This summary provides a high-level overview of the key changes, offering a glimpse into the comprehensive analysis detailed in our full article. Are you ready to navigate this new landscape?

The core objective: Enforcing equal pay

At its heart, the new legislation strengthens the principle of equal pay for equal work or work of equal value. It uses pay transparency and robust enforcement mechanisms to close the gender pay gap. The rules apply broadly, covering all sectors and employment types, including part-time, fixed-term, and agency workers.

The Cyprus Bill vs. The EU Directive: Key distinctions

While the Cyprus Bill implements the Directive’s core requirements, it introduces a more prescriptive and stringent compliance framework in several areas. Employers must be aware of these key distinctions:

• Granular documentation: The Bill requires employers to document not only their use of objective, gender-neutral job evaluation criteria (skills, effort, responsibility, and working conditions) but also how these criteria were weighted and agreed upon.
• Retrospective data requests: Upon request, employers must provide gender pay gap data for up to four previous years. This may require retrieving data from as far back as 2022.
• Personal liability for Directors: The Bill introduces personal liability for directors and officers for offences, unless they can prove a lack of consent, complicity, or negligence.
• Mandatory publication: While employers may choose whether to publish reports on their websites, the Department of Labour Relations (the Monitoring Body) will publish comparable employer-level data, ensuring external scrutiny.

Key employer obligations

The new requirements will transform the entire employment lifecycle. Key obligations include:

• Fair and transparent pay structures: Employers must establish and maintain pay structures based on objective, gender-neutral, and weighted criteria for job evaluation.
• Pre-employment transparency: Job applicants must be informed of the initial pay or pay range before an interview. Asking about salary history is banned.
• Transparency of pay progression: The criteria for pay levels and progression must be documented and made accessible to employees.
• Right to information: Employees gain the right to request information on their individual pay and average pay levels for their category of work, broken down by gender.
• Gender pay gap reporting: Reporting requirements are staged by employer size, starting from 7 June 2027 for companies with 150+ employees.
• 250+ employees: Annual reporting.
• 150-249 employees: Triennial reporting.
• 100-149 employees: Triennial reporting (from 7 June 2031).
• Joint pay assessment: If a gender pay gap of 5 per cent or more is identified and cannot be justified, employers have six months to rectify it. Failure triggers a mandatory joint pay assessment with employee representatives.

Enforcement, protection, and penalties

A robust framework will enforce these new rules:

• Shift of burden of proof: In any legal proceedings, the burden of proof will shift to the employer to demonstrate that no breach of equal pay rules has occurred.
• Monitoring body & Ombudsman: The Department of Labour Relations will collect and publish data, while the Ombudsman will handle individual complaints and discrimination claims.
• Penalties: Non-compliance can result in an offence which may corresponds to a fine up to €10,000 and / or imprisonment for up to six months. Personal criminal liability may extent up the chain of command, including to directors and other officers.
• Anti-victimisation: Dismissing or disadvantaging an employee for exercising their rights under the Bill is prohibited, with remedies including compensation for material loss and non-material harm, such as distress, which is without cap. This corresponds to a claim in a civil court and will be additional to any penalties imposed for a criminal offence,

Practical steps for employer readiness

Given the sweeping changes and approaching deadlines, employers should:

• Review recruitment processes end-to-end: Update pre-application and offer letter language and documentation, ensuring gender-neutral and non-discriminatory recruitment process, where pay ranges must be communicated clearly and salary history questions are removed from interview scripts.
• Revise existing employment contracts: Revise remuneration and pay-secrecy / confidentiality clauses, as applicable, to remove restrictions / prohibitions and to include nascent employee rights, including right to information.
• Update policies and handbooks: Establish matrices, procedures and strategy for defining a clear pay disclosure strategy, promotions / pay rises, reflecting pay transparency rights, request processes, and anti-retaliation guarantees. Identify and codify strategy for consultations with employees / employee representatives as well as other pertinent communication protocols.
• Identify and review of current compensation packages and establish weighted pay structures: Map all roles / employee categories to objective, gender-neutral criteria and weightings; secure joint agreement with employee representatives, as required.
• Systematise data: Set up HR/payroll systems for four-year retrospective data extraction and reporting.
• HR Training: Train HR / recruiter staff and managers.
• Conduct GDPR gap analysis: Mitigate risks from increased transparency, particularly around data privacy and small categories.
• Use the ERGANI system: Leverage Cyprus’ centralised digital platform for reporting and compliance.
• Engage with remediation windows: Ensure robust tracking of pay gaps and remediate proactively within the six-month period if gaps are detected.
• Document governance: Assign pay transparency oversight to board/leadership level and keep comprehensive compliance records.

Conclusion

Cyprus is set to implement one of the EU’s most demanding pay transparency regimes, setting a high bar for compliance, accountability, and governance. Employers should treat these requirements as imminent and invest in robust, documented processes.

As the Cypriot Bill ushers in a new standard for pay transparency and equal pay compliance, organisations should consider preparation a strategic imperative. To support employers and HR leaders as the enforcement date approaches, we will publish a comprehensive guide with analysis and recommendations closer to the Directive’s implementation, in early June.

For tailored guidance, reach out, our team stands ready to support your compliance journey.

The Cypriot Bill can be found here and the EU Directive here