The social security system provides for several benefits, such as maternity allowance, sickness benefit, unemployment benefit, old-age pension, invalidity pension, widows’ pension, orphans’ benefit, benefits for employment accidents and occupational diseases.
Cyprus has concluded social security bilateral agreements with the United Kingdom, Greece, Egypt, Canada, Quebec, Australia, Austria, Slovakia, Swiss Confederation, Czech Republic, Netherlands, Bulgaria, Serbia and Syria. The bilateral agreements that Cyprus has concluded with member states of the EU have been replaced by the EU Regulations 883/04 and 987/09, which coordinate the social security systems of the member states.
Social insurance contributions are made by any individual employed or self-employed in Cyprus. An employer also makes contributions for his/her employees. The relevant rates are applied on the weekly wages or monthly salaries received and are subject to certain upper limits.
The Social Security contributions of employees are withheld by the employer from the monthly salary paid to employees. These contributions along with the employer contributions should be paid no later than the end of the calendar month following the month that the salaries relate to. The Social Security contributions of self-employed individuals are paid quarterly. Social insurance contributions are restricted to a maximum amount that is increased annually.
The amount of contributions made by an employer to the Social Cohesion Fund is calculated on the total emoluments with no upper limit.
Employers may be exempted from the 8% Holiday Fund Contribution provided they meet certain criteria.
Sick leave is paid by the Department of Social Insurance. The benefit starts from the 4th day of absence from work due to illness and in the case of a self-employed person on the 10th day of absence from work. The level of the benefit is based on the average weekly earnings on which contributions were made in the previous contribution year under the social insurance scheme.
Many employers sponsor a Provident Fund scheme for their employees, similar to a pension plan. The basic principle of a provident fund is that both the employer and the employee contribute a specific percentage of the employee’s monthly gross salary to the fund. It is not compulsory to operate such funds, but once formed a fund is regulated by legislation and the office of the Commissioner of Provident Funds.