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

4th May 2020

Fiscal support schemes
 

Full Suspension of Operations

 

Companies the operations of which were 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 than 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 noted that for employees that do not fulfil the minimum conditions necessary for receipt of benefits from the Social Insurance Fund, the special unemployment benefit may reach 40% of the January 2020 salary or of the latest salary declared to the Social Insurance Services, with a maximum benefit of Euro 1.214 for a one-month period (as of 13.04.2020 there is also a minimum of Euro 360 for a one-month period).

It is provided that no employees must have been terminated as of 01.03.2020, 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.

A precondition of an 80% loss in turnover was added to the Scheme on 03.04.2020 by relevant decree of the Minister of Labour, Welfare and Social Insurance.

This Scheme is in effect between 16.03.2020 – 12.06.2020.

More information and the relevant electronic application forms can be found at the following link: https://www.coronavirus.mlsi.gov.cy/pliris

 

 

Partial Suspension of Operations

 

 

The Partial Suspension of Operations Scheme concerns companies that have suffered a loss of turnover beyond 25% in March 2020 and foresaw 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 noted that for employees that do not fulfil the minimum conditions necessary for receipt of benefits from the Social Insurance Fund, the special unemployment benefit may reach 40% of the January 2020 salary or of the latest salary declared to the Social Insurance Services, with a maximum benefit of Euro 1.214 for a one-month period (as of 13.04.2020 there is also a minimum of Euro 360 for a one-month period).

It is provided that directors-shareholders, partners that hold more than 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 01.03.2020, 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 16.03.2020 – 12.06.2020.

 More information and the relevant electronic application forms at the following link: https://www.coronavirus.mlsi.gov.cy/merikis

 

 

Self-Employed Workers Support Scheme

 

Self-employed workers who have fully suspended their operations according to the Decrees of the Minister of Health and the relevant decisions of the Council of Ministers (precondition of 80% loss in turnover) and self-employed workers who have partially suspended their operations (i.e. more than 25% loss in turnover), excluding certain exempt professions, may benefit from a special allowance equal to 60% of insurable earnings, subject to a minimum of Euro 300 and a maximum of Euro 900 per four-week period. Employees of such self-employed persons may benefit from the Full or Partial Suspension of Operations Schemes.

It is also provided that no employees of such workers must have been terminated as of 01.03.2020, in order to be eligible for this Scheme, and these workers must not terminate any of their employees, on economic/financial grounds, during the period of participation in the this 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 16.03.2020 – 12.06.2020.

 More information and the relevant electronic application forms at the following link: https://www.coronavirus.mlsi.gov.cy/autotelos

 

 

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 the coronavirus SARS-CoV-2 or is hospitalised or is a person with disability or is under compulsory restriction.

 

 

Special unemployed persons’ support allowance

 

Persons registered as regular unemployed persons that have exhausted their right for payment in February or March or April 2020 are entitled to a special allowance of Euro 360 for one month, as of 02.05.2020.
 

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 31.12.2020;

·        Extension of the obligation to submit the Annual Report to 28.01.2021; 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 10.11.2020, with the exception of companies that do not face liquidity problems, such as pharmacies and supermarkets.

On 16 April 2020, a new ministerial decree was issued and requires a number of taxpayers to submit monthly instead of quarterly VAT returns. This decree affects the VAT obligations of two specified categories of taxpayers. Taxpayers falling under the specified categories will receive (or have received_ a notification from the Tax Department which will give directions as to the time of submission of the tax returns and how to pay the VAT due. Taxpayers who fall into the second category will be asked to pay 30% of the amount due in each case as opposed to those who fall into the first category who will be required to pay the full amount due. The tax department specifies that the monthly submission will be effected for the months of March until June 2020.

 

 

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 29.02.2020, 31.03.2020 and 30.04.2020, provided that they have filed their tax returns for those periods and pay outstanding VAT by 10.11.2020.

 

Customs and Import Duty

 

 

 

 

 

Excise Duty

 

 

 

 

Social Insurance

Relief from import duties and VAT of goods that fall under the relief/exemption medical equipment, supplies, and consumables imported into Cyprus between 30 January 2020 and 31 July 2020. A list of these products is attached to the customs circular.
The relief/exemption is granted provided that the covered goods are imported by or on behalf of state organisations including state bodies, public bodies and other bodies governed by public law, or by or on behalf of organisations approved by the competent authorities in the member states and the goods are intended to be either: i) distributed free of charge to persons affected by or at risk from Covid-19 or persons involved in combating Covid-19;or (ii) made available free of charge to persons affected by or at risk from Covid -19 or persons involved in combating Covid-19 while remain the property of the bodies and organisations referred to above. The relief/exemption is also granted for goods that are imposed for release into free circulation by or on behalf of disaster relief agencies to meet their needs during the period they provide disaster relief to persons affected by or at risk from Covid-19 or persons involved in compacting Covid-19.On 30 March a decree was published in the official Gazette of the Republic of Cyprus and pursuant to Article 5 (5) of the Consumer Tax Law (91(I)/2004), the payment deadline for payment of excise duty on energy products, tobacco products, alcohol and alcoholic beverages by companies whose turnover exceeds Euro 3.5 million may be extended from 16 April to 16 June, upon request by the taxpayer. Similarly, if this decision concerns April, the payment deadline will be extended from 16 May to 16 July. The extension will apply only to companies that pay the excise duty through the computerized Theseus system and the production, acquisition and import of such goods is not occasional.

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 01.04.2020 to 30.06.2020.

 

 

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 31.12.2020, 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.

 

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 the coronavirus SARS-CoV-2. 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 the coronavirus SARS-CoV-2 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 considerations

 

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 SARS-CoV-2 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
 

Confidentiality

 

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 the coronavirus SARS-CoV-2 matter, 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.

 

 

Cybersecurity

 

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.

 

Commerce
 

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.

 

 

Performance

 

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 SARS-CoV-2 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 SARS-CoV-2 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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