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Third-country nationals seeking employment in local and international companies in Cyprus
Criteria and Limitations
The European Union’s immigration policy is governed by Articles 79 and 80 of the Treaty on the Functioning of the European Union (TFEU) ensuring fair treatment of third-country nationals residing in EU Member States. Although the present provisions secure third-country nationals rights in a wide perspective, it is up to the EU Member States to determine volumes of admission for those seeking work, whether employed or self-employed (Article 79 para. 5, TFEU).
In that respect, Cyprus legislators adopted several law provisions where certain criteria must be fulfilled in order for third-country nationals to be employed, in both Cyprus companies and International Business Companies (IBC) registered in the Republic.
Concerning the category of Cyprus companies, the most important criterion which must be satisfied is for the employers to show that an eligible Cypriot or EU national cannot be found to fill the job vacancy. This procedure requires informing the relevant authorities and placing a note of the vacancy in the newspaper with a deadline expiration of 6 months after the noting day. With the end of the deadline and no interest shown by potential employees, the company may proceed to the employment of third-country nationals. Therefore, a Cyprus company must prioritize the employment of EU nationals and have as a last resort the employment recruitment of a third-country national.
Conversely, companies of foreign interests, including international companies, shall meet two criteria when employing a third-country national. The first one is divided in three sub-criteria, which are set as following:
i. The majority of the shareholders of the company shall be of foreign nationality. Additionally, when having shareholders whose Ultimate Beneficial Owners (UBOs) are foreign companies, these companies must obtain the relevant approval declaration by the Civil Registry and Migration Department (CRMD).
The cases of public companies registered in any recognized Stock Exchange and international companies operating before the change of regime and for which the Central Bank of Cyprus possesses all the necessary data, are exempted from this limitation.
ii. Possessing an equal or below 50% share capital of the total share capital of the Company, with the abovementioned percentage representing an amount equal or higher than EUR 171.000 in order for the Company to be considered eligible.
iii. Especially for newly incorporated Companies, bank statement(s) are required, indicating that the amount of EUR 171.000 corresponds to a direct foreign capital investment legally brought to Cyprus from abroad.
The second criterion considers the venue of the company’s operations. IBCs operating in Cyprus should acquire their self-contained offices, being located in appropriate individual premises.
At this point, it must be mentioned that the procedure of employing a third-country national in international companies in Cyprus is of an interdependent relationship between the company and the third-country national. If the company fulfils the requirements but the third-country national does not, and vice versa, then, employment under this status cannot be achieved.
Third-country nationals can be employed at the eligible IBCs as stated above, classified in three types of positions. This procedure is automatically transferred under the authority and examination by the Civil Registry Migration Department (CRMD). Before acquiring an employment agreement with the potential third-country national employee, the companies shall make sure that they satisfy the requirements of obtaining a Temporary Residence and Employment Permit.
The first class of employees is the one of the Executive Directors of the Company. Executive Directors may be consulting directors, partners, general managers of branches and affiliate foreign companies and departmental managers. There is a limitation of 5 positions of this type to be filled unless the CRMD is convinced that a larger number is necessary.
Moreover, the monthly salary of a newly appointed Executive Director has a minimum of 3872 Euros per month.
An important notice is that there are no time restrictions to the residence period of these employees, giving them the opportunity to reside permanently in Cyprus – an option many third-country nationals holding this position find very attractive.
The second class considers the middle-management staff, executive staff and other key personnel. This class includes Directors, not Executive though, and other Executive and middle-management staff – managerial, clerical or technical personnel. Their monthly salary ranges from 1936 -3871 Euros and may be customized accordingly with the variations in the salary index.
Likewise to the class of the Executive Directors, third-country nationals hired for the positions of middle-management staff cannot exceed the number of 10. It is upon the CRMD’s discretion to decide the employment of more than 10, always in the light of justifications provided by the applicants. These justifications must indicate that the recruitment of these employees will suffice for the scope of the company’s activities but also will have a balanced proportion of foreign staff to Cypriot staff.
The last class of third-country national employees in an IBC in Cyprus concerns the supporting staff. It must be mentioned that because of the nature of their operations in the working place, this class is the most demanding. The criterion of giving priority firstly to Cypriots or European citizens for job vacancies of this type is strictly followed. In this respect, managerial, technical, clerical and professional staff must submit all certificates and supporting documents required.
It must be mentioned that the maximum number of third-country national employees an IBC can have is 30% of the total employees of the Company. Therefore, the ratio of immigrant employees and European Union employees must be 3:7 respectively.
The proportion between the two groups of employees is about to change, almost reaching an equilibrium between them with the beginning of the year 2016. A drafted Bill regarding the abovementioned matter has been approved by the Council of Ministers and is on the go for voting at the Parliament.
In this respect, the present advancement in the area of migration in the workplace is aiming to attract foreign income on the island, making Cyprus a strong player in the international arena of investments.
Even though the recruitment of third-country nationals in international companies in Cyprus is not an easy procedure, the present legislative development renders it a more feasible process.
In Cyprus, Arbitration is often used by Cooperative Banks/Institutions regarding loan cases against their Clients. The Cooperative Societies Act of 1985 (N. 22/1985) and more specifically the Article 52 refers to the arbitration proceeding. Article 52 does not make any reference on the method and the time individuals have to be notified/informed about the beginning of the proceedings, their right to choose a lawyer – not even if they consent to arbitrate with the Coop Bank. This is somewhat unorthodox because parties must consent to resolve their dispute with Arbitration.
However, the Clients of the Coops are not given the opportunity to be heard violating in that manner the ‘right to be heard’; one of the fundamental human rights recognized by our Constitution (Article 30, Constitution of Cyprus), European Convention of Human Rights (Article 6) and by the concrete provisions of International Law.
In order for the Arbitration to be effective, both parties must have an opportunity to be heard and have sufficient time to prepare their case with their Lawyers. Nevertheless, the common practice of Coop Banks is of proceeding to Arbitration despite client’s (defendant) unawareness of a procedure started against him and thus, losing the opportunity of practicing their right to be heard. After the Arbitration procedure takes place, the decision is of course in favour of the Bank and against the Client. This is likely to happen because the arbitrators are usually bank employees and not a ‘third’ person, meaning a completely impartial person. The Bank’s Lawyers achieve in this way, to register the Decision to the District Court with the aim of executing it. Definitely, by having the Coop Banks violating the constitutional right to be heard, Arbitration’s conduction leads to an unfair result. One must note that Article 52 of the abovementioned legislation does not explain the Arbitration Procedure, i.e. how it is conducted, when it will take place, the number of the Arbitrators etc.
To conclude, one may say that, in Cyprus at least, regarding Coop Banks, Arbitration is not applied correctly as it is usually held in the standards provided by International Commercial Arbitration. Essential changes have to be made in order for the procedure to be more accessible to individuals, especially to the weakest parties and do not have the chance to refer to Court and present their case. If we travel back in time, the main reason Coop Banks were established, was to help the poor and farmers and in general individuals in a weak financial position. In contrast to their original purpose, nowadays they seem to satisfy other political and economic purposes.