The 13th salary and holiday pay in Cyprus: what the employer owes

In short

An employer may not keep back part of the agreed salary and hand it back as holiday pay, because the cost of annual leave falls on the employer. No law requires a 13th salary, but it is owed where it was agreed, even orally.

Klitos Platis, advocate

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Your payslip shows the agreed gross salary, but each month part of it is missing. Your employer explains that it is keeping that part back as a “holiday allowance” and will hand it over when you take leave. The 13th salary does not come, and the leave, when it comes, is paid at less than you expected.

Two laws and the case law answer these questions. The Annual Holidays with Pay Law, Law 8/1967, says who pays for the leave. The Protection of Wages Law, Law 35(I)/2007, says what may be taken out of the salary. And the case law of the Supreme Court says when a 13th salary is wages that are owed. At the end we explain what you can do, and how much time you have to do it.

Leave is paid on top of the salary, not out of it

The cost of annual leave falls on the employer, not on your salary. Law 8/1967 gives every employee annual leave “with pay” (sections 2 and 3), that is, paid leave, and it secures that pay in one of two ways:

Through the Central Holiday Fund. The employer pays the Fund a contribution calculated on the employee’s wages, and the leave pay is paid out of the Fund (Regulations 6(2) and 9(1) of the Annual Holidays with Pay Regulations of 1980, Κ.Δ.Π. 287/1980). The Fund is managed by the Director of Social Insurance Services.
Through the employer’s own leave scheme. The Minister of Labour may approve an employer’s leave scheme where, in its operation, it is more beneficial to the employees than the provisions of the Law, and the employer is then exempt from the Fund (section 11).

The Law describes the contribution as one “payable by the employer” (section 9(2)(b)), and an employer that fails without reasonable cause to pay it commits an offence (section 14(1)(b)). Nowhere does the Law provide for the employer to recover it from the employee’s wages. Law 35(I)/2007, indeed, includes the contribution to the Central Holiday Fund in the very “wages” it protects (section 2).

If, once everything has gone in and out, you received only the agreed salary, your leave was not paid: you paid for it with your own money.

Why paying it back does not cure the deduction

Money kept back from the salary and paid back later under another name is the same salary, paid late. Section 10(1) of Law 35(I)/2007 allows no deductions from wages except:

where a law or regulation provides for them;
under the rules of pension, provident and medical care funds;
under a court judgment;
for damage to the business that the employee caused intentionally or through gross negligence, and only after consultation;
where a collective agreement or general agreement applicable to the employee provides for them;
with the employee’s written and signed consent.

The employer’s contribution for leave is not mentioned in any of the first five cases. That leaves written consent. If you were ever asked to sign a form about deductions, that is the document examined first, and the employer must keep a record of the consent forms (section 10(5)).

The employer holds the records. It must keep records of each employee’s gross and net wages, of every deduction and of its reason (section 12(1)), it bears the burden of proving that it paid (section 12(3)), and it must give you a payslip within five working days of each payment (section 3(4)(b)). The Schedule to the Law provides that the payslip shows, where they apply, the 13th salary and the contributions to the Central Holiday Fund. Your payslip is therefore your first piece of evidence: it shows what was kept back and under what name.

A breach of the Law by the employer is an offence, punishable by up to six months’ imprisonment, a fine of up to 15,000 euro, or both (section 20(1)). A director, secretary or similar officer with whose consent or connivance a company’s offence was committed faces the same penalty (section 20(1A)).

When the leave is paid short

If the days or the pay for your leave are less than you are entitled to, the difference can be claimed. Under section 5(1) of Law 8/1967, an employee who has worked at least forty-eight weeks in the leave year is entitled to twenty working days on a five-day week and twenty-four on a six-day week, or more if a contract or collective agreement gives more. Public holidays and days of sickness do not count as days of leave (section 6(1)). We explain the calculation in our article on annual leave and working time.

The Law also protects leave through criminal provisions. An employer that fails to grant leave that is due, or to pay the contribution to the Fund, commits an offence, and on conviction is also liable to pay the contribution (section 14(1)).

Before you claim the leave from your employer, find out whether it has paid contributions for you to the Fund. In a 2009 case before the Limassol Labour Disputes Court, Dimitriou v. Creazione di Terra Ltd, both sides stated that the employer had paid the Holiday Fund each month the amount due for the employee, and that she could collect it by applying to the Fund. The claim for leave was withdrawn. If the contributions were not paid, the claim lies against the employer.

While the employment continues, leave is taken, not bought out. Under section 8(2) of the Organisation of Working Time Law, Law 63(I)/2002, the minimum annual leave may be replaced by an allowance in lieu only when the employment relationship ends. For what is owed when employment ends, see our article on termination of employment.

The 13th salary: when it is owed

No law requires a private employer to pay a 13th salary, but where it has been agreed it is wages and is protected as wages. Both points come from Adelfoi Liotati Ltd v. Director of the Department of Labour Relations, Criminal Appeal 151/2016: the first was noted by the trial court, and the Supreme Court, on 1 November 2019, agreed with its interpretation that an agreed 13th salary is wages.

At his hiring the employee had agreed orally that, on top of his monthly salary, he would receive a bonus every Christmas of about one month’s salary. He received it without a break from 2004 to 2010, as all the staff did. For 2011, 2012 and 2013 the employer did not pay it, because of the economic crisis, and the employee did not consent. The trial court held that the bonus, given to everyone “on a steady, regular and defined basis” and “without any condition or term”, was not an ex gratia payment but wages under section 2 of Law 35(I)/2007, and that it had been cut without the employee’s consent. The Supreme Court agreed with that interpretation and upheld the conviction.

The name does not change the result. In Director of the Department of Labour Relations v. Stavrou and Others, Criminal Appeals 264/2018 and 265/2018, the trial court had acquitted a company and its director because the employee signed each December that he received the sum as a “gratuity”. The Supreme Court, on 3 July 2020, held that this was “irrelevant”: the payment had been made steadily from the first year, without conditions, was roughly equal to one month’s salary, and there was an oral agreement that the employee would have whatever the rest of the staff had, together with a 13th salary. The acquittal was set aside and the respondents were convicted.

What counts is not what the payment is called, but whether it was paid steadily as part of your pay.

A 13th salary may also rest on a collective agreement. Section 12(1)(e) of Law 8/1967 places within the jurisdiction of the Labour Disputes Court claims for the “thirteenth salary and any other right arising from law, regulation, custom, individual or collective agreement”. If your sector is covered by a collective agreement, read what it provides and when each benefit is paid.

How it is proved

The 13th salary is proved by whoever claims it, which is why the documents decide the case. In Creazione di Terra the employee said she had agreed a 13th salary orally. There were no written terms of employment, and the Labour Disputes Court found neither her evidence nor that of the employer’s director credible. Without evidence it could accept, the claim for a proportion of the 13th salary was dismissed.

The same Court also held that, even if there had been a right, the employee had given it up, because she had signed a receipt for her last salary with the words “I declare that I have no other claim against the company”. Before you sign a receipt for a payment, read what you are declaring. If you are asked for one, write only what you received and for what period.

What you can do

There are three routes, and one does not rule out another.

A written request to the employer. Ask for the payslips that are missing and for an explanation of every deduction. The employer must hold this information in its records, and its answer, or its silence, becomes evidence.
A complaint to an inspector. Under section 16 of Law 35(I)/2007, an inspector receives complaints about disputes arising from the application of the Law, provided the case has not already been brought before a court. The inspector investigates, tries to settle the dispute and draws up a minute, which may be used before the Labour Disputes Court. From the complaint until the minute is drawn up, the time limit for applying to the Court is interrupted (section 16(5)). Liotati and Stavrou were both criminal cases brought by the Director of the Department of Labour Relations, with the employee as complainant, and on conviction the court may order payment of the sum owed (section 20(2)).
An application to the Labour Disputes Court. Claims for annual leave, accrued wages and the 13th salary fall within its exclusive jurisdiction (section 12(1)(e) of Law 8/1967), and its judgment carries interest from the date the application was filed (section 12A).

Twelve months, from each sum left unpaid

The application to the Labour Disputes Court is made within twelve months from the date on which the right arose (section 12(10A) of Law 8/1967). In Pantelis Georgiou v. Ironhold Estates Ltd (2007) 1 A.A.D. 1051, a hotel employee claimed after leaving, among other things, a proportion of the 13th and 14th salary and annual leave, under a collective agreement. Much of the claim was held time-barred.

The Supreme Court rejected the argument that time starts to run when the employment ends: “We do not agree that the time when the right to claim his benefits arises begins after the termination of the employment relationship”. The benefits could not be accumulated from year to year and claimed at the end. So count from the oldest month with a deduction and from the first 13th salary that did not arrive. A complaint to an inspector gives you time, because it interrupts the time limit.

What this means in practice

Compare every payslip with your contract. The gross salary you agreed is owed in full. A line that takes off an amount “for leave” needs an explanation: the contribution for leave is paid by the employer, and a deduction is allowed only in the cases in section 10. Keep the payslips, the bank statements and every message about the deductions.

For the 13th salary, gather whatever shows it was part of your pay. The contract, the collective agreement for your sector, the payslips of earlier years and the names of colleagues who received it. Liotati and Stavrou show that steady payment without conditions counts for more than the name.

Count the twelve months from each sum. A complaint to the inspector, with proof of its date, interrupts the time limit, and an application to the Labour Disputes Court claims the sums with interest. If the deductions continue, our article on unpaid wages explains when leaving and claiming compensation may also be justified.

Employers: leave is not funded out of payroll. The contribution to the Fund, or paying for leave through an approved scheme, is a cost of the business. A 13th salary that was agreed and has been paid to everyone for years, without conditions, does not stop without the employee’s consent. Questions of this kind, for employees and employers alike, fall within our employment practice.

Questions we are asked

My employer keeps back part of my salary every month and gives it to me when I take leave. Is that lawful?

As a rule, no. The agreed salary is owed in full for every month worked, and a deduction is allowed only in the cases listed in section 10 of Law 35(I)/2007. Under Law 8/1967 the contribution to the Central Holiday Fund is the employer’s contribution, and the Law makes no provision for the employer to recover it from your salary. If you have signed a form about deductions, bring it: it is the first document to be examined.

Is the 13th salary compulsory in Cyprus?

Not by law. It is owed where your contract, written or oral, or a collective agreement that covers you provides for it. Where it has been agreed and is paid steadily every year, without conditions, it is wages under Law 35(I)/2007: in Adelfoi Liotati Ltd (2019) the Supreme Court upheld the conviction of an employer that stopped paying it without the employee’s consent.

My employer calls the 13th a “gratuity” and asks me to sign a receipt. Does that change anything?

Not on its own. In Stavrou (2020) the Supreme Court held it irrelevant that the employee signed for the sum as a “gratuity”, since it had been paid steadily from the first year, without conditions, and was roughly equal to one month’s salary. Read every receipt before you sign it, though: a statement that you have no other claim may stop you claiming what you are owed.

How long do I have to claim the sums?

The application to the Labour Disputes Court is made within twelve months from the date the right arose, under section 12(10A) of Law 8/1967. Count from each sum that went unpaid, not from your last day at work. A complaint to an inspector under Law 35(I)/2007 interrupts the time limit until the inspector’s minute is drawn up.

What should my first message say?

Your agreed gross salary and where it is written down, how much your employer keeps back each month and how it explains it, whether you received a 13th salary in earlier years, and how many days of leave you took and how they were paid. If you have signed a document about the deductions or a receipt in settlement, mention it.

Sources

Klitos Platis

Advocate, Partner

Kleanthous & Platis LLC, Cyprus
Published 20 October 2026

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