carried out and the reasoning behind them should be available upon request of the Inspector and must be kept by the employer for a period not exceeding six (6) years.
Offenses and Penalties
The offences and penalties relevant to the breach of the Law have also been broadened.
Prior to the recent amendment, the Law did not provide for criminal liability of company officials for violations regarding unlawful wage deductions. As a result, it was necessary to rely on Article 20 of the Criminal Code, under which officials could be prosecuted as accomplices to the offence. Article 20 of the Law has now been amended and directly provides for the criminal liability of company officials participating in wage deduction offences.
More specifically, in the event of a legal person or organisation committing an offence, and where it is proved that the offence has been committed with the consent or contribution of a natural person (who at the time of the offence was in the position of an official, director, president, secretary or other similar position or appeared to act in any of these positions) then the person or persons committing the offence, in case of conviction, are liable for a fine not exceeding €15,000 or imprisonment not exceeding six (6) months or to both of these penalties.
Anna Praxitelous Senior Lawyer
Eliada Georgiades Lawyer