First and foremost, it should be stressed that in order for a third country national to be employed in the Republic of Cyprus (areas controlled by the government of the Republic of Cyprus), it is a prerequisite to obtain a Temporary Residence and Work Permit or equivalent approval following filing of an application to this end to the Civil Registry and Migration Department (Migration Section) of the Ministry of Interior (the “Civil Registry and Migration Department (Migration Section)”). In this regards, it is of particular importance to stress that by securing a temporary or even permanent residence permit, a third country national is not entitled to be employed in the Republic of Cyprus unless so is expressly provided in the terms of the specific permit and/or of the scheme under which the permit is obtained. The procedure to be followed, the supporting information / documentation required and the timeframe for the completion of the process vary in accordance to the specific type of permit.
Generally speaking, Cyprus legislation makes provision for sector-specific categories in which third-country nationals may be temporarily employed for the purpose of performing work, depending on their status in the Republic of Cyprus and/or the type of permit for which they have or are going to apply; such categories include, among others, general employees (admitted in sectors where there is need for support in the absence of local or European personnel), domestic workers, food handlers, athletes, coaches, livestock labourers, agriculture workers, priests, nurses, bartenders, creative artists, performing artists, creative supportive staff and the supporting staff of a performing artist. Of course, there is also the option for an employer to employ high-skilled third country nationals, in which case the procedure is more concise. In any case, the rules, terms, conditions as well as the volume of admission of third-country nationals to any such specific categories are determined by the Council of Ministers considering and/or relying on the proposal of the Minister of Labour.
A crucial criterion for applying for most of the types of work permits available, is for the employer to obtain and/or secure an approval from the Labour Department (Ministry of Labour, Welfare and Social Insurance) (the “Labour Department”), which is the competent authority for securing that there are no Cypriots or citizens of Member States of the European Union, available or adequately qualified for the specific job or post prior to recommending the employment of third country nationals. To be more precise, the employer who is interested in employing third country national(s) must, upon receipt of the approval from the Labour Department, submit an application accompanied by -among others- the contract of employment and the remaining documents certified by the Labour Department, for the purpose of acquiring an entry visa that will enable the third country national to enter the Republic of Cyprus (in case he/she is not already in the Republic of Cyprus) and then, upon the arrival of the third country national in the Republic of Cyprus (if applicable), proceed with the submission of the main application for the registration and acquisition of the respective residence and work permit, depending on the type and nature of employment.
Apart from the above, there is also the option to transfer a third country national from a foreign company to a company situated and operating in the Republic of Cyprus. more specifically, the Civil Registry Law (Cap.105) has been amended for the purpose of accommodating the provisions of Directive 2014/66/EU of the European Parliament and of the Council of 15 May 2014 on the conditions of entry and residence of third-country nationals in the framework of an intra-corporate transfer (the “EU Directive 2014/66/EU”) relating to the intra-corporate transferee permit (ICP) that can be granted in order for third-country nationals employed by an employer entity or undertaking established in a third country to be able to be employed by an employer entity or undertaking of the same group of companies established in the Republic of Cyprus. In this regards, it is important to stress that in order for the involved undertakings to be qualified as part of a group of companies, the said entities or undertakings must be considered as linked in any of the following ways:
(a) one of the undertakings holds, directly or indirectly, the majority of the subscribed capital of the other;
(b) one of the undertakings controls the majority of the votes attached to the issued share capital of the other;
(c) one of the undertakings is entitled to appoint more than half of the members of the administrative, management or supervisory body of the other; and
(d) the undertakings are in fact managed on a unified basis by a common parent undertaking/owner.
In light of the above, it must be underlined that in order for an employer to be eligible to obtain a work permit for an intra-company transferred employee, it is a prerequisite that the said employer forms part of a group of companies within which the transfer shall take place, while such an employer must prove its good standing and clean criminal record, as well as its compliance with all its legal obligations, including the settlement of taxes and the payment of contributions for employees. In the same way, it is extremely important for the involved entities or undertakings, namely the foreign entity and the Cyprus one, to be able to prove the employment existing or future relationship, as the case may be, between each of them and the intra-company transferred employee by providing official documentation to this end, issued by the competent governmental authority or body of the respective jurisdiction.
All in all, there are different procedures on the basis of which a third country national may be employed in the Republic of Cyprus while each type of residence and work permit is subject to a series of benefits, limitations and restrictions. Lastly, we cannot disregards the fact that, apart from the classic / standard procedures for the general employment of third country nationals, the government of the Republic of Cyprus, in order to adapt to the evolved needs of our times, has also developed various schemes, strategies and programs that were in force from time to time while it has recently introduced and does currently apply a Strategy for attracting, among others, businesses of foreign interests for activities or/and expansion of their activities in the Republic of Cyprus, which may also serve the needs for the employment of third country nationals in various key positions provided that the employer and each of the prospective employees satisfy the relevant criteria set forth in the said Strategy.
What is constructive dismissal?
Constructive dismissal is basically the situation where an employer has committed a serious breach of contract entitling the employee to resign in response to the employer’s conduct, by treating himself as having been dismissed by the employer. In such cases, the existing legal framework enables the treatment of the employee’s resignation as a form of unfair dismissal since the actions and/or conduct of the employer (constructive part) leads to the resignation of the employee (dismissal part).
In the British case Western Excavating (ECC) Ltd v Sharp, it was stated that “If the employer is guilty of conduct which is a significant breach going to the root of the contract of employment, or which shows that the employer no longer intends to be bound by one or more of the essential terms of the contract, then the employee is entitled to treat himself as discharged from any further performance”. If he does so and proceed with the termination of the employment contract by reason of the employer’s conduct, he is constructively dismissed.
The aforementioned legal approach is also reflected in the relevant applicable Cypriot law. More specifically, subsection 7(1) of the Termination of Employment Law of 1967 (24/1967) (the “Law”) provides that in cases where an employee legally terminates his/her employment with the employer due to the conduct of the employer, then such termination is considered as being termination of employment by the employer within the meaning of section 3 of the Law, which recognises the employee’s right to receive compensation after his/her termination of employment by the employer.
However, it must be stressed that according to subsection 7(2) of the Law, in any proceedings before the Labour Disputes Tribunal initiated pursuant to the abovementioned subsection 7(1) of the Law, it will be presumed, until proven otherwise, that the employee has not terminated his employment lawfully. This actually means that the burden of proof is on the employee to show at the Court that the conduct and/or actions of the employer amounted to a fundamental and/or serious breach of contract (usually referred to as a “repudiatory breach”) leading the employee to terminate the employment contract as a result.
What is a repudiatory breach?
In cases of constructive dismissal, the employer’s unreasonable conduct and behaviour leading an employee to terminate the employment contract is often referred to as a “repudiatory breach”. A repudiatory breach can either be a fundamental breach of an express contractual term or a breach of the implied term of “trust and confidence” between the parties.
It must also be noted that such unreasonable treatment by the employer may either be a one-off serious breach of the employment contract (for instance, failure by an employer to pay an employee’s salary) or a continuous pattern of behaviour and/or incidents, which taken as a whole amount to a fundamental breach of the implied term of trust and confidence (for instance, persistent bullying in the workplace).
In Lewis v Motorworld Garages Ltd it was stated that “..the repudiatory conduct may consist of a series of acts or incidents, some of them perhaps quite trivial, which cumulative amount to a repudiatory breach of the implied term of the employment contract that the employer will not, without reasonable and proper cause, conduct himself in a manner calculated or likely to destroy or seriously damage the relationship of confidence between the employer and the employee”.
In general terms, a finding that there has been conduct which amounts to a breach of the implied term of trust and confidence will inevitably mean that there has been a fundamental or repudiatory breach going necessarily to the root of contract. In Garner v Grange Furnishing Ltd, it was stated that behaviour or conduct amounting to a repudiation can be a series of small incidents over a period of time. If the employer is making it impossible for the employee to go on working, that is plainly a repudiation of the employment contract.
In the Cypriot case Louis Tourist Agency Ltd v Antigonis Elia, it was stated that the kind of an employer’s conduct and/or behaviour justifying the termination of employment by the employee is not specified in the aforementioned subsection 7(1) of the Law. However, in the aforementioned case, reference was also made to Alouet Clothing v Athanasiou, where it was held that a breach of a fundamental term of the employment contract by the employer, constitutes a conduct falling under the provisions of subsection 7(1) of the Law. Moreover, it was stated that although it is difficult, if not impossible, to exhaustively determine the employer’s misconduct falling under subsection 7(1) of the Law, such conduct must be of such nature and character as to undermine the foundation of the employer-employee relationship, whether by breach of a fundamental term of the employment contract or by conduct and/or behaviour on the part of the employer which is not compatible with the admissible relationship framework between the employer and the employee.
What is the applicable standard of assessment for a breach to be considered as a repudiatory breach of the employment contract giving rise to a claim for contrastive dismissal? Is this standard objective or subjective?
It shall be noted at this point that in order for a breach of the implied term of trust and confidence to exist, it is not necessary to be proved that the employer intended the repudiation of the contract. The function of the employment tribunal is to examine the employer’s conduct as a whole and to determine whether it is such that its cumulative effect judged reasonably and sensibly is such, that the employee cannot be expected to put up with it. Whether an employee is entitled to terminate his/her employment contract by reason of the employer’s behaviour does not depend upon whether the employer had intended the conduct to be repudiatory or could reasonably have believed that it would be accepted as such, but upon whether the employer’s conduct, viewed objectively, manifests an intention no longer to be bound by the contract. In other words, the employer’s behaviour must be such that its effect, judged reasonably, is to disable the other party from performing properly his/her duties and obligations. It is thus inferred that the applicable standard in such cases is objective and not subjective; it is that of a reasonable person. This is also reflected in Malik v BCCI, where it was stated that the conduct of the employer must impinge on the relationship between the employer and the employee, in the sense that, looked at objectively, it is likely to destroy or seriously damage the degree of trust and confidence the employee is reasonably entitled to have in his employer. This requires one to look at all the relevant circumstances.
Whether the conduct of the employer constitutes behaviour that justifies the resignation on the part of the employee, is judged by examining and assessing objectively the facts and circumstances of each individual case.
The subjective sensitivities of an employee are not taken into consideration for the purposes of such assessment.
What kind of an employer’s behaviour and/or conduct may constitute a repudiatory breach for constructive dismissal purposes?
According to Halsbury’s Laws of England, although there is no exhaustive list of behaviours and/or incidences that may give rise to a claim for constructive dismissal, it was noted that among the types of breach of contract by the employer that may support a finding of constructive dismissal are the following:
a) A failure to pay wages or unilateral decision to cut pay;
b) Demotion or other change in status;
c) A change of job content not permitted or envisaged by the contract;
d) Undermining a senior employee’s position;
e) Change of the place of work, or breach of a mobility clause, whether express or implied;
f) Unilateral change of working hours;
g) Failure to ensure the employee’s safety;
h) Breach of the term of trust and respect;
i) Failure to follow a contractually binding disciplinary procedure;
j) Imposition of a disciplinary measure in a disproportionate manner;
k) Failure to provide a reasonably suitable working environment
l) Failure to deal with grievances properly and timeously.
An offensive and derogatory behaviour towards an employee may constitute a repudiatory breach giving rise to claims for constructive dismissal. In Palmanor Ltd v Cedron, it was stated that although tribunals have to be careful so as to avoid attaching great importance to words used in the heat of the moment or in anger, there comes a time when the language is such that even if the person using it is in a state of anger, an employee cannot be expected to tolerate it.
Moreover, failure of an employer to adequately support the employees in periods with increased workload may also constitute a behaviour amounting to a repudiatory breach for constructive dismissal purposes. In Seligman & Latz Ltd v Mc Hugh, the Employment Appeal Tribunal held that the employee was entitled to regard herself as having been constructively dismissed on grounds that the employers were in breach of an implied condition in her employment contract that if she were overloaded, she would have the assistance of a junior and/or apprentice hairdresser and that the breach was fundamental going to the root of the contract.
What role does the time of resignation play in cases of claims for constructive dismissal? What is the right time for an employee to tender his/her resignation in such cases?
The answer to the above question is that the timing of an employee’s resignation plays a crucial role in the outcome of a claim for constructive dismissal. In Western Excavating (ECC) Ltd v Sharp, it was stated that the employee “must make up his/her mind soon after the conduct of which he/she complains”. This is due to the fact that if the employee leaves a long period of time to lapse between the occurrence of the repudiatory breach and the time of his resignation as a result of such breach, he is quite likely to lose the right to claim that he has been constructively dismissed by the employer as he may be taken to have affirmed the employment contract and waive the repudiatory breach thereof.
In W.E. Cox Toner (International) Ltd v Crook, it was noted that an employee faced with a repudiation by his employer is in a very difficult position in the sense that if he goes to work the following day, we will himself be doing an act which is consistent with the continued existence of the contract, and he might be said to be affirming the contract. Moreover, if he then accepts his (monthly) salary (i.e. further performance by the guilty party), the risk of being held to affirm the employment contract is even greater. It was further noted that “delay might be serious, not in its own right but because any delay normally involves further performance of the contract by both parties. It is not the delay which may be fatal but what happens during this period of delay”. Mere delay, unaccompanied by any express or implied affirmation of the employment contract, does not constitute affirmation thereof, but if it is prolonged it may be evidence of an implied affirmation.
However, it must be noted at this point that if the innocent party further performs the contract to a limited extent but at the same time makes it clear that he/she is reserving his/her rights to accept the repudiation or is only continuing so as to allow the guilty party to remedy the breach, such further performance does not prejudice his right subsequently to accept the repudiation.
Moreover, in Marriot v Oxford Co-operative Society it was noted that provided that the employee makes clear his/her objection to what is being done, he/she is not to be taken to have affirmed the contract by continuing to work and be paid for a limited period of time (i.e. continue working under protest for a limited time period), even if his/her purpose is merely to enable him to find another job.
In Waltons and Mors v Dorrington it was further noted that there is no fixed time limit in which the employee must make up his mind. It depends upon all the circumstances including the employee’s length of service, the nature of the breach and whether the employee has protested at the change. It was also stated that “mere protest will not however, prevent an interference that the employee has waived the breach, although exceptionally, a clear reservation of rights might do so”.
In the Cypriot case Κώστας Mηνά v Κυπριακές Αερογραμμές Δημόσια Λτδ, the Court held that, although a not so short time period of 3⅟2 – 4 months, has lapsed from the date the breach has occurred (i.e. the unilateral change of the terms of the employment contract by the employer company), the employee had not waived the breach and/or affirmed the employment contract and concluded that the employee had been constructively dismissed. In its abovementioned decision the Employment Tribunal had taken into consideration the employee’s overall attitude during the aforesaid period of 3⅟2 – 4 months, the length of the employee’s employment with the employer company (i.e. twenty-three years), and the fact that the employee was faced with the objective difficulty in finding a job of a similar nature in Cyprus.
Is the employee’s right to a constructive dismissal claim lost permanently in cases of lapse of time?
In the latest leading case Kaur v Leeds Teaching Hospitals NHS Trust, the Court of Appeal confirmed that in cases where there has been an earlier repudiatory breach which has been affirmed by the employee, if there is subsequently conduct which taken together with the employer’s earlier fundamental breach that causes the employee to resign or plays a part in the decision of the employee to resign, the later act (which may not be itself repudiatory) effectively reactivates the earlier repudiatory breach. The employer’s further act can be described as “reviving” the employee’s right to terminate the contract. An employee who is the victim of a continuing cumulative breach, is entitled to rely on the totality of the employer’s acts notwithstanding a prior affirmation, provided the later act forms part of the series.
It was also noted that “when the threshold had been reached would of course be a matter of assessment in every case, and no one would know whether the employee had jumped either too early or too late until a tribunal ruled”.
In its judgment, the court stated that there is a five-question test for tribunals to consider when determining whether an act and/or an incident may be deemed to be a last straw, enabling an employee to claim that he/she has been constructively dismissed by his/her employer:
- What was the most recent act (or omission) on the part of the employer which the employee says caused, or triggered, the resignation?
- Has the employee done anything to suggest that they have accepted (or affirmed) the contract since that act?
- If not, was that act (or omission) by itself a repudiatory breach of contract (i.e. of sufficient importance to justify resignation)?
- If not, was it nevertheless a part of a course of conduct comprising several acts and omissions which, viewed cumulatively, amounted to a repudiatory breach of the employee’s contract by showing that all trust and confidence had been destroyed? If it was, there is no need for any separate consideration of a possible previous affirmation.
- Did the employee resign in response (or partly in response) to that breach?
All that is required for a last straw resignation is that a series of incidents, whether or not previously affirmed, amounts to a fundamental breach of contract. In other words, further contributory acts effectively revive the employee’s right to rely upon the whole series of acts, notwithstanding the earlier affirmation(s). If the employee does not delay his/her resignation from the occurrence of the last of these incidents, his/her constructive dismissal claim may be well-founded.
In Kaur v Leeds Teaching Hospitals NHS Trust, the claimant was employed by the NHS Trust Hospitals, the Tribunal held that the entirety of the disciplinary and appeal process conducted by the employer and their outcomes were arguably reasonable and that it was not open to the claimant to wait fifteen (15) months after the incident in 2013 to rely on the appeal outcome in 2014 as the last straw entitling her to resign claiming that she has been constructively dismissed.
Is causality between the employer’s conduct and the employee’s resignation a requisite in order for an employee to be able to claim that he/she has been constructively dismissed by the employer? Does the employer’s repudiatory conduct have to be the sole cause of resignation?
Causality between the employer’s conduct and the employee’s resignation is a prerequisite in cases of constructive dismissal.
In Walker v Josiah Wedgwood & Sons Ltd, it was noted that it is at least a requisite that the employee should resign as a result of the breach of the employer’s relevant duty to him/her, and that this shall demonstrably be the case. Moreover, it was further stated that it is not sufficient if the employee resigns in circumstances which indicate some ground for his/her resignation other than the breach of the employer’s obligation to him/her. The test is whether the employee’s resignation was effectively caused by the employer’s repudiation. It is not necessary that the repudiatory breach by the employer is the sole cause of the employee’s resignation, it suffices that this is the substantive cause of the resignation.
In Jones v F Sirl & Son (Furnishers) Ltd,the employee was faced with worsened employment terms and conditions and waited three and a half weeks until she was approached by another firm that offered her a job prior to her resignation. The employee accepted the job offer and claimed that she had been constructively dismissed by the employer. The employment tribunal concluded that the resignation was in response to the job offer and not to the employer’s repudiation. The Employment Appeal Tribunal (EAT) overturned the decision of the employment tribunal and held that the employee had been constructively dismissed as a result of the repudiation of the employment contract on the part of the employer. It was also stated that the test was not what was the sole cause of resignation but rather what in fact was the effective cause.
Who bears the burden of proof in constructive dismissals claims?
The burden of proof in cases of claims for constructive dismissal is on the employee. This actually means that the employee has to show at the Court that the repudiatory conduct and/or actions of the employer left the employee with no other option than to terminate the employment contract and tender his/her resignation as a result.
As already mentioned, according to subsection 7(2) of the Law, in any proceedings before the Labour Disputes Tribunal relating to claims for constructive dismissal (pursuant to subsection 7(1) of the Law), it will be presumed, that the employee has not terminated his employment lawfully until proven otherwise by the employee.
What are the employees’ rights to damages/compensation in constructive dismissal cases?
According to subsection 7(1) of the Law, in cases of constructive dismissal, the employee is entitled to receive damages/compensation pursuant to section 3 and Tables A and D of the Law as per below:
|Continuous employment period||Compensation amount|
|Up to 4 years||2 weeks’ salary for every continuous employment period of 52 weeks.|
|More than 4 and up to 10 years||2 ½ weeks’ salary for every continuous employment period of 52 weeks.|
|More than 10 and up to 15 years||3 weeks’ salary for every continuous employment period of 52 weeks.|
|More than 15 and up to 20 years||3 ½ weeks’ salary for every continuous employment period of 52 weeks.|
|More than 20 and up to 25 years||4 weeks’ salary for every continuous employment period of 52 weeks.|
It is noted that paragraph 4 of Table A of the Law states that, the Employment Tribunal, has absolute discretion as to the determination of the compensation amount awarded to an employee. It is also noted that, except to what is provided above, in the determination of the compensation amount the Employment Tribunal will also take into consideration, inter alia, the following: i) the wages and any other earnings of the employee; ii) the period/duration of employment of the employee; iii) the loss of prospect of the employee in finding another job; iv) the age of the subject matter employee; v) the actual conditions of the employee’s employment termination.
What are non-solicitation clauses contained in employment contracts?
Non-solicitation clauses are contractual terms contained in employment contracts, restricting an employee from soliciting and/or canvassing, directly or indirectly, business or custom from employer’s clients, post-termination of his/her employment with the employer.
Are non-solicitation clauses easily upheld by the Courts?
It shall be stressed at this point that Courts are not willing to uphold non-solicitation clauses, unless it can be proved by the employer that he/she has a legitimate proprietary interest that needs to be protected against the employee in question and that the protection sought by the enforcement of such non-solicitation clauses goes no further than what is reasonably necessary, having regard to the circumstances and the facts of each individual case(Office Angels Ltd v Rainer-Thomas and O’Connor).It is noted that in cases where the Court is not satisfied that a non-solicitation clause meets the aforementioned requirements, it refuses to uphold the clause as, generally, any contractual term restricting an employee’s activities post-termination of his/her employment is considered to be void for being in restraint of trade and contrary to public policy (Gledhow Autoparts v Delaney).
What kind of proprietary interests are capable of being protected by the incorporation of non-solicitation clauses in employment contracts?
The legitimate proprietary interests that can be protected by the incorporation of non-solicitation clauses in employment contracts are mainly customer and trade connections. Client and trade connections actually refer to connections developed between the employee and the trading partners/customers of the employer. Is it noted that in certain cases, “client connections” may also includes potential clients (East England Schools CIC v Palmer and another). Any reference to “client connections” is actually a reference to the personal knowledge and/or power of influence and control an employee may have over the customers of the employer, to such a degree that enables him/her to take advantage of that connection in order to solicit or canvass the business or custom of his/her employer’s clients (East England Schools CIC v Palmer and another; GW Plowman & Son Ltdv Ash).Undoubtedly, in cases where an employee has dealt directly with certain clients for a period of time, he/she has knowledge and influence over the said clients. The clients develop a relationship of trust with the particular employee who, as a result, may exercise the control and influence he/she has gained over the said clients, who rely upon the employee to meet their needs, rather than on the employer’s company (East England Schools CIC v Palmer and another; GW Plowman& Son Ltd v Ash).In most of the cases, the aforementioned relationship built up between the employee and the employer’s clients was developed by the use of the resources of the employer (e.g. marketing budget).
When is a non-solicitation clause considered as being reasonable by the Courts?
Once the employer proves that he/she has indeed a legitimate proprietary interest that needs to be protected against the employee, namely his/her client connections, the employer also needs to demonstrate that the non-solicitation clause is reasonable. As already mentioned, a non-solicitation clause will only be considered as reasonable by the Court if it is proved by the employer that the clause is no wider than what is reasonably necessary for the purpose of protecting the employer’s client connections. In considering the reasonableness of the of a non-solicitation clause the Court may also take into consideration whether or not a covenant of a narrower ambit would have sufficed for the purpose of protecting the employer’s interests. In Office Angels Ltd v Rainer-Thomas and O’Connor, it was stated that a restrictive clause in one form cannot be considered to afford no more than adequate protection of the employer’s relevant legitimate interest if the evidence shows that a restrictive clause in another form, much less far-reaching and less prejudicial to the employee, would have afforded adequate protection.
Other factors that play some role in determination by the Court as to whether or not a restrictive clause is reasonable are the role, duties and responsibilities the employee had in employer’s business. Generally, the more junior the employee, the harder it may be for a restraint, namely a non-solicitation clause, to be upheld by the Court as reasonable. On the other hand, the more senior the employee and the more responsibilities he/she had, the more willing the Court is to uphold a restrictive clause as being reasonable, always taking into consideration the facts of each individual case. In Safety Net Security Ltd v Coppage, it was held that a non-solicitation clause restricting the employee from soliciting and/or canvassing, directly or indirectly, business or custom from clients of the employer for a period of six months, post-termination of his employment was considered as reasonable and was upheld by the Court as the employee had played a large role in the employer’s business as its “outward face” and he had contact with all of the employer’s clients as he had undertaken the role of director. It was stated that the employee had realistically had the power to influence all the clients with whom he had communication during his employment.
What constitutes “solicitation” of clients?
It is noted at this point that solicitation needs something more than simply informing a client of the employee’s departure. There must be an aim and an intention to acquire orders from the client and frequently requires the employee to initiate contact and communication with the client for that purpose (Baldwins (Ashby) Ltd v Maidstone).
How interpretation and construction of non-solicitation clauses affect their validity and enforceability?
The construction and interpretation of non-solicitation clauses play significant role in whether or not these will be upheld by the Court as enforceable. It must be noted that in cases where non-solicitation clauses/restrictive covenants are too wide, the Court will not be willing to interpret them in a more narrow way in order to render them valid and enforceable and will rather treat them as void and/or unenforceable (East England Schools CIC v Palmer and another).
Moreover, where a contract contains several restrictive clauses, these are treated by the Court as being severable. For instance, if a non-competition clause contained in a contract is considered as being too wide but a non-solicitation clause contained in the same contract is considered by the Court as reasonable, the Court will uphold the reasonable clause and render the other clause unenforceable.
According to the Court, the below mentioned criteria apply in order to assess whether a clause or some of the wording contained in a clause can be severed from the rest of the contract (also known as the “blue pencil” test (Tillman v Egon Zehnder Limited; East England Schools CIC v Palmer and another):
- The unenforceable wording can be removed without having to add to or modify the remaining words;
- The remaining clauses/restrictive covenants must be supported by adequate consideration;
- The removal of the unenforceable wording and/or provisions must not generate any major change in the overall effect of the restrictive covenants in the contract of employment.
Τhe role and functions of the secretary as contemplated by the Law are administrative in nature. The secretary cannot assume any executive or managerial powers in the absence of express authority from the Board of Directors of the Company.
Specifically, it is noted that a secretary must not take and/or assume any power entrusted upon the directors. For instance, the secretary cannot summon a general meeting on his/her own as he/she issues and sends notices in regards to general meetings, under the instructions of the Board of Directors.
It is noted that, exempt from certain statutory duties, the responsibilities and duties of the secretary are not stipulated by Companies Law Cap.113 (hereinafter referred to as the “Law”). The duties of the secretary are assigned to him/her either by the Articles of Association of the company, or by the contract of service signed between the secretary and the Company, or by the Board of Directors of the Company, which is the most common case. Moreover, it is mentioned that in practice, certain duties and responsibilities of the secretary are implied by a course of conduct. Ordinarily, the duties and responsibilities of the secretary include, inter alia, his/her presence at all general meetings of the Company and of the Board of Directors, keeping proper minutes of the general meetings and other proceedings, the issuance and dispatch of the necessary notices, under the instructions of the Board of Directors, to the members and other relevant persons in regards to the general meetings etc, the conduct of correspondence with the members of the Company regarding to transfers of shares, calls, forfeiture etc. Additionally, the secretary is responsible for the submission of the relevant returns to the Registrar of Companies. He/she also has the responsibility to keep the books of the Company which relate to the internal affairs thereof, such as the register of members, the register of debentures, the share ledger etc.
Kindly note that the Law imposes the following statutory duties upon the Secretary:
- In respect of a public company to make the statutory declaration required prior to the commencement of business (s. 104(1) (c) and 104(2)(c) of the Law);
- To sign the annual return and the accompanying documents (s.122 of the Law);
- In case of winding up of the Company by the Court, to verify the statement to be submitted to the Official Receiver (s.224(2) of the Law);
- In respect of a receiver being appointed by debenture holders whose debentures are secured by a floating charge on substantially the whole of the Company’s assets, to verify the statement to be submitted to the receiver (s.341(2) of the Law);
It is noted at this point that according to Palmer’s Company Law (21st edition), many of the duties imposed upon the companies by the Law, are so clearly within the province of the Secretary that default by the company to comply with such duties and/or obligations shall in appropriate occasions and circumstances give rise to liability on the part of the secretary, where the relevant applicable section(s) imposes liability upon officers in default. This may be applicable in relation to defaults in regard to the following obligations:
- To deliver a return of allotments (s.51 of the Law);
- To issue share or debenture certificates (s.78 of the Law);
- To cause the registration of charges with the Registrar of Companies (s.91 and 92 of the Law); and to keep the Company’s register of charges and make it available for inspection (s.99 and 100 of the Law);
- To publish the Company’s name outside its places of business, on its seal and on its publications (s. 103 of the Law);
- To permit the inspection of the register of members (s. 108 of the Law);
- To permit the inspection of the register of debenture holders and to forward copies and to forward copies of the trust deed (s.84 of the Law);
- To keep the register of directors and secretaries (s.192 of the Law);
- To ensure the publication of particulars with respect to directors in trade catalogues, circulars, etc. (s. 193 of the Law);
- To keep minutes (s. 139 of the Law) and to make available for inspection the minutes of the general meetings (s. 140 of the Law);
- To send out copies of the balance sheets and auditors’ reports (s. 152 of the Law).
It is mentioned that in many of the aforementioned cases, the secretary is liable to a fine in the event the Company fails to comply with its obligations under the Law. However, the conditions of criminal liability may vary. For instance, in sections 104(6) and 341(5) of the Law, the statutory provisions lay down their own criminal sanction in cases of non-compliance. On the other hand, in the instance of sections 120(2) and 78(2) of the Law, the provisions refer to the “default fine” as defined in section 375 of the Law. There are also instances, such as section 108(3) of the Law, where both a fine and a default fine are mentioned. It is noted at this point that in cases where under the applicable provision of the Law a fine is imposed on the secretary in his/her capacity as the “officer in default”, mens rea has to be proved against him/her due to the fact that section 375(2) of the Law provides that the phrase “officer in default” means an officer of the company “who knowingly and wilfully authorises or permits the default, refusal or contravention mentioned in the enactment”.
In any case, the Board of Directors of the Company has the power to dismiss the Secretary in case the secretary exercises his/her duties negligently and/or without due diligence.
The rights and obligations of the employer and employee in Cyprus are regulated by reference to the terms of the respective employment agreement (or such other instrument giving rise to an employment relationship) which are complemented by a series of statutes / legislative instruments setting out, among other things, the fundamental rights of employees and basic obligations of employers. Importantly, beyond the express contractual terms contained in any employment agreement, the employer and the employee are, unless expressly agreed to the contrary, bound by a series of implied terms, the most prominent of which is the implied term of mutual trust and confidence.
In stark contrast to commercial transactions where there is a presumption as to the equality of negotiating strength as between the contracting parties, the employment relationship has long been recognised as an idiosyncratic contractual relationship due to the inequality of bargaining power as between the employer and the employee. Indeed, most employment contracts are usually standard-form contracts drafted by the employer and presented to prospective employees on a take-it-or-leave-it basis ensuring that the employer negotiates from a position of strength.
In this respect, it is not uncommon for an employer to seek to restrict the ability of an employee to pursue or take up employment at a third party (usually a competitor of the employer) either while the employment relationship is in force, or following the termination thereof. As a general rule, where a clause / provision in the employment agreement amounts to or has the effect of a general and unqualified restriction on the ability of the employee to pursue a particular trade or occupation, it will most likely be deemed to be invalid and unenforceable against the employee on grounds that such a clause imposes an excessive restriction on the fundamental right of an employee to freely pursue employment. This general rule appears to apply with equal force in relation to the period while the employment agreement is in force and to the period following its termination, although in both cases it may still be possible, for an employer to restrict the ability of an employee to take up a position of employment at a third party provided certain criteria are satisfied.
Employment by a Third Party While the Employment Relationship is in Force (Simultaneous Employment)
It should be stressed from the outset, that it is not always the case that an employment agreement will contain an express provision dealing with the possibility of employment by a third party. In such cases, it can be said that where the possible employment by a third party does not violate the terms of the main employment agreement, and does not adversely affect the interests of the main employer, then, at least theoretically, there is no impediment to the employee being employed by a third party in addition to his employment by the main employer. This of course, is subject to the proviso that such employment by a third party is not contrary to any law. At the same time however, it must be stressed that any additional employment should not come at the expense of the main employment and in this respect the employee must not place himself in a position where his duty of loyalty towards the main employer would be compromised (as would be the case of being employed by a third party – competitor of the main employer).
To take an example, let us assume, that Janice is employed as a hairdresser at Daisy’s Hair Saloon on a full-time basis. Pursuant to the terms of her employment agreement, her normal hours of work are from 8 a.m. – 6 p.m. from Monday to Friday. A few weeks after the commencement of her employment at Daisy’s Hair Saloon, Janice is offered a part-time job as a waitress at Dino’s Pizzeria where she will only be required to work during the weekends.
Provided Janice’s employment agreement is silent on the matter of simultaneous employment by a third party, Janice would not be precluded from working for Dino subject to the proviso that Daisy’s interests (in her capacity as the main employer) are not adversely affected by Janice agreeing to take up the position of waitress at Dino’s Pizzeria and/or provided that Janice has obtained the express consent of Daisy in her capacity as the ‘main employer’. Furthermore, it can be argued that the nature of business of Dino’s Pizzeria is not such as to be considered competitive to the business of Daisy’s Hair Saloon; at the same time, Janice will only be working during weekends meaning that her employment at Daisy’s will not be affected in any way by reason of her employment at Dino’s. If, on the other hand, Janice was required to work at Dino’s on weekdays from, say 5 p.m. to 11 p.m., then Daisy would be entitled to object to Janice being employed by Dino since this would clearly interfere with Janice’s obligations towards Daisy under the main employment agreement.
Non – Competition Clauses Relating to the Period Following the Termination of the Employment Relationship
Clauses relating to the period following the termination of the employment relationship may be upheld in instances where the restriction imposed on the right of the employee to pursue or carry on a trade or occupation is not excessive. Suppose now that Daisy, weary of the growing popularity of Jean’s Beauty Parlour, a competing business located in close proximity to Daisy’s Hair Saloon, is contemplating the addition of a clause in the employment agreements entered into with any new employees to the effect that following the termination of the employment her employees shall be precluded from taking up employment at any competitor of Daisy’s Hair Saloon. As already touched upon, the generality of the restriction in question will invariably render the clause as invalid and unenforceable because it violates a fundamental right of an employee to seek employment.
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:
- 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.
- The business was transferred as a going concern to a new employer who renewed the employment contract of the employee in question.
- 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.
- 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.
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).
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.
Article 2 of the European Framework Agreement on Telework of 2002 defines “telework” as a form of organising and/or performing work, using information technology, in the context of an employment contract/relationship, where work, which could also be performed at the employer’s premises, is carried out away from those premises on a regular basis.
The European Framework Agreement on Telework is the first “autonomous agreement”, agreed by the Social Partners of Europe in 2002 and it is binding merely on the signatories. The signatories are responsible of implementing the content of the Agreement at a national level.
General Principles governing Teleworking emerging from the European Framework Agreement
- Voluntary nature of telework (Article 3): The employees and the employer may introduce telework only by mutual agreement. Accordingly, there is no right as such to telework and there is no obligation to do telework. If telework is not part of the initial job description, and the employer makes an offer of telework, the worker may accept or refuse this offer. If a worker expresses the wish to opt for telework, the employer may accept or refuse this request. Additionally, a switch to telework does not affect the employment status.
- Discontinuance: The European Framework Agreement also ensures that both the employee and the employer may discontinue telework at any time without prejudice to the employment relationship and working conditions. On the opposite side, if the worker refuses to change to telework this cannot be a reason for termination of the employment relationship or for changing terms and conditions.
- Equal Treatment and Collective Rights (Article 4): Teleworkers enjoy the same collective rights as their colleagues at the employer’s premises. For example, they may participate in or stand for works council elections and have to be considered when calculating thresholds for bodies of collective representation. These rights are guaranteed by applicable legislation and collective agreements. Among the Member States, a widespread approach was taken to provide teleworkers with the same protection, privileges and obligations as ordinary workers.
There is no obligation for the Employers in the European Framework Agreement to create a new and specific telework set of regulations. The obligation is merely the equal treatment of all employees regardless of their status of employment. On the other hand, in order to take into account the particularities of telework, specific agreements may be necessary.
- Working Time (Article 9): The European Framework Agreement recognizes the general applicability of working time regulations to telework, while at the same time stating that ‘the teleworker manages the organization of his/her working time’. In doing so, the agreement offers more flexibility to teleworkers in the arrangement of their working schedules compared with employees who work at the company premises. Telework Schedule is something very important. The employment contract has to indicate telework Days and hours but the work hours may be subject to change.
- Workload and Performance: The agreement also stipulates that teleworkers’ workload and performance standards are equivalent to those of other employees.
- Health and Safety (Article 8): According to the European Framework Agreement and Directive 89/391, the employer is responsible for health and safety measures at the teleworker’s workplace. For instance, the employer has to inform the teleworker of risks related to the work. This applies, in particular, to risks related to working with computer equipment. The teleworker is, in turn, responsible for correctly applying these safety policies.
It is understandable, though, that in practice it is sometimes problematic for the employer to control and guarantee adequate working conditions, as measures are difficult to implement in
workplaces outside of the employer’s premises.
- Equipment (Article 7): As a general rule, the employer is responsible for providing, installing and maintaining the equipment necessary for regular telework unless the teleworker uses his/her own equipment. Of course, the employer compensates or covers costs directly caused by the work of the employee (e.g. communication costs, internet connection) and provides the teleworker with an appropriate technical support facility. The employer is liable regarding costs for loss and damage to the equipment and data used by the teleworker. On the other hand, the teleworker has to take good care of the equipment provided to him/her and does not collect or distribute illegal material via the internet.
- Training: Teleworkers have the same access to training and career development as comparable workers at the employer’s premises and are subject to the same appraisal policies as these are their workers. Teleworkers receive appropriate training targeted at the technical equipment at their disposal and at the characteristics of this form of work organisation.
- Access at Workplace: The employer has access to the teleworker’s workplace. If the workplace is at home, the consent of the teleworker is required before access can be gained.
- Privacy (Article 6): It is of great importance when the place of work is the teleworker’s home. The European Framework Agreement states that ‘the employer respects the privacy of the teleworker’. If the employer needs to access the workplace, this can only be done after prior notification and with the consent of the employee. Any kind of monitoring system can only be introduced after the worker representatives have been informed and consulted, as provided in the Directive 90/270 on visual display units.
- Data Protection (Article 5): The employer is responsible for taking the appropriate measures to ensure the protection of data used and processed by the teleworker for professional purposes. The employer informs the teleworker in particular of any restrictions on the use of equipment and of sanctions in the case of non-compliance; for example, in relation to restrictions to use the equipment for private purposes.
- Termination: The agreement is not a guarantee of employment and can be terminated at any time by either Organization or employee. A telework arrangement may never be allowed to continue uninterrupted if it is detrimental to work quality, client service, the work unit, or the organization. In such situations the manager will make a good faith effort to work with the employee to resolve the situation, but if the problem cannot be resolved, the manager has a responsibility to terminate the agreement.
Termination of the telework agreement should be made for sound business reasons which the employee is entitled to know. In the event of termination of the agreement, the employee will be notified and provided the reason(s) for the termination in writing.In the event this agreement is terminated, the manager will make every attempt to provide sufficient notice to allow the employee to make appropriate dependent care or transportation arrangements.The Organization will not be held responsible for costs, damages or losses to the employee resulting from termination of the agreement.
Agreement between employer and teleworker
A negotiated agreement between the parties is necessary to arrange issues such as work organisation and the modalities for changing work from the employer’s premises to telework and vice versa.
The employer is obliged to provide the teleworker with relevant written information in accordance with Directive 91/533/EEC, namely the conditions applicable to the contract or employment relationship. The specificities of telework normally require additional written information on matters such as the department of the undertaking to which the teleworker is attached, his/her immediate superior or other persons to whom she or he can address questions of a professional or personal nature, reporting arrangements, etc.
The remote workers have equal rights regarding working conditions, workload and performance standards as employees working on the employer’s premises.
The Employers can determine a general framework for occasional remote work applicable within the company, covering the following items:
- The compatible functions/activities within the Company
- The procedure
The directive, though, does not apply to employees with a contract of less than 1 month or with a working week of fewer than 8 hours.
Essential Information of a teleworking contract:
- the identity of the parties and the place of work;
- the nature of the job;
- the date the contract begins and its duration;
- the amount of payment;
- the working hours;
- the collective agreements governing the employee’s conditions of work.
- The employer must give the employee a document containing the information required within 2 months of commencement of employment.
- Where an employer requires an employee to work in a different EU country (‘expatriate employee’), he must give that employee the document containing the information required before departure. That document must set out certain additional information, such as the currency of payment and the length of employment. These provisions do not apply where the duration of employment abroad is 1 month or less.
- The employer must give the employee a written document within 1 month of any change in circumstances.
The Employers can also determine a general framework for occasional remote work applicable within the company, covering the following items:
- The compatible functions/activities within the Company
- The procedure to apply and to grand occasional remote work
- The necessary equipment or technical support eventually provided for the employer
- The possible availability of the employee
- The possible remuneration to be paid by the employer, covering the cost of the occasional remote work
In addition, teleworkers must ensure the following:
- The protection of organization data on disk, hardcopy, or on portable devices from theft, loss, or unauthorized access during transit and at the alternate worksite.
- That approved firewalls and anti-virus software are on all remote site computers and are updated daily with current definitions.
- That flash drives or other portable drives are scanned for viruses before used for uploading or downloading data.
- Sensitive information in hardcopy form is returned to the office or shredded.
- All work is backed-up according to organization procedures.
- The organization’s network is not accessed from the remote worksite or other locations unless with advance approval and for approved purposes.
- The employee agrees to follow the organization’s guidelines pertaining to the handling of public records.
Products, records, documents, inventions and discoveries made while teleworking are the property of the Organization. The employee is expected to comply with the Organization’s policies regarding inventions and copyrights regardless of the work location or whether work was performed on equipment owned by the organization or the employee.
It is worth noting that Cyprus is one of the six countries that have not yet implemented the Framework Agreement on Telework. There is also no specific telework legislation in Cyprus, even though there is no conflict between current national legislation and the Framework Agreement on Telework to justify its non-implementation. To date, the Republic of Cyprus has not taken any initiative to implement the content of the Telework Agreement.