Cyprus: Latest working life developments – Q2 2017

Amendments to social security legislation to combat undeclared and illegal work, and legislation to establish a new labour inspection body are the main topics of interest in this article. This country update reports on the latest developments in working life in Cyprus in the second quarter of 2017.

Tougher legislation to tackle undeclared work

On 19 May 2017 the House of Representatives passed several amendments to the Social Security Law to combat undeclared and ‘illegal’ work. The amendments set out both procedural and punitive provisions.

Among the procedural provisions is the responsibility of employers to electronically declare the employment of workers a day before they begin work, and to register them within seven working days of the start of their job. Punitive provisions include heavy administrative fines for businesses that employ undeclared workers, starting at €500 for each worker and for each month of the infringement.

However, households that employ domestic workers and health carers are excluded from the administrative fines. A legal presumption has also been introduced: unless employers can prove otherwise, it will be assumed that undeclared employment began six months before the date the infringement was discovered and employers will have to pay six months of social insurance contributions for each undeclared worker. If an employer commits a second similar offence within two years of the first offence, the authorities now also have the power to order an employer to suspend their business, or part of it, for up to 48 hours. Employers also face administrative fines and business suspension for ‘illegal’ employment or employing workers who do not have permission to work in Cyprus.

Finally, the new legislation provides that all inspectors assigned by the ministry under any legislation, not necessarily the Social Security Law, will be able to report cases of undeclared work. Inspection duties could also be assigned to other public employees or to individuals from the private sector through the purchase of inspection services.

Although the trade unions are very much in favour of this initiative, they have objected to two of the amendments: the exclusion of domestic work and the possible assignment of inspection duties to the private sector, which the unions view as a step towards the deregulation of work.

Proposals for new inspection service

On 4 July 2017, the Labour Committee of the House of Representatives had initial discussions on a bill tabled by the Ministry of Labour, Welfare and Social Insurance that proposes the establishment of a new inspection service. The aim is to increase the inspection capacity of the ministry and improve efforts to detect and combat undeclared employment and other labour irregularities. The bill proposes increased powers for inspectors working for the ministry to carry out targeted inspections.

The major task of the inspectorate is to ensure that there are no violations of any of the 28 labour-related laws. Currently, inspectors from the various departments of the Ministry – the Department of Labour, the Department of Labour Inspection and the Department of Labour Relations – only monitor compliance with legislation overseen by their specific department. The new body will bring all inspectors together and will authorise them to check for compliance with all labour-related legislation. Under the new strategy, the ministry will assign more public employees to the role of inspector and to purchase private inspection services as required. Inspectors will have the authority to carry out inspections without prior notice and issue fines directly to offenders. They will also have the right to request police escorts during inspections, to inspect any kind of business archive, document or certificate and to ask questions of any person in the business being inspected.

Trade unions have complained that there was no social dialogue to discuss the bill before it was submitted to the House of Representatives. The established process, say the unions, is that any legislation affecting workers is first discussed in the Labour Advice Body before submission. However, the Minister of Labour, Welfare and Social Insurance, Zeta Emilianidou, said that social dialogue is unnecessary because the administrative structure of the ministry is not a trade union issue. Ms Emilianidou also said that she is ready to offer clarification on any of the bill’s provisions, and invited stakeholders to the ministry for a meeting. All the trade unions requested time to study the provisions of the bill before setting out their official position.

Commentary

The bill to establish a new inspection body will be submitted to the parliament’s plenary for a vote on Friday 14 July 2017 without amendments, and despite union reactions.

Pambis Kyritsis, General Secretary of the Pancyprian Federation of Labour, submitted written comments on the proposals to the House of Representatives Labour Committee on 10 July 2017. Objecting to the staffing of the inspection service by the private sector, Mr Kyritsis cited Article 6 of the ILO Convention No. 81, which states that an inspection body should be made up of public employees. However, he has warned that without the purchase of services from the private sector it will be impossible to establish the new service.

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