New hotel industry agreement 2013–2015

Just before the official onset of the summer season, the social partners in Cyprus have signed a new collective agreement in the hotel industry. To counterbalance the reduction of labour costs, the new agreement, based on a mediation proposal from the Ministry of Labour, provides tools to safeguard employees’ rights to the provident fund and to monitor the implementation of the agreement. However, trade unions believe a significant number of workers in the sector will not benefit from the agreement.

Decline of collective bargaining

On 29 May 2013, trade unions and employer organisations representing hotel workers accepted the mediation proposal put forward by the Ministry of Labour and Social Insurance (MLSI) and signed a new collective agreement that covers over 16,000 skilled and unskilled workers. However, around 4,000 immigrant workers may not be covered by the agreement, since their employers do not allow them to form unions.

In fact, sectoral trade unions estimate that collective bargaining coverage in general is declining, as sectoral agreements are violated by almost all enterprises. In most cases, however, the violation is partial, meaning that either not all the provisions of the agreement are enforced, or that only a small number of staff – usually permanent staff who are union members – are covered (CY1109019Q).

Signatories to agreement

On the employee side, the new agreement was signed by the Union of Hotel and Recreational Establishment Employees of Cyprus (SΥXΚΑ), which is affiliated to the Pancyprian Federation of Labour (PΕΟ); and the Federation of Hotel Industry Employees (ΟYXΕΒ), which is affiliated to the Cyprus Workers’ Confederation (SΕΚ).

The signatories representing the employers were the Cyprus Hotel Association (CHA) and the Association of Cyprus Tourist Enterprises (SΤΕΚ).

The new agreement will be effective retrospectively from 1 January 2013 until 31 December 2015. The previous agreement expired on 31 December 2012, having been extended at the request of the employers for a further two years beyond its original December 2010 expiry date (CY1010019I).

Content of agreement

Pay issues

The agreement freezes wages and any increase in the Cost of Living Allowance (COLA) for all hotel workers.

Other key changes on pay have also been included in the agreement.

  • Compensation for working on public holidays will be paid at a rate of double time instead of triple time during the term of the agreement.
  • As before, Sunday work will be compensated at a rate of 1:1.5, but workers will be guaranteed two Sundays off a month.
  • Easter bonuses will be reduced from 30% to 7.5%.
  • The new agreement cuts employers’ contributions to provident funds from 10% to 3%. Provident funds in the sector are mostly voluntary arrangements agreed in the framework of the system of free collective bargaining and are financed by contributions from employers and employees, providing defined contribution lump-sum benefits. Sector-based provident funds operate for certain categories of employees only, such as hotel employees. The majority of provident funds operate on a company basis and are relatively small. As a result of the financial crisis, however, many other collective agreements have also cut employers’ contributions to these funds (CY1301019Q). There have also been suggestions that provident funds need to become a main pillar of the pension system, as a way to develop private pension plans.
  • Where an employer’s property is damaged (for example, broken glasses), the employer previously had the right to deduct 5% from the amount of the 10% service charge applicable in the hotel industry (included in the total amount of the bill). The new agreement means employers will have the right to deduct 17.5% from the amount of the service charge as compensation for any damages. For example, where a service charge amounts to €10, the employer can now keep €1.75 (17.5%) instead of €0.50 (5%).

Monitoring the agreement

Two of the most important aspects of the new agreement, long requested by workers’ representatives, are the establishment of an adequate legal framework for the regulation of the sector’s provident funds, and the creation of a monitoring committee to make sure employers comply with its provisions.

Those who have worked in the industry for the same employer for six consecutive months are entitled to contribute to a provident fund, and seasonal workers acquire the same right after being employed for three consecutive seasons. Employees may make voluntary contributions of between 3% and 10%, and the employers’ contribution is now set at a standard rate of 3%.

The monitoring committee, appointed by Cyprus’s Labour and Social Insurance Minister, will be able to exclude employers from any support schemes for the hotel industry, such as financial support from the state and training and employment schemes, if they violate the sectoral agreement.

Social partners’ positions

The Labour and Social Insurance Minister, Zeta Emilianidou, described the agreement as extraordinary given the current negative economic situation of the country.

Although the agreement’s cutting of labour costs was unavoidable, it is expected that the new employment scheme will create new jobs for unemployed people =, particularly in the hotel industry. The new scheme providing incentives for employment of the unemployed in the hotels, restaurants and catering sector and the wider tourist industry (in Greek) targets all sectors of the industry and aims to employ a total of 6,000 employees.

Representatives of both OYXEB/SEK and SYXKA/PEO expect the wage freeze, pay cuts and changes in working conditions to be only temporary, and that all benefits will be restored when the agreement expires at the end of 2015 when, hopefully, the general economic situation will have improved.

Both trade unions and sectoral employer organisations thanked the Labour and Social Insurance Minister for the ministry’s help in concluding the new collective agreement.

Evangelia Soumeli, INEK-PEO

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