If you are made redundant in Cyprus, the redundancy payment does not come from your employer. It comes from the state Redundancy Fund, which employers finance through a contribution of 1.2% of insurable earnings, and you claim it yourself on a form. You need 104 weeks of continuous service with that employer to qualify, and the payment starts at two weeks' wages per year of service, capped at 75.5 weeks in total. The rules sit in the Termination of Employment Law 24/1967.
What the law counts as redundancy
Section 18 of Law 24/1967 sets out the grounds. An employer can declare a post redundant where the business has closed or the workplace has stopped operating; where modernisation, mechanisation or reorganisation has cut the number of people needed; where the product, the production method or the skills required have changed; where a department has been abolished, including a department of one; where the business faces marketing difficulties or a shortage of credit or finance; where orders, raw materials or other means of production have run out; or where the volume of work has fallen.
The thread running through all seven is the job rather than the person. If the role still exists and somebody else is doing it, the ground has not been made out, whatever the letter says.
Who qualifies, and who does not
Two conditions do most of the work. You need at least 104 weeks of continuous employment with the same employer, counted to the date the employment ends. And you must not have reached pensionable age, currently 65, when the termination takes effect.
The two-year threshold is a hard line and it catches people out. An employee dismissed at 100 weeks for a perfectly genuine redundancy reason gets statutory notice and nothing at all from the Fund. Continuity is worth checking rather than assuming: short breaks, moves between associated companies and periods of certified sickness do not normally stop the clock, but any particular gap in your record is a question to put to the Social Insurance Services before you rely on the answer. Public officers holding statutory tenure sit outside the scheme altogether.
How much the Fund pays
The payment is expressed in weeks of wages, on a scale that rises with service.
| Years of service | Weeks' wages for each year in the band |
|---|---|
| 1–4 | 2 |
| 5–10 | 2.5 |
| 11–15 | 3 |
| 16–20 | 3.5 |
| 21–25 | 4 |
Add the bands together and 25 years produces 75.5 weeks, the statutory maximum. Service beyond 25 years adds nothing. Someone leaving after 12 years collects 8 weeks for the first four, 15 weeks for years five to ten, and 6 weeks for years eleven and twelve, so 29 weeks in total.
The weekly wage feeding into that sum is capped. The maximum weekly figure taken into account is four times the weekly basic insurable earnings, an amount the Social Insurance Services reset each year, which means the largest payment the Fund can ever make is 75.5 times that capped week. Ask them for the current figure before you model a payout. On a senior salary it is the cap, not your actual pay, that decides what arrives.
Notice sits on top
Redundancy pay is not a substitute for notice. Statutory notice under the same law runs on length of service: one week for 26 to 51 weeks of service, two weeks for 52 to 103, four weeks for 104 to 155, five for 156 to 207, six for 208 to 259, seven for 260 to 311, and eight weeks once service passes 312 weeks, which is six years. Notice has to be in writing and the employer may pay in lieu of working it.
You receive that alongside the Fund payment, together with accrued holiday pay and whatever your contract or an applicable collective agreement adds. Our guide to working in Cyprus covers how those terms are regulated. Unemployment benefit is a separate claim again, made to the Social Insurance Services once you have registered as a job seeker with the Public Employment Service, and it runs for up to 156 days in a period of unemployment. The qualifying conditions are set out in our guide to Cyprus social insurance.
When redundancy is a dismissal in disguise
The burden of proving a genuine redundancy falls on the employer, and the Labour Disputes Court expects evidence rather than assertion: audited accounts showing turnover falling away, the branch closure, the reorganisation plan that predates the dismissals rather than following them.
Two patterns tend to sink an employer's case. The first is recruiting a replacement to do substantially the same work shortly afterwards. The second is keeping the remaining staff on overtime, which is hard to square with a claim that there is no longer enough work to go round.
Where the real reason was something else, the claim is unfair dismissal, and that needs only 26 weeks of continuous service. Compensation is assessed by the court, cannot be less than the redundancy payment the employee would have received, and cannot exceed two years' wages. The employer meets the first year's worth and any excess comes from the Redundancy Fund. Reinstatement is available where the employer has 19 or more employees and the dismissal was an act of bad faith. The forum is the Labour Disputes Court, whose place in the wider structure is described in our guide to the Cyprus court system.
Collective redundancies bring an extra layer
Once the numbers reach a certain size, the Collective Redundancies Law 28(I)/2001 adds a consultation stage. It applies where an employer plans to dismiss, within a period of 30 days, at least 10 employees in a business with 21 to 100 employees, 10% of the workforce in a business with 101 to 299, or 30% of the workforce in a business with 300 or more.
The employer then has to consult employee representatives on ways of avoiding the redundancies or reducing the number affected, and on measures that soften the consequences, such as redeployment or retraining. It must also notify the Minister of Labour and Social Insurance at least 30 days before the dismissals take effect, setting out the numbers involved, the parts of the business affected, the occupations and family circumstances of the employees, and the reasons.
Deadlines, and the tax on anything extra
Employers have their own notification duty in every redundancy, not only collective ones. Under section 21 of Law 24/1967 the Ministry of Labour must be told at least a month before the intended termination date, on form YKA 608, with the number of employees, the branches affected, each person's name, occupation and family responsibilities, and the reason.
Your own claim goes to the Redundancy Fund on form YKA 600 within three months of the dismissal. A late application can be accepted up to twelve months where there is good reason, but that is a discretion rather than a right, and it is not a deadline to test. If the Fund refuses the claim or pays less than you believe is due, the dispute goes to the Labour Disputes Court against the employer and the Fund together. An unfair dismissal application carries its own window: twelve months from the date the notice of termination was served, or nine months from the Fund's response where redundancy was the stated reason.
Anything your employer pays above the statutory position is taxed under rules that changed this year. From 1 January 2026, ex gratia lump sums paid on termination of employment or voluntary retirement are exempt up to €200,000, with the excess taxed at a flat 20% and kept apart from your other income for rate purposes. The previous threshold was €20,000, so negotiated exit packages look very different in 2026 than they did in 2025. The employer cannot deduct the payment either way. If a package is on the table, have the treatment confirmed by the Tax Department or an adviser before you sign, and put the rest of the year's income through the income tax calculator so you know where the year ends up.
Facing redundancy, or planning one? Browse the directory for an employment lawyer, and get the paperwork looked at before the three-month claim window closes. Figures and rules described here reflect the position in September 2026; confirm the current wage cap and contribution limits with the Social Insurance Services.