Protection of Wages
The Law
The Protection of Wages Law of 2007 was put into force on the 21st of March 2007 and applies to all employees that receive wages. Its main purpose is to regulate the method and frequency with which wages are paid and also, to lay down the circumstances for allowable deductions. Under any circumstances, deductions shall be limited to the extent deemed necessary for the sustenance of the employee and his/her family.
Who is covered
The Law applies to all employees receiving wages for services rendered to an employer. Any income of monetary value that arises from such an employment is also included in the wage, except for non-regular (casual) commission or ex gratia payments.
Employment and payment (wages)
Employee rights with regard to wages
Payment of wages in kind and usage of employer’s shops
a) the employee has given his prior consent;
b) such allowances, taking in consideration their quantity and quality, are useful and beneficial for the employee or his/her family;
c) the value given to such allowances is reasonable and fair.
Deduction of wagesDeductions from wages are permitted only under certain conditions and always to the extent deemed necessary for the support of the employee and his family. Moreover, assignment (transfer) of wages is not permitted unless explicitly provided by law or regulation and only to the extent that this does not obstructs the support of the employee and his/her family.
Deductions that can be made from wages are the following:
Deductions from wages for the reimbursement of damage caused by the employee
Employer’s obligation to maintain records
Inspection
The Minister of Labour and Social Insurance may appoint Inspectors, or other Officers, for the more effective application of the Law. In exercising his responsibility, the Inspector may either carry out an ex officio investigation or examine complaints for infringement of the provisions of the Law. For this purpose, Inspectors are granted the necessary powers in order to exercise their duties.
Competent Court
If an employer is found guilty of an offence of breaching this Law, he is subject to a sentence of up to three (3) months imprisonment or a fine up to €3.417, or both. In addition, any employer found guilty of improperly resorting to insolvency with the purpose of depriving employee rights derived from this Law, is subject to a sentence of up to six (6) months imprisonment or a fine up to €5.125, or both. Moreover, whoever obstructs or attempts to obstruct an Inspector or refuses to answer or lies or omits to present any necessary document in accordance with the Law, or obstructs or attempts to obstruct any other person from presenting himself/herself before an Inspector, is subject to an imprisonment up to three months or with a fine not exceeding €3.417, or both penalties. If the offence is committed by a legal person or organisation, there are penalty provisions against any officer, if it is proved that the offence has been committed with his/her consent, co-action or tolerance
The Protection of Wages Law of 2007 was put into force on the 21st of March 2007 and applies to all employees that receive wages. Its main purpose is to regulate the method and frequency with which wages are paid and also, to lay down the circumstances for allowable deductions. Under any circumstances, deductions shall be limited to the extent deemed necessary for the sustenance of the employee and his/her family.
Who is covered
The Law applies to all employees receiving wages for services rendered to an employer. Any income of monetary value that arises from such an employment is also included in the wage, except for non-regular (casual) commission or ex gratia payments.
Employment and payment (wages)
- Employment means the provision of work or services with pay, in accordance with the provisions of a contract of employment (verbal or in writing, individual or collective) or employment relationship in general.
- The employment relationship may be in the form of full or part-time employment, of a fixed or indefinite term, on a continuous or otherwise basis, irrespective of the place of employment, and includes work provided from home and trainee apprenticeships.
- Wages include any financial/monetary payments made by the employer to the employee, in return for the provision of employment services, as well as, any income of monetary value that arises from such an employment (e.g. including payments in kind where allowed by Law), except for non-regular commission or ex gratia payments.
- Wages include any payments made to Provident Funds and the Central Annual Leave Fund.
Employee rights with regard to wages
- Wages must be paid in legal tender (euros), that is, banknotes and coins, or payment through a bank account or with a bank cheque or postal cheque.
- When wages are paid in cash, this takes place only during working hours on working days, at or near the workplace, unless otherwise provided for by law, regulation or collective agreement.
- Wages shall be paid directly to the employee, unless the employee has agreed otherwise in written form.
- The employer is prohibited from limiting in any manner -directly or indirectly- the freedom of the employee to dispose of his wages, except in specific cases and to the degree that this law prescribes.
- In case that the employer has shops/stores for the sale of merchandise/services, the employees shall be free from any coercion to use such stores or services.
- Wages shall be paid regularly at least once a week, except for monthly paid employees, in which case wages shall be paid at least once a month.
- In cases where wages are calculated on a piecework basis or according to output/production, the maximum period of payment cannot be less often than twice a month at intervals not exceeding sixteen days, provided that this is feasible or that no other arrangement applies arising from a collective agreement or custom.
Payment of wages in kind and usage of employer’s shops
- The payment of wages (whole or part) in the form of alcoholic beverages or other harmful substances is prohibited.
- Part of wages may be paid in the form of allowances in kind only in industries or occupations where payments of such allowances are customary, provided that:
a) the employee has given his prior consent;
b) such allowances, taking in consideration their quantity and quality, are useful and beneficial for the employee or his/her family;
c) the value given to such allowances is reasonable and fair.
Deduction of wagesDeductions from wages are permitted only under certain conditions and always to the extent deemed necessary for the support of the employee and his family. Moreover, assignment (transfer) of wages is not permitted unless explicitly provided by law or regulation and only to the extent that this does not obstructs the support of the employee and his/her family.
Deductions that can be made from wages are the following:
- deductions prescribed by laws and regulations (social insurance, inland revenue, etc.);
- deductions in accordance with regulations for retirement,provident and medical funds;
- deductions prescribed by Court rulings;
- deductions for the reimbursement of damage or loss to the employer are only authorized if they were caused intentionally or due to severe negligence on behalf of the employee (based on the procedure described below);
- other deductions following the employee’s consent.
Deductions from wages for the reimbursement of damage caused by the employee
- Deductions from wages for the reimbursement of damage or loss to the employer may be authorised if they were caused intentionally or due to severe negligence on behalf of the employee. However, before any deduction is made, the employer must consult with employee representatives with the purpose, among others, to determine the amount and method of payment of any such deductions. If no recognised employee representation is present in the enterprise, then the consultation takes place directly with the employee.
- In the case that the consultation reaches a deadlock, the dispute is referred to the Ministry of Labour and Social Insurance (Department of Labour Relations) for mediation. If the dispute is, again, not resolved, it shall be referred to the Labour Disputes Court for a final ruling.
Employer’s obligation to maintain records
- Employers are required to maintain records showing, in respect of each worker employed, the particulars relating to the gross and net amount of wages, including any deduction and the reason for it.
- Such records have to be maintained by the employer, or on his account, and should be available for inspection purposes by Inspectors of the Ministry of Labour and Social Insurance.
Inspection
The Minister of Labour and Social Insurance may appoint Inspectors, or other Officers, for the more effective application of the Law. In exercising his responsibility, the Inspector may either carry out an ex officio investigation or examine complaints for infringement of the provisions of the Law. For this purpose, Inspectors are granted the necessary powers in order to exercise their duties.
Competent Court
If an employer is found guilty of an offence of breaching this Law, he is subject to a sentence of up to three (3) months imprisonment or a fine up to €3.417, or both. In addition, any employer found guilty of improperly resorting to insolvency with the purpose of depriving employee rights derived from this Law, is subject to a sentence of up to six (6) months imprisonment or a fine up to €5.125, or both. Moreover, whoever obstructs or attempts to obstruct an Inspector or refuses to answer or lies or omits to present any necessary document in accordance with the Law, or obstructs or attempts to obstruct any other person from presenting himself/herself before an Inspector, is subject to an imprisonment up to three months or with a fine not exceeding €3.417, or both penalties. If the offence is committed by a legal person or organisation, there are penalty provisions against any officer, if it is proved that the offence has been committed with his/her consent, co-action or tolerance