Redundancy under Cyprus Law: Legal Framework and Case Law

Redundancy (“πλεονασμός”) is a legally regulated ground for termination of employment in Cyprus, primarily governed by the Termination of Employment Law of 1967 (Law 24/67, as amended). This legislation aims to balance the employer’s right to restructure operations with the employee’s right to protection against unjust dismissal. The regime is complemented by jurisprudence of the Supreme Court and the Industrial Disputes Court, which emphasize objective and fair application of redundancy provisions.

Procedural Requirements

An employer intending to dismiss employees due to redundancy must follow specific statutory steps. Firstly, the employer must notify the Minister of Labour and Social Insurance at least one month in advance by submitting form YKA 608. This notice must disclose the number of affected employees, their roles, family obligations, and the reasons for redundancy. Secondly, the employer must issue a formal letter of termination to the employee.

For employees to receive compensation from the Redundancy Fund, they must file an application using form YKA 600 within three months of dismissal. In exceptional circumstances, late applications may be accepted up to twelve months post-dismissal if justified. Should the Fund reject the application, the employee may pursue claims before the Industrial Disputes Court against both the employer and the Fund.

Substantive Conditions

Redundancy may be invoked only if the employee has completed 26 consecutive weeks of service with the same employer and has not reached retirement age at termination. Moreover, at least one of the grounds enumerated in Article 18 of the Law must exist. These include:

• Closure of the business or cessation of operations at the workplace;

• Modernisation, mechanisation, or reorganisation reducing the number of necessary employees;

• Changes in products, production methods, or required skills;

• Abolition of departments, including single-person departments;

• Difficulties in marketing products or financial/credit constraints;

• Lack of orders, raw materials, or resources;

• General reduction in business volume.

Objective Assessment and Case Law

The courts insist that redundancy must be assessed on an objective basis, reflecting the actual needs of the enterprise rather than the employer’s subjective belief. In Dionas Georgios v. Cyprus Airways Ltd (2016) 1 A.A.D. 1235, the Supreme Court stressed that redundancy must arise from genuine business needs and not as a pretext for dismissal.

Similarly, in Hindle v. Percival Boats Ltd [1969] 1 All E.R. 836 (applied in Cyprus case law), redundancy was held to depend on objective conditions rather than the employer’s classification of the termination. The principle has been consistently reaffirmed in Cypriot cases such as United Hotels (Lordos) Ltd v. Stavrou (2003) 1 A.A.D. 515.

Where employers attempt to disguise dismissal as redundancy, courts intervene. In Galatariotis Bros Ltd v. Grigora (2001) 1 A.A.D. 1985, redundancy was rejected when the employer replaced the dismissed employee with another worker performing the same duties. Similarly, in Christou Kyriakides v. Redundancy Fund (2017), the Court found that the employee was merely substituted, not genuinely redundant.

Abolition of Departments

Article 18 explicitly recognises the abolition of a department as a valid reason for redundancy. The Supreme Court in Phileleftheros Public Co Ltd v. Giannoulas Christou (2017) confirmed that even a single-person department may be abolished, provided the abolition reflects genuine operational restructuring. Conversely, where duties are redistributed to other employees without true elimination of functions, redundancy is not established (Tassos Kalligas v. Redundancy Fund, 2016).

Financial and Market Difficulties

The Law also permits redundancy due to financial pressures. In Skyrianides Hotels Ltd v. Polyviou (2003) 1 A.A.D. 820, the Court clarified that “credit difficulties” refer to the inability to obtain financing, not to repay existing loans. Furthermore, a “reduction in the volume of business” must be substantial and not seasonal or temporary, as established in Iasonos Ltd v. Christou (1994) 1 A.A.D. 703. Courts require convincing evidence, such as audited accounts or closure of facilities, to support claims of reduced business activity.

Redundancy and Public Sector Employees

Public servants enjoy statutory tenure until retirement and cannot be declared redundant. In Meliniotis Christodoulos v. Redundancy Fund (2006) 1 A.A.D. 144, the Court held that redundancy provisions do not apply to employees with tenure guaranteed by law. Similarly, in Meliniotis Christodoulos v. Municipality of Nicosia (2003) 1 A.A.D. 1067, claims for unlawful dismissal on redundancy grounds were rejected on the basis that such disputes fall under the exclusive jurisdiction of the Supreme Court under Article 146 of the Constitution.

Principles of Good Faith and Fair Dealing

Employers must exercise the redundancy right in good faith. In Photos Photiades Breweries Ltd v. Antoniades (2002) 1 A.A.D. 1490, the dismissal was deemed unlawful because redundancies were declared before modernisation measures were implemented. The Court stressed that genuine reorganisation must precede, not follow, dismissals. Similarly, redundancy cannot be invoked while employees continue working overtime, as this indicates that work volume has not diminished.

Conclusion

Redundancy under Cypriot law serves as a necessary instrument for business restructuring but remains tightly regulated. Employers must strictly adhere to the procedural requirements of Law 24/67, demonstrate objective grounds under Article 18, and act in good faith. The Industrial Disputes Court and the Supreme Court have consistently emphasised that redundancy cannot be used as a pretext for arbitrary dismissal. Employees unjustly dismissed retain the right to compensation from the Redundancy Fund or direct claims against the employer.

For both employers and employees, understanding the statutory framework and judicial interpretation of redundancy is essential in safeguarding rights and ensuring compliance with Cyprus labour law.