Employment
Employment relations in Egypt are generally governed by Egyptian Labour Law No. 12 of 2003, the (“Egypt Labour Law”) and Social Insurance Law No. 148 of 2019, that sets out the standards of employment conditions. The provisions of Egypt Labour Law apply to private sector employers and employees. Governmental corporations/entities fall outside the scope of Egyptian Labour Law.
The Labour Law distinguishes between employment contracts entered into for a definite period from those entered into for an indefinite period, and provides special rules for each type of contracts as follows:
Indefinite Period Contracts: When an employee is hired in a position for an undetermined period of time, it is presumed that as long as the employee performs his/her job requirements satisfactorily, he/she is entitled to remain on the job for as long as he/she wishes up or until retirement.
Definite Period Contracts: When an Employee is hired in a position for a determined period of time, whereby the employment contract explicitly determines a period after which the employment relationship shall be deemed terminated.
Moreover, the Labour Law recognizes the following three specific types of definite period employment relationships:
Temporary Employment: temporary employment is for a specific period or for a specific project.
Such employment terminates automatically upon expiration of its term or upon completion of the project or task.
Casual Employment: when an employee is employed to perform certain tasks, which do not fall within usual scope of activity of the employer. This form of employment may not exceed a period of six months.
Seasonal Employment: when an Employee is employed for a given season. Such type of employment is frequent in the agricultural sector for example.
With regard to definite period contracts, if the employer and the employee remain silent at the end of the contract period (i.e. none of the parties requested the termination or renewal of the contract), the contract shall be valid and shall turn into an indefinite period employment contract.
An employer shall conclude employment agreements with employees. Employment contracts are required to be written in the Arabic language. A bilingual contract in both Arabic and English/other language may be concluded. However, the Arabic language prevails in case of any conflict or dispute.
Generally, employment contracts must be drawn in three copies, a copy for each party and the third copy must be kept with the competent social insurance office or the competent labour office in case of foreign employees to obtain necessary work permits.
Structure of the Employment Contract: The main elements that must explicitly be included in any employment agreement are the following:
Name of the employer and address of the workplace
Name, qualifications, occupation, social insurance file number and address of the employee
Proof of identity of employee (identity card or passport).
The position of the employee.
The agreed upon salary, time, and method of payment.
The duration of the agreement.
A probationary period can be for a maximum period of 3 months and cannot be extended beyond this period and the employee cannot be appointed under probation for more than one time with the same employer.
The minimum wage issued in 2023 is EGP 3,500 for the private sector (changeable).
Public holidays The Labour Law provides for the right of the employee to fully paid leaves on the national holidays determined by a decision from the competent minister with a maximum of thirteen days per year.
Annual leaveThe Labour Law provides that all employees who have spent more than 6 months with the Employer are entitled to 21 working days per annum (proportionate with the actual employment period spent at the employer’s establishment). Such period is to be increased to 30 days for employees who have been working for 10 years or more, or who exceed the age of 50 regardless of the actual time spent at the employer’s establishment.
Additional 7 days shall be added to the aforementioned annual leaves balance in case of workers who work in dangerous or heavy jobs as determined by a decree of the competent minister.In all cases, the employee may not withdraw its right in its leaves balance. Furthermore, the employee must take at least fifteen days per annum including six consecutive days as annual leave.
The Law has given the employer the right to determine the appropriate time for the employees to take their annual leaves. If the employee refuses to take the leave at the time prescribed by the employer, such refusal must be in writing. In such case, the employee may not claim any amounts against such leave period.
Sick leaveThe employee who has proof for his illness shall have the right for a medical leave determined by the specialized medical institute. The employee shall be given a compensation for his wage according to the Social Insurance Law.
According to the Social Insurance Law, an employee with a proven record of sickness is entitled to paid sick leave at the rate of 75% of his/her salary upon which social insurance payments are calculated; for a period of 90 days, to be increased to 85% for the following 90 days.
Sick leaves are payable for up to 180 days per calendar year. The right is reserved for the employee to benefit from his/her accumulated annual leaves as well as convert these into sick leaves if such a balance exists.
Parental leaveThe female employee may take maternity leave only after spending 10 months in the service of the employer, shall be granted a paid maternity leave for a period ninety (90) days and such leave shall be based upon a medical report submitted by the physician and shall be provided twice only during the employee’s service period. Maternity leave is calculated on calendar days.
An establishment with more than 50 employees grants the right to the women employee with an unpaid leave not exceeding two years to care for her child and this leave shall only be granted twice during the period of employment.
Study leave The collective labour agreements or the company’s work regulations shall determine the conditions and terms concerning the paid study leaves that are granted to employee.
The employee shall have the right to determine the date on which they take their annual leave if he/she is going through exams, provided that the employee notifies the employer at least 15 days in prior.
Pilgrimage leaveThe employee who spends more than five consecutive years at the employer’s establishment shall be entitled to a one time fully paid pilgrimage leave for a period of 1 month.
An employee shall work for a maximum of eight (8) hours a day or forty-eight (48) hours per week.
Under certain circumstances, an employee may be required to work overtime. Overtime is the time consumed by employees over the limit set out by the Labour Law (the “Overtime”).
Regarding the salary paid against working Overtime (the “Overtime Consideration”), the Labour Law, provides that the Overtime Consideration shall be more than that salary paid for working normal hours. The Labour Law sets out the minimum rates for the Overtime and differentiates between daytime and night-time Overtime.
Employees are entitled to overtime if the work is exceptional or to face unusual circumstances. Daytime Overtime shall be compensated with an additional percentage of 35% of the normal working hours’ salary, while night-time Overtime shall be compensated with an additional percentage of 70% of the normal working hours’ salary.
In all cases, the Labour Law prohibits that the employee stays in the establishment for more than ten hours a day.
The weekend as per the Labour Law is a continuous period of twenty-four hours rest weekly (or after six consecutive days of work).
The employer shall not oblige its employees to work on their weekly rests. However, employees may – in certain circumstances and after the employer informing the labour office – work in their weekend against an extra consideration. The Weekend Overtime Consideration is double the salary of the relevant employee in normal working hours.
There is no requirement under the Egyptian Labour Law to provide an annual flight home. Therefore, it is subject to the employer’s discretion to provide such entitlement.
The employment contract can be terminated upon the occurrence of any of the following events according to the Labour Law:
Resignation of the employee;
Death of the employee;
Complete disability of the employee, or permanent partial disability provided that, there is no other work he/she can perform;
Retirement of the employee (at the age of 60 unless the Company's internal regulations provide for a higher retirement age); or
During the employee's contractual probationary period (which cannot exceed three months) the employee is deemed unfit for the job.
With respect to definite period contracts, the contract is also terminated without need for notice or any legal or judicial procedure upon expiry of the period stated in the contract, or termination of the task, project, or season, as the case may be.
In other cases, the employer may terminate the employment agreement by submitting a request to the labour courts if the employee commits any of the acts or omissions that are considered grave misconduct or fatal errors as provided in Article 69 of the Labour Law, which include for example:
The employee assumed a false identity or submitted false documents.
The employee acted negligently, causing the employer considerable loss, provided the employer notifies the competent authorities of the incident within 24 hours of becoming aware of it;
The employee failed to observe written instructions, displayed in a prominent place, compliance with which is necessary to ensure the safety of the workers and of the establishment, despite of his/her receipt of a previous written warning;
Employee has been absent without a valid reason for more than 20 days a year, or for more than ten consecutive days, provided that the worker is first warned in writing by registered mail with acknowledgment of receipt by the employer after ten days’ absence in the former case and after five days in the latter;
He/she divulged confidential information of the company employing him/her, which caused serious damages to the employer;
The employee has been competing with the employer in the same field of activity;
The employee has been found in a state of obvious intoxication or under the influence of drugs within working hours;
The employee assaulted the employer or the employer’s representative, or has committed a serious act of violence against any of his/her superiors during or in connection with his work; and/or
The employee has not respected the provisions regulating the right to strike.
Where an employer wishes to dismiss an employee, it is important that a documented process including an investigation be followed in order to demonstrate to the court that the dismissal was for a genuine misconduct.
The Labour Law entrusts the sanction of termination to be imposed by a tribunal based on the employer’s request. Hence, to terminate an employee, the employer submits a justified request before the Labour Court.
For the justification of the request, the employer should submit all relevant documentation relating to the concluded investigation.
In case the Labour Court accepts the termination request, the employee’s contract will be terminated, and the Company will not have in this case to pay a compensation to the employee.
In case the Labour Court rejects the request, the employee will be reinstated and awarded all his/her dues.
If the employer decides to terminate the employee regardless of the rejection of the termination issued by the court, the courts shall issue a compensation of minimum 2 months’ wage per year of service for employees with indefinite term contracts and the remaining period of a definite term contract in addition to any entitlements due (i.e. accrued leaves, notice periods…etc.).
The employer may terminate the contract based on reasons mentioned as an example in Article 69 without a request made to the labour courts by serving a notice. Additionally, the employer may terminate an indefinite term employment agreement for incompetence/poor performance in accordance with the approved work regulations. However, termination for incompetence/poor performance is considered a weak provision that the courts do not prefer resorting to unless there is strong evidence that the employee is indeed not performing.
Where an employer wishes to dismiss an employee for performance reasons, it is important that a documented performance process be followed in order to demonstrate to the court that the dismissal is for a genuine poor performance reason.
With regards to termination for poor performance of indefinite term employment contracts, the Labour Law is brief on the matter. Article 110 of the Labour Law provides that: “….in case of terminating an indefinite term employment contract, each of its two parties may terminate it provided that the other party is notified in writing of such termination prior to its occurrence. The employer may not terminate such employment contract except within the limits of the provisions prescribed in Article (69) of the Labour Law, or in case the employee’s weak performance is established according to the provisions of the approved regulations of the employer. Also, in terminating, the employee should rely on a justified and plausible cause relating to their health, social or economic situation. And in all cases, the termination should take place in a time suitable for the work conditions”.
Accordingly, termination for poor performance is vaguely and briefly mentioned in the Labour Law, and the latter does not define poor performance and what its criteria is, which in turn leaves it – in case the employee filed a case claiming wrongful termination - to the discretion of the court to determine whether the employee indeed displayed poor performance or not. In practice, judges adopt a narrow interpretation of what poor performance is.
Termination for economic reasons is also regulated in the law, where a justified request is filed and it remains upon the competent committee’s discretion to approve or reject such request.
For employees to receive their pension from the Social Insurance Authority, the Social Insurance Law has set out rules that depend on several factors such as reaching retirement age alongside subscription in old age, disability, and death insurance for at least 120 actual months, and the period increases to 180 actual months after five years from the date of enforcement of the Social Insurance Law.
Under the labour law, there is no end of service gratuity. However, once the employment relationship ends, the employer shall pay all entitlements to the employee.
The Egyptian Companies Law provides that companies must have a percentage of 90% Egyptian employees provided that their salaries do not exceed 80% of the total amount of company salaries (9:1 ratio obligation). The Law provides for an exception to the general rule stating that the competent minister may permit for specific periods the employment of foreign workers, consultants, or specialists where it may be hard to employ Egyptian workers notwithstanding the 90% percentage.
Investment Law provides for the same provision stating that an investment project may employ a percentage of 10% foreign workers of the total workers in the project.
However, the latter also provides for an exception where the percentage of foreign workers may be increased to 20% of the total workers in the project in case the Egyptian workers lack the required qualifications in accordance with the Investment Law.
