Hiring your first employee in Cyprus: the complete employer checklist

Your first hire turns the company into an employer, which is a registered status with its own numbers, filings and deadlines. Before the start date you register with the Social Insurance Services and notify the hire through ERGANI. From the first payday you run monthly payroll, and everything you deduct or owe is paid over by the end of the following month. Budget about 15.4% on top of the gross salary, because that is what the employer contributions add in 2026.

How do you register as an employer in Cyprus?

You apply to the Social Insurance Services for employer registration, and the employer number that comes back is the reference for every contribution payment and employer return you will ever file. Your company registration does not cover this. Being a registered company and being a registered employer are two separate records, and plenty of founders discover the second one exists a week before the first payday.

The hire itself is notified through ERGANI, the online system of the Social Insurance Services, and the deadline is strict: no later than one day before employment starts. There is no paper alternative; the paper declaration was abolished in September 2021. Since January 2025 you also register the employee's essential employment terms in ERGANI, an obligation added by decree KDP 455/2024.

Two practical things to collect during onboarding: the employee's social insurance number, and their tax identification number. The monthly employer return needs the TIN, so chasing it in month three is a headache you can skip.

What has to be in writing, and by when?

The essential terms of employment must be given to the employee in writing on a statutory timetable: the core terms, meaning the parties, the place of work, the job, the start date, any probation, the pay and the hours, within seven calendar days of the start, and the remaining terms within one month. That comes from the Transparent and Predictable Working Conditions Law of 2023, and any later change to a term has to be documented by the date it takes effect.

The failure we see most with first hires is not a badly drafted clause. It is having nothing in writing at all, because the first employee was a friend or a former colleague and everything felt understood. The written statement is what an inspector asks for, and it is what settles a dispute two years later when memories differ.

Statutory minimums are floors. Annual leave, public holidays, notice periods and the minimum wage apply even where the contract says something lower, so a clause below the floor simply has no effect. Where the arrangement is unusual, say remote work from another country or a fixed-term contract, have it checked before signing.

What does an employee cost above the gross salary?

An employee costs about 15.4% more than the gross salary. Five employer charges sit on top of the gross and are never deducted from the employee: Social Insurance at 8.8%, the Redundancy Fund at 1.2%, the HRDA fund at 0.5%, the Social Cohesion Fund at 2%, and GeSY at 2.90%.

Say you offer €2,500 gross a month. The company pays €220 Social Insurance, €72.50 GeSY, €30 Redundancy, €12.50 HRDA and €50 Social Cohesion on top, €385 in all, so the hire costs €2,885 a month before you have bought them a laptop. The employee meanwhile has their own 8.8% Social Insurance and 2.65% GeSY deducted from the gross, plus PAYE according to their income. Try the numbers on your own offer with our salary calculator.

The charges stop at three different points, which is why a high salary is harder to estimate than a low one. Social Insurance, Redundancy and HRDA are charged on insurable earnings up to €5,742 a month in 2026, a ceiling revised each January. GeSY runs until total annual income reaches €180,000. The Social Cohesion Fund is charged on all emoluments with no ceiling. Our guide to Social Insurance in Cyprus takes each layer on its own, and GeSY contributions covers why the health contribution reaches dividends as well as salary.

What is the minimum wage in Cyprus in 2026?

From 1 January 2026 the national minimum wage is €1,088 gross a month, and €979 gross until the employee completes six months of continuous employment with the same employer, up from €1,000 and €900. It excludes domestic workers, agricultural and livestock workers and seafarers, and hotel-industry staff have their own decree. The adjustment mechanism runs on a two-year cycle, so the next revision takes effect on 1 January 2028.

Contributions are calculated on actual earnings, so a minimum-wage hire generates the full stack of deductions and employer costs described above on a smaller base. If you are weighing a modest salary for yourself as director against dividends, that trade-off has its own moving parts, and our salary vs dividends guide works through them.

When do you pay the contributions and PAYE?

Everything is due by the end of the month following the pay month, and in practice it is two payments. The Social Insurance contributions, both the employee share you deducted and the employer share the company owes, go to the Social Insurance Services. The PAYE and GeSY withheld from salaries, together with the company's own GeSY contribution, go to the Tax Department, and since January 2026 that side runs on a monthly cycle: you file a monthly TD7 return through Tax For All, due with payment by the end of the following month, plus an annual TD7 that reconciles the year.

File the TD7 before you try to pay, because the return is what creates the liability on your TFA account. Payment itself has been exclusively through TFA since 22 August 2025, and late payment of withheld PAYE carries a 1% surcharge per month, with interest on top after a further month.

What has to be on a payslip?

Every employee must get an itemised payslip within five working days of payday. Under the Protection of Wages Law it must show the employer and employee, the payment date and the period it covers, the basic pay with the hours it corresponds to, any overtime with how it was calculated, any other payments, and every deduction as its own line, so the employee can see the Social Insurance, the GeSY and the PAYE separately, because they are three different charges under three different laws.

The same law requires salaries to be paid into a bank or payment account of the employee's choice, and it requires you to keep a payslip archive you can produce to a Labour Inspector within 15 calendar days of a request. A payslip that only ever existed as a screen the employee glanced at once fails that test. Keep them; they are the record behind every payroll figure in your accounts.

How Sumly runs your payroll

The payroll add-on does the monthly work for you. It calculates Social Insurance and GeSY automatically at the rates in force, emails each employee their payslip, prepares the employer filings, and posts every run straight into your books, so the liability created at month end and the bank payment that follows reconcile without a year-end hunt. Submission stays with a person: you on Base, or your Sumly certified bookkeeper on Premium. It costs €15 per employee per month on top of your plan, and you can see the full scope on the payroll feature page. There is a 30-day free trial, no card needed, so you can run your first payslip before you pay us anything.

Questions first-time employers ask

Frequently asked

Do I have to register as an employer before the first payday?

Yes, and the ERGANI notification comes even earlier. Employer registration with the Social Insurance Services creates the employer number every contribution payment is filed under, and each new hire must be notified through ERGANI no later than one day before their first day of work. A company that runs payroll without an employer number is holding money it deducted from someone with no way to pay it over.

Does the director of my own company count as an employee?

If the director draws a salary, yes. A director paid a salary is treated as an employed person for contribution purposes, so payroll, payslips and monthly contributions apply to them like anyone else. A director paid only in dividends is outside payroll, but dividends carry their own charges: GeSY at 2.65%, and Special Defence Contribution for Cyprus-domiciled residents.

How much does an employee cost on top of the gross salary?

Around 15.4% more in 2026. The employer pays 8.8% Social Insurance, 2.90% GeSY, 1.2% Redundancy Fund, 0.5% HRDA and 2% Social Cohesion Fund on top of the gross, and none of it is deducted from the employee. On a €2,500 gross salary that is €385 a month of employer contributions, so the real monthly cost is €2,885.

Do contributions apply to the whole salary if it is high?

Only partly. Social Insurance, the Redundancy Fund and HRDA stop at the maximum insurable earnings ceiling, which is €5,742 a month for 2026. GeSY runs until the employee's total annual income reaches €180,000. The Social Cohesion Fund has no ceiling at all and is charged on everything. Because the three stop at different points, no single blended percentage works across the pay scale.

Can I pay someone as a freelancer instead of hiring them?

Only if the relationship genuinely is self-employment. What counts is the substance of the arrangement: who controls the work, how integrated the person is in the business, and who carries the commercial risk. An invoice and a contractor agreement do not change any of that. If the authorities reclassify the relationship, the unpaid employer contributions are assessed against you, with charges on top.

Does Sumly submit the employer filings for me?

Sumly prepares them. The payroll add-on calculates Social Insurance and GeSY at the rates in force, emails the payslips, posts each run to your books and gets the employer filings ready. A person then submits: you on the Base plan, or your Sumly certified bookkeeper on Premium.