Guide on extraordinary measures for the restriction of the proliferation of COVID-19 to businesses and labour relations in Cyprus

31st Mar 2020

With a sense of duty to our members and our clients, we have issued the below guide on extraordinary measures that can be taken by businesses for the restriction of the proliferation of Covid-19 with a view to reducing as far as possible, at the same time, the impact of this developing global threat to public health on the operation of business.

We also include in the below Guide a number of new fiscal measures that have been adopted by the Council of Ministers (Government) on 15 March 2020 and 26 March 2020 and adopted as law by the House of Representatives on 27 March 2020, intended to counter the impact on business and levels of employment from the new restrictive measures related to the present public health crisis.


Fiscal support schemes

Full Suspension of Operations


Companies the operations of which have been mandatorily suspended, pursuant to the pertinent Decisions of the Council of Ministers and decrees of the Minister of Health, including inter alia shopping centres, department stores, cafes, coffeehouses, bars and all catering businesses (excluding delivery services), entertainment venues, cinemas, theatres, performance venues, libraries, museums, archaeological and historical sites, bookies, casinos, sports facilities, sports clubs, cultural associations and clubs, theme parks, barber shops, hairdressers, beauty salons, construction works (except licensed public utility projects), and all retail sector businesses (except certain exempt categories) may benefit from the Full Suspension of Operations Scheme, pursuant to which 90% of the employees may benefit temporarily from the special unemployment benefit (which is equal to 60% of the regular salary, with a maximum benefit of Euro 1.214) until the business ensues and they may return to work. 10% of the employees, including directors-shareholders, partners that hold more 20% of the share capital, general managers and managerial staff shall not be entitled to this benefit; if this category of employees exceeds 10% of the personnel, some may be eligible for the benefit. Further, in case that the business employs 9 employees or fewer, all employees shall be entitled to this benefit, excluding directors-shareholders.

It is provided that no employees must have been terminated as of 1 March 2020, in order to be eligible for this Scheme, and must not terminate any employees, on economic/financial grounds, during the period of participation in the Scheme plus a period equal to that period plus one month. The employer may still terminate on the following grounds: conduct rendering the employee subject to summary dismissal, and conduct making it clear that the relationship between employer and employee cannot reasonably be expected to continue, commission of a serious disciplinary or criminal offence, indecent behaviour, or repeated violation or ignorance of employment rules.

Please note that businesses the operations of which have been suspended, pursuant to the said decrees, still have the ability to perform administrative or other tasks behind closed doors on the condition that all hygiene rules are complied with and a minimum of 8 sq.m. per person are ensured.


Partial Suspension of Operations



The Partial Suspension of Operations Scheme (replacing the initially announced Small Enterprises Scheme) concerns companies that have suffered a loss of turnover beyond 25% in March 2020 and foresee the same for April 2020, in comparison to the same months in 2019, and the loss is precisely because of the Covid-19 pandemic (if the business did not operate last year, the comparison will be with the months preceding March 2020). Where the business employs up to fifty employees, a special unemployment benefit equal to 60% of the salary (subject to a maximum of Euro 1,214 for an employee) shall be granted to up to 75% of the employees, and if the business employs more than 50 employees, up to 60% of the employees may be granted the benefit.

It is provided that directors-shareholders, partners that hold more 20% of the share capital, general managers and managerial staff shall not be entitled to the abovementioned benefit; if this category of employees exceeds 25% or 40% of the personnel, as the case may be, some may be eligible for the benefit. Further, in case that the business employs up to 2 employees, all employees shall be entitled to this benefit.

It is also provided that no employees must have been terminated as of 01 March 2020, in order to be eligible for this Scheme, and must not terminate any employees, on economic/financial grounds, during the period of participation in the Scheme plus a period equal to that period plus one month. The employer may still terminate on the following grounds: conduct rendering the employee subject to summary dismissal, and conduct making it clear that the relationship between employer and employee cannot reasonably be expected to continue, commission of a serious disciplinary or criminal offence, indecent behaviour, or repeated violation or ignorance of employment rules.

This Scheme is in effect between 16 March 2020 – 12 April 2020.


Special sickness allowance


Where work from home is not possible and therefore an employee falling within the scope of the Ministry of Health’s directions cannot perform his/her duties outside the workplace, the question arises as to whether s/he will be entitled to pay for the period s/he is out of work. Because the employee’s absence is not due to the employer, the latter is not obliged to pay him/her a salary for the period of absence since the employee will be entitled to special sickness allowance for that period.

In light of the above, a special sickness allowance shall be paid in the following cases:

(a)    Employees who have specific health problems and are on the List published by the Ministry of Health imposing the obligation to abstain from work for the purpose of protecting their health and not deteriorating it (certificate by GP required);

(b)    Quarantined persons and persons that are self-restricted under telephone monitoring (certificate by Ministry of Health required); and

(c)    Persons over the age of 63 to 65 years of age who do not receive statutory pension and continue to work and are in quarantine or self-isolation.

Self-employed persons shall also be entitled to the allowance from the fourth day, in the same way as for employees, instead of the ninth day as it stands today.

In cases where an employee is found to be coronavirus positive or is hospitalised, s/he may make use of the existing procedure for receiving the regular sickness allowance.


Extraordinary parental leave and special allowance



Parents who cannot work from home or work on a flexible schedule or have no internal/domestic help to be granted a four-week extraordinary leave, in order to care for their children of up to 15 years old (no age limit for persons with disabilities provided that the said persons do not receive disability care allowance) due to school closures. Such employees shall be granted a special allowance of 60% for the first Euro 1,000 of salary and a 40% allowance for the next Euro 1,000 (in cases of single-parent families, the ratio is 70% to 50%). The benefit is subject to a maximum of Euro 1,000 (or Euro 1,200 for single-parent families).

Parents with a salary over and above Euro 2,500 shall not be entitled to any special allowance (in cases of single-parent families, may still be entitled under certain circumstances). At any given time, only one of the two parents may receive the said extraordinary leave (and allowance).

In addition, if a parent works or receives unemployment benefit or participates in a suspension of operations scheme and the other parent does not, the working parent shall not be entitled to the extraordinary parental leave, unless the non-working parent that does not work suffers from Covid-19  or is hospitalised or is a person with disability or is under compulsory restriction.


Department of the Registrar of Companies and Official Receiver


The Department has announced the below measures to assist liquidity of Cyprus-registered companies:

·        Suspension until January 2021 of the publication in the Official Gazette of the Republic of the quarterly notice prior to deregistration of companies not complying with their obligations to the Department;

·        Extension of the obligation to pay the annual levy of Euro 350 to 31 December 2020;

·        Extension of the obligation to submit the Annual Report to 28 January 2021; and

·        Extension of the imposition of a charge for late submission of statutory forms to the Department to early 2021.


Tax and social insurance measures

Value Added Tax


Temporary suspension of VAT payments for three months for the fiscal periods ending in February, March and April 2020. It is noted that relevant arrangements will be made so that the amounts due will be paid in tranches until 10 November 2020, with the exception of companies that do not face liquidity problems, such as pharmacies and supermarkets.


Tax returns


Minister of Finance is authorised to issue a decree for temporary suspension of income tax returns for companies and self-employed persons and for temporary suspension of payment of additional tax and interest on certain categories of persons liable for fiscal periods ending on 29 February 2020, 31 March 2020 and 30 April 2020, provided that they have filed their tax returns for those periods and pay outstanding VAT by 10 November 2020.


Social Insurance


Suspension of instalments for March and April for employers that are on a repayment plan for late payment of social security contributions and extension of repayment period for two months.


General Healthcare System

Suspension of the scheduled increase in contributions to the General Healthcare System from 01 April 2020 to 30 June 2020.

Tourism sector


Supplementary budget of Euro 11 million allocated for support of the tourism sector between June – September 2020, in cooperation with airlines and tour operators, and further actions for the period October 2020 – March 2021.


Banking and finance

Suspension of instalments


Suspension of payments of instalments and interest for loans to financial institutions (including loan management companies, insurance companies and the Cyprus Land Development Corporation) for a period of nine (9) months, until 31 December 2020, including business, natural persons and self-employed persons that have been consistent with their obligations (after written request to the financial institution). Companies and self-employed persons may also, by written request, be exempt from the obligation to submit financial statements to financial institutions for the year 2019.


State guarantees


The following measure shall be reconsidered by the Plenary of the House of Representatives on 02 April 2020 for final approval, so it may be subject to amendments:

State guarantees shall cover 70% of loss that may be incurred by new loans that will be issued between 02 April 2020 and 31 December 2020 for a period of up to six years as of the date that the loan is made. These guarantees are restricted to loans intended to facilitate liquidity for small-and-medium-sized enterprises and self-employed persons and cannot be used for repayment of existing loans, but they may be used for payment of interest of existing loans. The rest 30% of loss shall be covered by the lending institution, regardless if the loan is secured or not. These loans shall have a maturity period between three months to six years, except from current accounts the maximum guarantee of which is for one year. Further parameters regarding these loans shall be set by decree of the Minister of Finance, including the maximum loan amount and on what grounds (e.g. covering liquidity needs, working capital and investments).

Any businesses and self-employed persons benefiting from this scheme may not proceed with any terminations until 31 December 2020 through the Redundancy Fund.


Subsidised interest


The following measure shall be reconsidered by the Plenary of the House of Representatives on 02.04.2020 for final approval, so it may be subject to amendments:

For new loans subsidised low interest rates are fixed, for example as follows:

·        The total interest rate on new loans for an SME or self-employed person shall be:

For a secured loan with a maturity of up to one year at 0.75% and with no security at 1.25%

For a secured loan with a maturity of up to 3 years at 1% and with no security at 1.50%

For a secured loan with a maturity of up to 6 years at 1.50% and with no security at 2%

·        The total interest rate on new loans a large enterprise shall be:

For a secured loan with a maturity of up to one year at 1% and with no security at 1.50%

For a secured loan with a maturity of up to 3 years at 1.50% and with no security at 2%

For a secured loan with a maturity of up to 6 years at 2.50% and with no security at 3%


Health and safety at work

Evaluation and risk assessment


Employers have the statutory obligation to continuously evaluate the employment environment and undertake the necessary actions in view of possible risks, including the proliferation of Covid-19. Particular focus should be given to pregnant employees, persons with disabilities or particular health issues, persons over the age of 60, and other higher-risk groups. To this effect, the necessary measures must be taken with a view to securing health and safety at work. For example, free and abundant provision of antiseptics, antibacterial cleansers, disinfectants and alike products in the workplace, as well as regular cleaning and disinfecting of the workplace.

In addition, the provision of the technical capacity and facilities to work remotely and meet virtually (e.g. videoconferencing), rather than physically, wherever possible, are measures that should be explored by businesses.

There is also a pertinent announcement of the Ministry of Health to this effect, which suggests that the number of persons in each workplace, including both employees and clients that may be visiting, must be such that it ensures a minimum of 8 sq.m. for each person and a secure distance of 2 metres must be kept between persons.



Prohibition of entry


Employers must not allow persons found positive to Covid-19 or have come into contact with a confirmed case or have travelled abroad in the last fourteen days, regardless of destination, to enter the workplace, pursuant to the latest directions of the Ministry of Health. These persons shall be entitled to sickness benefit from the Social Insurance Fund.

In addition, employers may deny entry to personnel that may have been infected, to protect the health and safety of the rest of the personnel, and request of the employee to work from home and undertake all necessary medical examinations.


Reasonable adjustments


Our suggestion is for employers to follow the most stringent and conservative of measures and guidance issued by the Ministries of Health, of Foreign Affairs and of Labour, Welfare and Social Insurance, as well as the World Health Organisation.

Employers should make all reasonable adjustments, as required, to safeguard vulnerable employees, and regular updates and guidelines should be communicated to the workforce, particularly in cases where the physical presence of the employee is required in the workplace. Preferably, a specific person with a responsible position should be chosen as a focal point within the company to communicate to the workforce all matters concerning containment, health and welfare, as well as matters concerning remuneration, given the disruption to business operations and given the fact that a number of employees may be temporarily suspended from employment or may be requested to take out leave, as long as the business disruption persists.

A competent individual within the firm may also be tasked with ensuring compliance with company health and safety policies and liaising with the competent public health authorities for further guidance, particularly in cases of incidents or suspected incidents of infection in the workplace.

Flexible and remote working conditions, including working from home and/or flexible working hours allowing staff to travel out of rush hour, wherever possible, are the most recommended of measures to maximise temporary social distancing, as far as the current situation continues, as well as minimising business travel and limiting visitors to the workplace.


Other HR consideration


Employers should keep regular contact with their employees and communicate to them regularly company policy in the present extraordinary situation, as well as the relevant Business Continuity Plan.

Employers may ideally cross-train and create cross-disciplinary teams (particularly with members from the practice areas where workload is expected to increase, such as tax, employment, regulatory compliance, immigration, data protection and technology)

It should also be clarified that people working remotely and people with whom annual paid leave has been agreed are distinct and their situations considered accordingly. In particular, people working remotely may be considered as available for communication, at least during the agreed office hours, as usual, while persons on agreed annual leave must be treated as such.

A Business Continuity Plan should be issued the soonest (if not already prepared) and the possibility that some employees may get infected or may have already gotten infected should also be taken into account as part of the Plan; equally, it is possible that persons already infected and treated may in fact be re-infected, since the precise extent and/or time period of immunity to Covid-19 after treatment is still unknown.

Termination of employees should be treated as a measure of last resort, given that a termination under the present circumstances may cause reputational damage and may even be viewed unfavourably by a court in case that the lawfulness of the dismissal is under question. Alternatives should first be explored, such as striking an agreement with employees for temporary wage reduction, reduction in number of hours, working on a rotational basis, and taking out accrued untaken annual leave. Equally, the abovementioned state support schemes should be considered.

In case that a business proceeds with redundancies, they should make sure to follow a fair redundancy process and they are advised to follow the seniority principle and to make redundant employees only in sectors of the business that have indeed been affected in order to avert risk of liability in damages for unfair dismissal. If the business will proceed with a collective redundancy, it should consult its legal advisors for the necessary information and consultation requirements.


Privacy considerations



The right to private life is a constitutional right, but it may be qualified in cases of public health considerations. Equally, the European Data Protection Board in its recent guidelines states that data protection rules, such as GDPR, do not hinder measures taken in the fight against the coronavirus pandemic. However, the data controller must ensure the protection of the personal data of the data subjects and, in particular, personal medical data must always be treated cautiously and not disseminated to a larger number of people than absolutely necessary.

Therefore, a number of considerations should be taken into account to guarantee the lawful processing of personal data, including health data, such as information collected through temperature check of an employee or a visitor. Recording of such sensitive data (special categories of personal data) is prohibited as a rule, unless one of the legal grounds provided in Article 9(2) of the General Data Protection Regulation (GDPR) can be demonstrated. It is possible that the lawfulness of a temperature check policy may come on the basis that processing is necessary for employment, social security and social protection law obligations, such as securing a healthy and safe working environment, for the purposes of preventive or occupational medicine, for the assessment of the working capacity of an employee, or because processing is necessary for reasons of public interest in the area of public health, such as protecting against serious cross-border threats to health.

Nevertheless, basic principles always need to be complied with, including necessity and proportionality. For example, at the moment, taking temperature checks in the workplace is not a measure recommended by either EU or national health authorities or the World Health Organization. To this effect, there is a risk a court or the national data protection authority would find that temperature checks are not strictly speaking “necessary”.

It is advisable to regularly follow the latest national, EU and WHO medical guidance, in order to decide on such matters of privacy and, at the same time, advise employees that exhibit symptoms, or if any other persons in their household do, to stay home and undertake testing the soonest. In addition, implementing enhanced cleaning and hygiene policies may achieve the same objective without being intrusive.

Regardless of the decisions taken pertaining to privacy concerning Covid-19, businesses should strictly follow storage limitation and integrity and confidentiality obligations, as well as communicating the pertinent policy to employees, visitors and any other data subjects (depending on the categories of data subjects whose health data is processed).


Data integrity


Given the shift to teleworking for many business, companies should look into the matters of adequacy of IT infrastructure, software licensing, bandwidth, and clear communication of company policy to the personnel as to the obligations of the employees for use of the equipment solely for professional purposes, confidentiality obligations to clients, data security, and restriction of local storage and hard copying facility, in order to minimise the risk of data breaches. In addition, password protection of communications and work product is highly recommended.




Personnel should be provided with clear guidance on authentication and secure access process and additional checks should be implemented concerning financial transactions, such as verification from two sources (e.g. e-mail and follow-up phone call). Businesses should also be aware of increased activity in spam emails intended to breach security on the pretext of providing “further information” on SARS-CoV-2.



Price ceiling



Imposition of wholesale and retail price ceilings on certain products, including antiseptic gels and sprays, sanitising hand gels and simple surgical masks, in order to prevent profiteering.





Force majeure clauses set out, in general terms, unexpected circumstances that fall beyond the contracting party’s reasonable control that, having arisen, prevent it from fulfilling its contractual obligations. Where a contract contains a force majeure clause, which includes a reference to illnesses, the key issue is whether the SARS-CoV-2 outbreak falls within the scope of the said clause. Equally, businesses are advised to insert such clauses with specific references to infectious diseases or epidemics in their contractual relationships, as well as to revisit their insurance arrangements accordingly concerning supplies and cargo (where applicable).

If the contract does not include a force majeure clause or if the Covid-19 outbreak falls outside the scope of that clause, the parties will have to ascertain whether the common law doctrine of frustration is applicable to discharge them from their contractual obligations. It can, however, be difficult to establish frustration, depending on the specific circumstances and, primarily, the foreseeability thereof. Furthermore, the financial consequences of a contract that has been frustrated, can be increasingly complicated.

The Covid-19 outbreak could affect not only the ability of a contracting party to fulfil its obligations under contract, but also its overall financial condition, which could in itself constitute a material adverse change, whether in its financial condition, its business or its prospects. The many unknown parameters related to the outbreak at present, mean that it is difficult to determine the magnitude and timeframe of its consequences, making establishing a material adverse change a very complicated process. The ensuing financial problems that may be suffered by a company, as a result of the outbreak, are likely to generate other related contractual problems, such as breach of a financial covenant or payment default.

In light of the above, companies should consider carefully whether triggering a force majeure clause or claiming frustration in their contracts harms or serves the long-term interests of their business and/or if another less drastic measure or solution may be undertaken, always having regard to either party’s ability to perform their contractual obligations under the present circumstances; in cases of such termination, businesses should always first consult their legal advisor to avert the risk of giving the counterparty a right to damages, if the contract is not considered as frustrated.

In addition, in case that a company chooses to trigger a force majeure clause or frustrating circumstances, it should make sure to comply with any notification requirements, any regulatory requirements and official guidelines as at present and prepare a contingency plan in advance. The company should also retain any specific documentary evidence that may prove that this indeed is a force majeure event or frustrating circumstance for its purposes, so that it can use the same in any potential future judicial process, should the need arise.



Public procurement


Extension of the period of execution of the subject matter of public procurement contracts, for a period depending on the case ad hoc, without triggering any delay clauses and without seizing or liquidating part or all of the amount of the deposited performance guarantees.




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