An Employer's Guide To The Egyptian Labour Law

An Employer's Guide To The Egyptian Labour Law

The recruitment process in the UAE can sometimes involve hiring employees from Egypt due to its geographical proximity and cultural similarities. However, before finalising any recruitment decisions, it is crucial to have a clear understanding of the Egyptian labour law to ensure compliance and protect the rights of all parties involved. 

Failing to do so can result in legal repercussions that can disrupt business operations and harm your reputation. A global HR system ensures compliance with varying labour laws and regulations across countries, minimising legal risks and maintaining smooth operations. This article provides a comprehensive overview of the Egyptian labour law to help you navigate the recruitment process smoothly.

Overview Of The Egyptian Labour Law

Egyptian Labour Law sets out minimum employee rights, ensuring basic protection while allowing for enhanced benefits through individual agreements or collective bargaining. Any contractual clause diminishing an employee’s legal rights is null and void, while provisions offering more favourable terms remain valid. This framework maintains a fair balance between employee rights and employer flexibility.

Employment Contract Requirements: Clarity from the Start

Article 32 of the Egyptian Labour Law mandates that every individual employment contract must be written in Arabic and issued in three copies:

• One for the employer
• The employee
• The local Social Insurance Office

The contract should detail: 

• The employer’s and employee’s information
• Job description
• Salary
• Other benefits

These requirements promote transparency and legal certainty from the outset of the employment relationship.

Employer Record-Keeping Duties: Staying Organised for Compliance

Article 77 requires employers to maintain a detailed file for each employee, including: 

• Personal information
• Job title
• Salary changes
• Leave records
• Disciplinary actions
• Termination details

These records must be kept for at least one year after employment ends to help resolve any disputes over compensation or termination.

Employment of Foreign Nationals: Regulated but Fair

Article 28 stipulates that foreign nationals need a work permit to be employed in Egypt, and their numbers cannot exceed 10% of the total workforce in any establishment. Companies must keep detailed records of foreign employees, including their qualifications and permit details. This regulation supports a balanced and fair employment environment for foreign workers.

Contract Duration and Termination: Flexibility within Limits

The law recognises both fixed-term and indefinite contracts. Fixed-term contracts end automatically upon expiry, but if work continues without renewal, they convert to indefinite contracts, except for foreign employees. Contracts over five years allow employees to terminate without compensation after the initial period, provided a three-month notice is given. This provision offers employees flexibility while respecting the contractual agreement.

Probation Periods: Brief and Fair

Probationary periods are permitted but limited to three months, and an employee cannot be placed on probation more than once by the same employer. This provision protects employees from prolonged uncertainty and ensures probation is used appropriately to assess suitability for the role.

Independent Contractors: Clear Boundaries

Independent contractors are considered self-employed and are not covered by standard labour protections. They are responsible for their own taxes and do not receive employee benefits. The law recognises the distinct nature of these working relationships to prevent misclassification and protect both parties from legal repercussions.

Working Hours and Break Periods: Balancing Work and Rest

The law limits working hours to eight per day or forty-eight per week, excluding breaks. In exceptional circumstances, employees may work up to ten hours per day with the approval of the competent administration. Employees are entitled to break periods not exceeding one hour. This regulation supports adequate rest and recovery time to maintain employee well-being and productivity.

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Leave and Public Holidays Under the Egyptian Labour Law

Under Egyptian labour law, provisions for employee leave and public holidays are designed to support worker wellbeing while maintaining productivity across sectors. The law guarantees paid time off in various circumstances, and public holidays are granted with full pay, reflecting a balanced approach to work and personal life.

Annual Leave

Employees who have completed one full year of service are entitled to 21 days of paid annual leave each year. Leave is calculated pro rata for those who have worked for over six months but less than a year.

The entitlement increases to 30 days for employees who:

• Have completed 10 consecutive years of service with one or more employers, or
• Are 50 years of age or older

Annual leave does not include weekends or official public holidays, which are treated separately.

Employers retain the discretion to determine the timing of annual leave based on business needs. By law, employees must take at least 15 days annually, with a minimum of six consecutive days. Unused annual leave may be carried forward and used later, ensuring employees retain their entitlement.

Casual Leave

Employees may take up to six days of casual leave per year, with each instance not exceeding two working days. Casual leave is intended for unplanned or emergencies and is typically paid.

Sick Leave

Employees diagnosed with an illness are entitled to sick leave as approved by a recognised medical authority. Compensation during sick leave is provided under Egypt’s Social Insurance Law, rather than directly by the employer.

Pilgrimage and Religious Leave

Under Article 53, employees with five continuous years of service are entitled to one month of fully paid leave to perform Hajj or to visit Jerusalem. This leave is granted only once during the employee’s entire service period.

Maternity and Childcare Leave

Female employees with at least 10 months of service are entitled to 90 days of fully paid maternity leave, covering pre- and postnatal periods. This entitlement may be used twice throughout her employment.

For two years following childbirth, female employees are entitled to two 30-minute daily breaks for breastfeeding. These breaks may be combined and are not deducted from the employee’s salary.

Public Holidays

Employees in Egypt are entitled to paid public holidays as officially designated by the Ministry of Manpower and Immigration. These holidays include a mix of national, religious, and historical observances:

• Coptic Christmas Day (7 January)
• 25 January (Revolution and Police Day)
• Sham El-Nessim (spring festival)
• Eid Al-Fitr (3–4 days)
• Sinai Liberation Day (25 April)
• Labour Day (1 May)
• Eid Al-Adha (4–5 days)
• 30 June Revolution
• Islamic New Year
• 23 July Revolution Day
• Prophet Muhammad’s Birthday
• 6 October (Armed Forces Day)

As Islamic holidays follow the lunar calendar, their dates vary each year. Employees required to work on any official public holiday are entitled to triple pay (300%) of their regular daily wage as compensation. This ensures respect for cultural and religious observances while accommodating business needs when required.

Employee Benefits and Social Security in Egypt

Basic Salary

The basic salary of an employee must be specified in: 

• The employment contract
• Collective labour agreement
• Internal company regulations

In the absence of such terms, the salary is determined based on comparable roles within the workplace. 

If no direct comparison exists, it is set according to established professional customs. Where neither exists, a competent labour committee may determine a fair wage by sector standards.

Annual Salary Increase

Employees are legally entitled to a mandatory annual increase of no less than 3% of the basic salary used to calculate social insurance contributions. This helps maintain wage growth in line with economic conditions and cost-of-living factors.

Overtime Pay

Under Egyptian labour law, overtime compensation is mandatory and varies depending on the nature and timing of the additional work. 

The rates are calculated as percentages of the employee’s daily wage:

• 135% for hours worked beyond regular hours during the day
• 170% for extra hours worked at night
• 100% for hours worked on weekly rest days
• 300% for hours worked on official public holidays

These rates apply unless higher terms are negotiated in the employment contract or collective agreements.

Bonuses

Under Egyptian labour law, there is no statutory obligation to provide annual bonuses. Production-based incentive bonuses are exempt from tax when granted, allowing employers to recognise employee efforts without additional tax liability.

Social Security Contributions

Egypt has a structured social insurance system that covers pensions, medical care, work injuries, unemployment, and death benefits. 

Both employers and employees are legally required to contribute:

• Employees: 11%
• Employers: 18.75%

These contributions are based on a declared salary, subject to a minimum threshold of EGP 1,700 and a maximum of EGP 10,900. Social insurance contributions support employees and their families, help with retirement planning, and provide access to healthcare.

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Termination of Employment and Severance

Under Egyptian labour law, termination of employment is governed by clear provisions designed to ensure fairness and stability in the workplace. The legal framework in Law No. 12 of 2003 emphasises the importance of protecting employees' rights while recognising legitimate grounds for employers to end a contractual relationship.

Termination with Cause

Termination of an employee must be based on a valid reason, and employers are expected to adhere to the disciplinary and procedural safeguards outlined in the law. 

According to Article 69 of Law No. 12 of 2003, acceptable grounds for dismissal include:

• Serious professional incompetence
• Repeated violations of workplace safety rules
• Extended, unauthorised absences
• Disclosure of confidential business information
• Acts of misconduct, such as assault or falsifying documents

Dismissal must follow a proper internal investigation process and, in some cases, be approved by a competent labour court. This ensures that termination is not carried out arbitrarily and that employees have access to legal recourse if they believe they have been mistreated.

Termination without Cause

The employee may be entitled to compensation if an employer terminates a worker without valid cause. 

This can include:

• Wages in lieu of notice, if proper notice was not given
• Compensation for unused annual leave

Severance pay is not mandated under Egyptian labour law unless specified in the employment contract or collective agreement. In cases where termination is challenged before a labour court and found unjustified, the court may order reinstatement or the payment of fair compensation, depending on the circumstances.

Notice Periods

The notice period required depends on the employee's length of service:

• The notice period is two months for employees with less than 10 years of service.
• The notice period extends to three months for employees with 10 years or more.

Either party may provide payment in lieu of notice, allowing the termination to take immediate effect while fulfilling the contractual obligation.

Severance and Redundancy Payments

Employees who are made redundant or dismissed without cause may be entitled to severance pay, depending on the terms of their employment contract or collective agreement. If applicable, such payments are typically calculated based on the employee's length of service and agreed-upon terms. 

This amount would be in addition to unused leave entitlements and end-of-service benefits owed under the contract or collective agreement.

End of Employment and Social Insurance

Employers are required to document the termination and notify the relevant Social Insurance Office to ensure the proper handling of post-employment benefits and entitlements. Employees are entitled to a certificate of employment detailing their employment history and reasons for departure.

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Upcoming Changes in the Egyptian Labour Law

Egypt is updating its labour legislation to meet the evolving needs of the workforce and bring it closer to international standards. The proposed 2022 Draft Labour Law, approved by the Egyptian Senate in February 2022, is intended to replace Labour Law No. 12 of 2003. 

Although not yet in force, pending approval from the House of Representatives and ratification by the President, it introduces a range of practical reforms to improve employee welfare and clarify employer obligations.

Enhancements to Leave Entitlements

A key focus of the draft legislation is to expand parental and other forms of leave:

• Paternity Leave: For the first time in Egypt, eligible fathers will be entitled to one day of paid paternity leave, which recognises shared family responsibilities.
• Maternity Leave: Paid maternity leave would increase from 90 to 120 calendar days, offering greater support during the postnatal period.
• Parental Leave: Employers with 25 or more employees would be required to grant up to two years of unpaid parental leave to eligible female employees, which would support family responsibilities alongside work.
• Sick Leave: The sick leave entitlement would increase from six to twelve months, with higher benefit rates: 100% of wages for the first three months, 85% for the next six months, and 75% for the final three months.

Annual Leave

• Employees in their first year of service would be eligible for 15 days of paid leave.
• Employees aged over 50 would be entitled to 45 days of annual leave, up from the current 30 days.
• Casual leave would increase from six to seven days.

Contractual and Dismissal Regulations

The draft law introduces measures to improve clarity and fairness in employment arrangements:

• Fixed-Term Contracts: These would convert to indefinite-term contracts after four years of renewal, instead of six years under the current law, offering more job security for long-serving employees.

Notice Periods

• For fixed-term contracts, the notice period would be reduced from three to two months.
• For indefinite-term contracts, the notice period would remain at three months, regardless of service length.

Dismissal Grounds

Specialised labour courts would be empowered to rule on dismissal cases involving specific violations, such as:

• Identity fraud or submission of forged documents
• Prolonged, unjustified absence
• Breaches of workplace safety regulations
• Disclosure of confidential business information
• Conflicts of interest with the employer
• Physical aggression against employers or superiors
• Drug use during working hours

These provisions aim to safeguard employers’ rights while preserving procedural fairness for employees.

Financial and Administrative Duties for Employers

The draft law also outlines structured obligations for employers:

• Minimum Annual Pay Increases: Employers must implement annual increases of at least 3% of the wage ceiling used for social security calculations, ensuring minimum wage growth in line with economic benchmarks.
• Training Fund Contribution: Employers would contribute 0.25% of payroll to a central fund to support workforce training and development.
• Employer Penalties: Fines for serious violations such as forced labour and workplace discrimination would increase from LE5,000 to LE20,000 per worker. Repeat offences would result in doubled penalties to strengthen enforcement and discourage non-compliance.

Egypt’s Forward Outlook

These proposed reforms reflect Egypt’s continued efforts to modernise its labour framework while considering the rights of all stakeholders. The law balances employee protections and maintains a stable, business-friendly environment.

By refining its legislative structure, Egypt intends to support responsible economic development and align more closely with international labour practices.

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