Back to International Employment Law

KEY DEVELOPMENTS FOR 2023

Maternity leave

The Egyptian government has issued a draft of the new anticipated labor law for Egypt that is scheduled to be issued sometime next year (the “Draft Labor Law”). The Draft Labor Law cancels out the condition under Article 91 of the existing Labor Law No.12 of 2003 which stipulates that a female employee is entitled to a period of paid maternity leave provided she has spent more than 10 months in the service of her employer.

Article 91 of the existing Labor Law No.12 of 2003 being repealed could result in an increased financial burden for employers in Egypt. For instance, the provisions of the Draft Labor Law may be relied upon by a pregnant woman to obtain her statutory maternity benefits at any time during her employment term including the first 3 months of her employment (probation period). A pregnant woman may also use her maternity leave during the probation period without the employer having assessed her capacities as an employee up to that point and due to the provisions of Draft Labor Law the employer would be restricted from terminating the female employee’s contract during her maternity leave. This may result in increased discrimination in the Egyptian workforce with employers preferring to hire men due to these newly introduced updates to the maternity law provisions under Egyptian labor law.

An employer may choose to incorporate more precautious terms in their offer letters to female employees. These terms may incorporate a condition for all female employees to disclose their social/marital status and whether they are pregnant or not; however, it is to be noted that female employees reserve the right to refuse such disclosures.

Maternity leave period

Under the Draft Labor Law, female employees are entitled to three periods of paid maternity leave during the term of their employment instead of the two periods mandated under the current Labor Law.

The increased number of maternity leave periods incorporated in the Draft Labor Law creates a conflict with the Egyptian government’s ongoing campaigns to reduce the population growth rate and would increase the financial burden placed on Egyptian employers.

Egyptian employers can opt to enter into definite term contracts (for instance, to be renewed annually) to avoid the drawbacks of the referenced changes in the new Draft Labor Law.

Definite term contracts

Under the Draft Labor Law, if a definite term employment contract is renewed for more than six years, it shall be automatically transformed into an indefinite term contract. The current labor law stipulates that a definite term contract shall transform into an indefinite term only if the parties at the expiry date of said definite term contract do not sign a new written agreement. Alternatively, upon a definite term contract’s expiry it shall be renewed for a new definite term through written agreement between the parties.

Terminating indefinite contracts is a more difficult process for employers. In the absence of grave misconduct, employers are compelled to keep undesirable employees for an indefinite period as the termination of such employees’ contracts could result in employers having to pay large compensatory settlements.

From a practical perspective, an employer may choose to end a particular definite term contract upon its expiry on the sixth term. The employer may also conclude a new definite term contract with their employees every six years to avoid the contract’s transformation to an indefinite term as mandated by the new labor law.

KEY DEVELOPMENTS FOR 2022

Introduction of minimum wage increases to employees in the private sector

The National Council for Wages has set the long anticipated salary thresholds, effective as of January 2022, applicable to the private sector.  The revised salary thresholds are as follows: 

• Minimum Wage: EGP 2,400 per month; and
• Minimum annual salary increase: 3% per year

Subject to Ministerial Decree No. 57/2021 by the Ministry of Planning and Economic Development: 

• All private companies must ensure that their employees are receiving the minimum wage of EGP 2,400 per month;
• All private companies must award employees a minimum salary increase of 3% (with a minimum of EGP 60) every financial year. This increase is only applicable to the portion of the employee’s salary used for social insurance purposes.

Currently, the minimum subscription salary for social insurance purposes is set at a minimum of EGP 1,400 per month and a maximum of EGP 9,400 per month.   The issuance of the aforementioned Decree is the first time that the Egyptian Government has explicitly set a minimum wage applicable to employees in the private sector. Previously the minimum wage requirement was linked to the Social Insurance Law, which obligates employers to register Egyptian nationals in the social security system and requires an employee to earn at least EGP 1,400 per month in order to be enrolled.

Employers must be aware of the exact date on which the minimum salary requirement will come into effect in order to fulfil their legal obligations and avoid running the risk of being subject to fines issued by the relevant authorities and Labour Office. In the event an establishment is unable to the pay the employee’s minimum wage due to economic difficulties, the establishment in question must have submitted a request for a “reasoned exemption” to the National Council for Wages by 31st October 2021.

Regulations shed more guidance on implementation of law consolidating various social security laws and social insurance programs

Prime Minister Decree no. 2437 of 2021 (“Decree”) has issued the Executive Regulations of the Social Insurance Law no. 148 of 2019 (“Law”). The Executive Regulations sheds more light on the implementation of the Law, which replaces many existing social security laws and regulations and consolidates different social insurance programs into one.  

The issuance of the Executive Regulations is a step forward for employers as it contains the procedural steps to follow in implementing the Social Insurance Law and its provisions.  Therefore, it is important for employers to understand their duties towards their employees and before the Social insurance Authority.

Implementation of Egyptian Data Protection Law

The Egyptian Data Protection Law No. 151/2020 (“Data Law”) came into effect in October 2020. However, employers have been given a grace period of 12 months from the issuance of the associated Executive Regulations (effectively up until April 2022) to implement the changes introduced by the Data Law.

Egypt’s Government introduced the Data Law following the implementation of the European General Data Protection Regulation (“GDPR”) which is considered the golden standard against which most Data Laws, internationally, are assessed. The purpose of the Data Law is to safeguard the rights of individuals in the country in so far as it concerns their personal data and to ensure that businesses store and process employee’s personal data in a way that protects those rights. However, unlike the GDPR, Egypt’s Data Law is only applicable to electronically processed data and not hard copies. There are a number of exemptions, which include data held by the Central Bank of Egypt and other entities that are subject to the Central Bank’s control.

The Data Law is applicable to the following individuals:

• Egyptian nationals residing inside or outside of Egyptian territories;
• Non-Egyptian nationals residing within Egyptian territories; and
• Non-Egyptian nationals residing outside of Egypt provided that “the act is punishable in any form in the country in which it occurred” and the subject affected by the infraction/circumstance is an Egyptian national or a Non-Egyptian resident of Egypt.

The Data Law establishes a regulatory authority for personal data protection and provides that Controllers and Processors (as defined under the Data Law) must obtain a license or permit in order to process personal data. The Executive Regulations set out details of the various categories of licenses available. Generally, a license (costing up to EGP 2,000,000) would be required for activities which fall under the following categories:

• Performing data safeguarding, handling and processing operation;
• Engaging in electronic marketing;
• Processing sensitive data; and
• Conducting cross-border transfers of personal data.

Employers must ensure that they are complaint with the Data Law in respect to employees and human resources data. A compliance system must be put in place which addresses the following:

• Running of sufficient background checks & screening;
• Obtaining the employee’s or data subject’s consent;
• Updating employment contracts with provisions which ensure that employees are aware of the data collection taking place;
• Ensuring that the company has a Data Protection Policy in place (for example, a code of conduct for internet use);
• Adopting safe transfer / cross-border HR data transfer mechanisms;
• Adopting a reasonable procedure, which maintains and protects employees’ personal information in the event of a disciplinary investigation; and
• Ensuring a data breach procedure is in place in order to detect, investigate and report actual or threatened personal data breaches

KEY DEVELOPMENTS FOR 2021

COVID-19 related measures

Law no. 170 of 2020 in respect of the joint contribution to face some of the economic repercussions resulting from the spread of pandemics or natural disasters occurrence (the "Law") has been issued to include the following:

• The Law provides that one percent of the net income of the employees resulting from their work shall be deducted monthly and for a period of twelve months.
• Additionally, one-half percent of the net receivables from the pensions established in accordance with the Social Insurance Law shall be deducted as a contribution to face economic repercussions resulting from pandemics or the occurrence of natural disasters.
• Employees working in the public and private sector shall be subject to the provisions of this Law.
• It is permissible by a decision from the Cabinet, the proposal of the Minister of Finance and other competent Ministers, to exempt employees working in the economically affected sectors from this contribution whether in whole or in part.
• It is also permissible to increase or shorten the deduction period mentioned above or to specify the period during which the deduction will be made in the future. It is not permissible to increase the total period of deduction for more than twelve months except after obtaining an approval from the House of Representatives.

The following employees shall be exempt from the deductions mentioned above:

1. Employees whose net monthly income does not exceed EGP 2,000.

2. Employees subject to pensions whose net monthly pension does not exceed EGP 2,000.

KEY DEVELOPMENTS FOR 2020

Introduction of a New Social Insurance Law

A new Social Insurance Law has recently been implemented in Egypt and is aimed at unifying the laws relating to insurance and pensions across different sectors. In particular, the Social Insurance Law addresses the issue of insurance evasion, by increasing fines payable if an evasion is identified.

The key provisions in the Social Insurance Law are as follows:

• A minimum pension entitlement to the value of not less than 65% of the minimum insurance subscription wage.
• The value of existing pensions have increased due to inflation at a rate of up to 15% per year.
• Establishment of incentives to insure employees who work informally.
• An unemployment allowance is provided for, funded in part by the employer's 1% contribution from the employee's monthly wages.
• The retirement age should reach 65 years by the year 2040, provided that the retirement age gradually increases from the year 2032.
• A fine shall be imposed for those seeking to evade the obligations set out in the Social Insurance Law to the value of up to EGP 100,000 (approximately $6,330 USD).

KEY DEVELOPMENTS FOR 2019

Rights of disabled people in Egypt

On 19 February 2018, the Egyptian President ratified the Law for persons with disability No. 10/2018. The Law provides many positive reforms and covers health and media rights for persons with a disability; their right to education; vocational training and work. It also imposes legal and criminal protection for persons with a disability and their political rights and their rights to sports and entertainment.