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Since January 1, 1997, it has become mandatory for all Cyprus-based businesses to possess an employer’s liability insurance contract. This contract must be with an authorized and licensed insurance provider. Employers should ensure their insurance company’s authorization.

This article presents a detailed analysis of why businesses in Cyprus must have employer’s liability insurance, the benefits it offers, and the risks it helps mitigate.

Defining Employer's Liability in Cyprus

Defining Employer’s Liability in Cyprus

Employer’s liability is a legal concept. It applies if an employee has been injured or killed while at work. It also applies if an employee has contracted a disease related to their work environment.

In these cases, the employee or their family can claim compensation from the employer’s liability insurance. The key term is “liability” – the claimant must prove the injury or disease occurred while working for the insured (business owner), and the latter is liable for the damage.

Irrespective of the number of employees, every employer in Cyprus must be insured against liability for any mishap or occupational disease affecting their employees.

Aspect Description
Who it Applies To All businesses in Cyprus with one or more employees
Legal Requirement Mandatory as of January 1, 1997
Benefits Protects business from legal fees and damages; Provides compensation for employees; Maintains business reputation and trust
Coverage Limits Each employee: up to €160,000; Each accident or series of accidents: up to €3,415,000; Policy period limit: €5,125,000
Consequences of Non-Compliance Criminal prosecution; Fines up to €1,500; Imprisonment up to one year; Damaged business reputation

Who is an Employer in Cyprus?

In the context of Cyprus law, an employer is any individual or entity that maintains an employment relationship with a worker. This includes being responsible for the workplace environment, work organization, working conditions, and equipment, among other things. This applies even to those who don’t have additional employees but carry out economic activities or conduct their business, profit-oriented or not.

The requirement for employer’s liability insurance extends to a wide range of employment scenarios. It’s mandatory for individuals employing househelp, shop owners, factory proprietors, hoteliers, and other professionals or organizations that employ personnel for more than 8 hours weekly. However, companies without employees and family-owned businesses employing exclusively family members are exempt from this insurance obligation.

Benefits of Employer’s Liability Insurance in Cyprus

Protection for Employees and Employers

An organization’s most significant asset is arguably its workforce. Therefore, safeguarding the company and its employees becomes a prime responsibility of the employer. Employer’s liability insurance is the most effective way to ensure this protection.

Employer’s liability insurance provides peace of mind, protecting both the employees and the employers from the unexpected. With nearly 1 in 3 businesses facing an employee lawsuit at some point according to a study by Hiscox, the need for such insurance becomes more evident.

Mitigating Economic Risk Factors

Uncertainty in business caused by the risk of an employee suing their employer can be avoided. Employer’s liability insurance is a great way to mitigate this risk. This can help to keep relations between employer and employee positive. If the employee is the victim of an unfortunate event and takes legal action, this will be avoided.

Saving on Legal Expenses

The employer can save significantly on legal fees if sued by an employee following any unfortunate event. According to a survey by the Small Business Administration, the average cost of a lawsuit for a small business can range from £3,000 to £150,000. Having employer’s liability insurance helps to keep these costs manageable, shielding businesses from potentially crippling legal fees.

Employee Confidence and Retention

Having employer’s liability insurance can also foster a greater sense of security among employees, knowing that they are covered in the event of an unfortunate incident. This assurance can enhance job satisfaction and aid in employee retention, which is beneficial for maintaining a stable, experienced workforce.

A study by Glassdoor showed that employees’ trust in their employer’s commitment to their safety can increase their loyalty by up to 39%. By securing employer’s liability insurance, businesses can demonstrate this commitment, fostering greater trust, and in turn, enhancing employee retention.

Business Reputation and Trust

Employer’s liability insurance can also help to enhance a business’s reputation. A company that takes its responsibilities towards employees seriously earns greater respect and trust from customers, clients, partners, and the public. This demonstrates that the company is reliable and it can potentially lead to increased business opportunities.

Identifying Occupational Accidents and Diseases

Occupational Accident: It refers to any workplace mishap resulting in worker injury or death. This includes acts of violence related to work that result in injury to one or more workers.

Occupational Disease: These are health conditions caused by biological, chemical, physical, or psychological factors present in the workplace. These diseases can affect a worker’s health and productivity.

Legal Requirements for Employers in Cyprus

Cyprus law mandates employers to comply with several requirements, including:

    • Ensuring worker health and safety.

    • Maintaining records of all employees, their roles, and their pay.

    • Reviewing the gross wage of all employees at the end of the insurance period.

    • Possessing an insurance certificate displayed in an open and visible area for possible inspection by the Ministry of Labor.

    • Including the company’s insurance number on all insurance-related documents.

The Impact of Non-Compliance

Financial and Legal Consequences

Non-compliance with employer’s liability insurance requirements can lead to severe financial and legal consequences. Besides the possibility of fines and imprisonment, companies may also be responsible for paying out-of-pocket for any claims brought against them. This could have a significant impact on the financial stability of the business.

Damaged Business Relations and Reputation

Failure to adhere to the employer’s liability insurance requirements can also damage a company’s relationships with its employees and other stakeholders. It can lead to a loss of trust and potentially harm the business’s reputation, impacting its long-term success and sustainability. Employers must therefore prioritize obtaining and maintaining their liability insurance to avoid such consequences.

Compensation Limits of Employer’s Liability Insurance in Cyprus

The Cyprus law stipulates the following minimum indemnity limits:

    • Each employee is covered for up to € 160,000.

    • The maximum amount compensated for an accident or series of accidents is €3,415,000.

    • The overall coverage limit is €5,125,000 for a given policy period.

Employers may consider obtaining additional insurance coverage. This is in case the current limits are not enough to cover the growing number of claims and compensations.

Employers Liability Insurance Cyprus Compensation Limits

Importance of Accessible Insurance Certificates

The employer’s liability insurance certificate policy, identifying the minimum coverage and the companies covered, should be easily accessible to staff. The requirement to display insurance certificates changed on October 1, 2008, allowing companies to use electronic displays of the insurance certificate. Employers must ensure employees have access to the insurance certificate and are informed about it.

Employer’s Liability Insurance Vs. Civil Liability Insurance

Civil liability insurance covers a broad range of potential liabilities, including property damage or personal injury claims filed by clients, customers, or third parties. However, it specifically excludes claims made by employees resulting from workplace injuries or illnesses. This is where employer’s liability insurance steps in, covering the costs associated with employee claims for compensation due to workplace-related injuries or diseases.

The penalties for non-compliance with mandatory employer’s liability insurance can be severe in Cyprus. Not only can failure to carry this insurance result in hefty fines, but it can also lead to imprisonment. This underscores the importance of understanding the distinction between the two types of insurance and ensuring that businesses have the appropriate coverage in place. In Cyprus, employers who fail to carry insurance can face criminal prosecution, with fines of up to €1,500, or imprisonment for up to a year, depending on circumstances.

Table: Comparing Employer’s Liability Insurance and Civil Liability Insurance

  Employer’s Liability Insurance Civil Liability Insurance
What it covers Claims made by employees for workplace-related injuries or diseases Claims made by the public or other companies, excluding employees
Is it mandatory? Yes, in most places including Cyprus Typically optional
What happens if you don’t have it? Possible criminal prosecution, fines up to €1,500, or imprisonment for up to a year in Cyprus May leave businesses or individuals financially exposed in the event of a liability claim
Ideal for All employers with more than one employee All businesses that interact with the public or other companies

Professional Guidance by Be In Cyprus

With, you have a reliable partner on your side, ensuring that you are always updated with changes in local laws, potential risks, and the best ways to manage them.

Take advantage of our service to connect with professionals in Cyprus, who can help to tailor an insurance plan fitted to your business’s specific needs. This way you can focus on running your business while we handle the complexities of insurance compliance. Our goal is to make your move to Cyprus smoother and your stay worry-free.


Employer’s liability insurance in Cyprus is not only mandatory for a business owner but also provides a safety net for employees who become victims of unfortunate events. Employer’s liability insurance is important for business owners who have employees. It protects them from having to pay large compensation amounts to victims or their families. Therefore, it is essential for business owners to obtain this type of insurance.


No, you don’t require this type of insurance if you work for yourself.

No, it is unnecessary to notify the insurance provider each time you recruit a new employee. Still, you must inform the insurance company when there is a significant change in the number of employees.

Any accident that could result in a claim must be immediately reported to the insurance company. The insurance company must also be notified immediately in case any letter, claim, writ, or summon is received.

Volunteers who are hurt can be compensated through their employer’s liability insurance.

If a worker has been fired illegally in Cyprus and has worked for that institution for more than 26 weeks continuously, then that employee is entitled to compensation from the employer.