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Cessation of employment (Redundancy)

CATEGORY: EMPLOYMENT

Cessation of employment (Redundancy)

According to section 18 of the applicable Termination of Employment Law of 1967, an employee is considered as being redundant in cases where his/her employment is terminated by the employer for one of the following reasons:

  • The employer has ceased or intends to cease the operation of the business in which the employee is employed.
  • The employer has ceased or intends to cease the performance of business activities in the area where the employee is employed.
  • Due to automation, mechanisation or any other change in methods of organisation and/or production which decreases the necessary number of employees.
  • Due to change in the products or in production methods or in the skills the employees needed to possess.
  • Due to closing of various business departments.
  • Due to credit difficulties.
  • Due to shortage of orders or raw materials.
  • Due to shortage of means of production.
  • Due to significant reduction of the work volume.

Right to receive redundancy payment

According to section 16 of the Law, employees have the right to redundancy payment if they have been continuously employed for at least 104 weeks by the same employer and their employment was terminated for redundancy reasons.

It is worth mentioned, that in cases of seasonal employment by the same employer where the period of annual employment equals or exceeds the period of fifteen weeks, the employment is considered to be continuous.

Cases where the right to receive redundancy payment is lost

An employee dismissed for redundancy reasons, is not entitled to redundancy payment in cases where:

  1. The employer, prior to the termination of employment of the employee, offers him/her an alternative and appropriate employment opportunity but the said employee unreasonably refuses the employer’s offer.
  2. The business was transferred as a going concern to a new employer who renewed the employment contract of the employee in question.
  3. The employer company intends to transfer the said employee to another company that is connected to it, in an employment position that fits the employee in question.
  4. Prior to the termination of the employment, another company in which the first employer is the major owner or has significant control, offers the said employee a proper employment position (section 20 of the Law).

Calculation of redundancy payment amount

The redundancy payment amount is calculated on the basis of the period of continuous employment of the employee and his/her latest wage. More specifically, the redundancy payment amount is calculated in the following manner:

Continuous employment period

 

Redundancy payment

 

Up to 4 years

 

2 weeks’ wages for every continuous period of employment of 52 weeks.

More than 4 and up to 10 years

 

2 ½ weeks’ wages for every continuous period of employment of 52 weeks.

More than 10 and up to 15 years

 

3 weeks’ wages for every continuous employment period of 52 weeks.

More than 15 and up to 20 years

 

3 ½ weeks’ wages for every continuous e period of employment of 52 weeks.

More than 20 and up to 25 years

 

4 weeks’ salary for every continuous period of employment of 52 weeks.


If the employee did not receive a fixed wage, the wage that is taken into consideration for the purposes of calculation of the redundancy payment is the average weekly wage the employee received during the last twelve weeks before the termination of his/her employment.

If the employment period is not a whole number of years, the rest employment period shall be considered as an entire year, but only if this period equals or exceeds the period of twenty-six weeks.

Period of employment

The employment period is calculated in weeks. Specifically, the following weeks are taken into account for the purpose of calculation of the entire period of continuous employment:

  • A week during which the work period of the subject matter employee, equals or exceeds the period of 18 hours.
  • A week during which the employee was unable to work because of maternity, sickness, occupational injury, or ailment.
  • A week during which the employee was absent due to non-permanent work cessation.
  • A week during which the employee was absent, in such occasions that by law, arrangement or custom, the employment is considered as being continuous by the Industrial Dispute Court;
  • A week during which the employee was absent because of parental leave.

Process followed for receiving the redundancy payment amount

If the employee is entitled to redundancy payment from the Redundancy Fund he/she shall submit a particular application form, the SIS 600, which can be acquired from any Social Insurance District Office or Citizen Service Centre. The aforementioned form needs to be submitted to the Social Insurance District Office or Citizen Service Centre within three months from the date of termination of employment. The redundancy payment amount is deposited in the employee’s bank account.

Notice provided by the employer to the employee

The employer is under an obligation to give written notice to the employee in relation to his/her dismissal. The minimum period of notice the employer shall provide to the employee depends on the period of his/her employment and is calculated in the following manner:

  • Employment up to 6 months, no notice is required
  • Employment between 6 months to 1 year, a minimum period of 1-week notice shall be given
  • Employment between 1 year to 2 years, a minimum period of2 weeks’ notice shall be given
  • Employment between 2 years to 3 years, a minimum period of 4 weeks’ notice shall be given
  • Employment between 3 years to 4 years, a minimum period of5 weeks’ notice shall be given
  • Employment between 4 years to 5 years, a minimum period of 6 weeks’ notice shall be given
  • Employment between 5 years – 6 years, a minimum period of 7 weeks’ notice shall be given
  • Employment for 6 years or more, a minimum period of 8 weeks’ notice shall be given

It shall be noted that in cases where the contract of employment provides for a longer notice, the minimum notice specified in the employment contract shall prevail.

Other notices

In cases where the employer wishes to dismiss the employees for redundancy reasons, he/she is under an obligation to give at least one month’s notice before the cessation of the employment to the Minister of Labour and declare the number of employees who will lose their jobs due to redundancy, the affected branch, the names, professions and family responsibilities of the employees that will be dismissed, and provide the reasons for this action (section 21 of the Law).

Unlawful dismissal

If the employee was unlawfully dismissed by the employer, he/she can submit a special application form to the Industrial Disputes Court within a period of twelve months from his/her dismissal or within nine months from the Redundancy Fund reply.

Author: ELENI LOUKA

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