Cyprus Mail

Emilianidou warns of restrictions on severance pay

Labour Minister Zeta Emilianidou

Businesses that make employees redundant due to a temporary decline in turnover will have to dig into their own pockets for severance pay as they won’t be eligible to tap the Redundancy Fund, Labour Minister Zeta Emilianidou warned Tuesday.

She was speaking at the House labour committee, discussing a bill being fast-tracked that would extend to March 2021 her powers to promote special relief measures for workers, the self-employed and businesses.

The labour minister’s powers to offer special support – linked to the coronavirus situation – are due to lapse next week.

But due to the ongoing situation, Emilianidou told MPs, the government anticipates that support schemes will be necessary until March next year.

By law, employers must compensate redundant employees who have had continuous service of at least 104 weeks. Redundancy compensation for employees is covered by the Redundancy Fund, entirely financed by employers’ contributions. The fund covers both individual and collective redundancies.

But Emilianidou said that businesses no longer wishing to participate in the special coronavirus-related schemes and sack employees or cut salaries without going through the procedures envisaged under the Code of Industrial Relations, or reduce work hours bypassing the Labour Relations Department, would not be eligible to use the Redundancy Fund for severance pay.

Also, companies falling foul of these rules would be denied requests to hire college students or foreign workers.

“Someday this pandemic will end, and these businesses will not be eligible for redundancy and will themselves have to compensate employees, because it shall be considered a temporary drop in turnover,” said Emilianidou.

According to the minister, throughout the years the Labour Disputes Court has handed down several judgments stating that any temporary reduction in a business’ turnover shall not be deemed a valid reason for making employees redundant.

Businesses are being offered both incentives and disincentives, the minister said, adding: “Good employers who respect the laws and appreciate their staff, will see their applications swiftly processed and approved.”

The same bill extending the labour minister’s powers for special support programmes also allows the minister to credit the social insurance contributions for workers and the self-employed persons until March 2021.

In short, the government will automatically pay the social insurance contributions for these individuals.

It applies to anyone enrolled in the special government schemes for unemployment, maternity, sick leave, and child care – again related to the coronavirus situation.

What’s more, the cabinet is soon set to approve additional special training schemes geared at people working in the hotel industry.

Emilianidou said that under the schemes, to be overseen by the Human Resource Development Authority, participants will be considered as employed persons.

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Source: Cyprus News Agency