Egypt Update: Employment and Social Insurance

On 8 April 2024, the National Wage Council (“NWC”) raised the minimum wage/salary for private sector employees to EGP 6,000 (six thousand Egyptian pounds) effective from 1th of May 2024, by virtue of the Decree No. 27 of 2024 issued by the Minister of Planning and Economic Development. The minimum wage/alary limits are usually subject to changes and revisions every year, considering the inflation rates in Egypt. That said, it is expected that such limit will change during 2025, when the NWC issues its annual decree regulating such limit.

• Companies should comply with the legal provisions in the Labor Law in relation to the various financial contributions to the different funds established according to the Labor Law. We have attached a summary of the relevant provisions related to different funds provided by the Labor Law, for your information. In this context, and during the last two years, labor offices started to enforce the provisions related to the funds contributions which were not enforced before, such as the application of the training fund and emergency fund contributions.
• Annual leaves application and practice continues to be a challenge to employers. Employers are recommended to revisit their internal annual leave system and policies, and its application vis a vis its application provided by the Labor Law in light of the recent court precedents and burden of proof.
• Employers are recommended to follow and adopt certain termination and exit process of the employees in light of their employment contract typesto have a safe and legal exit,while maintaining companies’ rights and mitigating the litigation risks, in light of the recent court precedents in this regard .
• Grounds for legitimate termination of the employment contracts by the employers, and its process and documents remain a legal challenge to most employers.

Key changes in the new Draft of the Labor Law

The latest draft of the new Labor Law is currently under review by the Prime Minister. This version incorporates the proposed amendments concluded after extensive discussions between the relevant parties within the Parliament over the recent months.

The issuance of the new Labour Law represents a pivotal development for Egypt, as it seeks to address prevailing challenges within the labor framework, enhance the equilibrium between employees’ rights and employers’ interests, and align national legislation with international standards and best practices.

As the draft of the new Labor Law advances toward potential issuance, it is essential for employers to familiarize themselves with its key provisions and understand how these changes may affect their business operations and workplace practices. The most significant changes and provisions introduced in the draft of the new Labor Law, which is intended to replace the existing Labor Law No. 12 of 2003 in its entirety (hereinafter referred to as the “Draft Law”), are as follows:

Maternity Leave

• No Service Period Required for Entitlement: The Draft Law has removed the minimum period requirements. Previously, a female employee needed to complete ten (10) months of service with any employer to benefit from maternity leave.
• Extension of Maternity Leave Duration: One of the most notable changes is the extension of the maternity leave period from three (3) months to four (4) months. This extension aims to ensure equality between public and private sector female employees by aligning their maternity leave entitlements.
• New Resignation Timelines and Rules:
• Timelimit for Approval: Employers must approve or reject an employee’s resignation within five (5) days of submission. Otherwise, the resignation is deemed to be automatically approved. This is a new rule which is not regulated in the current Labor Law.
• Withdrawal of Resignation: A resigning employee or their authorised agent may withdraw, in writing, the resignation within the 5-day approval period (instead of the current 7-day window). Such withdrawal must also be approved by the competent labor office.

Employee’s File

The Draft Law has added a new document to be kept in the file, which proves that the employee is socially insured before the National Organisation for Social Insurance (i.e., either Form No. 1 social insurance or an extract of a social insurance print evidencing the same). The Draft Law also recognizes the electronic format of the employees’ files.

Disabled Employee’s Annual Leave

Under the Draft Law, disabled employees are entitled to forty-five (45) days of annual leave. This entitlement exceeds the standard annual leave period for other employees, which is only twenty-one (21) days, reflecting recognition of the specific needs of disabled individuals. This is a new rule which is introduced for the first time in the Draft Law, as part of Egypt’s recognition of the disabled employees rights in the society.

Combating Harassment in Workplace

In response to the International Labour Organisation’s (ILO) comments, a new provision has been incorporated into the Draft Law to address workplace harassment, including a clear definition of sexual harassment. The new provisions require employers to ensure a safe and non-hostile work environment free from harassment and violence. Employers are also obligated to implement measures to prevent harassment and promote workplace safety.

Furthermore, the Minister of Labor will issue a decree outlining all forms of harassment and violence in the workplace, methods of prevention, and templates for codes of sound professional conduct.

It is worth noting that the definition of harassment introduced in the Draft Law differs from that in the Egyptian Penal Code. The Draft Law adopts a broader definition of sexual harassment, encompassing any physical, verbal, or non-verbal behaviour of a sexual or gender-based nature that undermines dignity, without specifying the context or methods involved.

In contrast, the definition in the Egyptian Penal Code is more specific, detailing actions, methods (such as signals, words, and electronic communication), locations (including public and private spaces), and the intent to seek a sexual benefit. This makes the Penal Code’s definition more situational and concrete.

Child Labor

Under the Draft Law, a new article was added stipulating that children must not be employed in jobs, professions, or industries that:

• jeopardise their physical or psychological safety; or
• threaten their morals or well-being.

This provision was added to align with the worst forms of child labor as defined in the ILO Convention No. 182 of 1999, given that Egypt is a member of that convention.

New Work Schemes

• A new chapter under the Draft Law has been added to define and regulate Non-Traditional Work schemes, providing flexibility in employment schemes. Non-Traditional Work is now defined as “any type of work performed in a manner outside the conventional setup, regardless of the method or form of implementation. It is undertaken for the benefit of an employer, under their management or supervision, in return for a wage of any kind”.
• Furthermore, the Draft Law has listed examples of what is considered Non-Traditional Work as follows:
• remote working, which is work performed in a location other than the workplace and implemented through technological means in locations approved by the employer;
• work via digital platforms;
• part-time work;
• flexible work, which involves working the same number of hours as a full-time employee but performed at non-continuous times agreed upon by the parties;
• work sharing, which is a single job performed by multiple individuals who share responsibilities, working hours, and wages as agreed; and
• any additional innovative work arrangements identified and regulated through a decree to be issued by the Minister of Labor.
• In the same context, The employment relationship under new work schemes must be clearly defined and formalised in a written employment contract, either in paper or electronic form. Under the Draft Law, employees are now permitted to work for multiple employers, provided this arrangement is mutually agreed upon and properly documented. However, employees are strictly prohibited from disclosing any confidential information related to their employers and are not allowed to engage in independent work or operate their businesses.

Social Insurance

• Pursuant to the regulations issued by the National Organization for Social Insurance (“SI Authority”) on 2th of December 2024, and in implementation of the provisions set forth under Circular No. 1 of 2020 issued from the SI Authority, the following amendments shall come into effect as of 1th of January 2025:
• Amendments to the Social Insurance Subscription Salary Limits:
• The minimum insurable salary shall increase to EGP 2,300 (two thousand three hundred Egyptian pounds), replacing the previous limit of EGP 2,000 (two thousand Egyptian pounds).
• The maximum insurable salary shall be adjusted to EGP 14,500 (fourteen thousand five hundred Egyptian pounds), replacing the previous limit of EGP 12,600 (twelve thousand six hundred Egyptian pounds).
• Adjustments to Pension Limits:
• The minimum pension entitlement for individuals whose service concludes on or after 1th of January 2025 shall be raised to EGP 1,495 (one thousand four hundred ninety-five Egyptian pounds), instead of the former amount of EGP 1,300 (one thousand three hundred Egyptian pounds).
• The maximum pension entitlement shall also be EGP 11,600 (eleven thousand six hundred Egyptian pounds), instead of the former cap of EGP 10,080 (ten thousand eighty Egyptian pounds).
• On 10th of November 2024, an internal instruction was issued by the Head of the SI Authority, explicitly prohibiting officials of the Authority from recognizing or accepting general powers of attorney (POAs) in any transactions or dealings with the Authority. The decree mandates that only specific powers of attorney (POAs) shall be accepted, provided that such powers of attorney clearly and unambiguously grant the agent the authority to represent the principal solely before the SI Authority. In other words, proxies and general POAs are no longer accepted by the SI Authority.
• The SI Authority system is now connected/linked to the Tax Authority system. This would ensure that accurate salaries are reported to both entities. That said, the salary reported to either Authority should be the same salary that should be reported to the other one, to avoid any liability resulting from reporting two different salaries to each Authority, while their systems are now linked..
• Social Insurance Law No. 148 of 2019 extends the application of its provisions on the expats (foreign employees). Accordingly, if the employer employs expats, they should be subject to the same social insurance contributions as applied on Egyptians. Expats would have the right to claim back their SI contributions, if they submitted a request to the SI Authority within 6 months from the end of their employment relationship with the employer.
• Social Insurance offices started to request from the financial statements of the company which evidence the existence of construction contracts, according to Circular No. 7/2023, as part of the enforceability and implementation of the contractors’ insurance scheme. Social Insurance offices currently define “construction contracts”, in a very broad manner corresponding with its definition in the Civil Code, which includes broader range of contracts (not the Construction of Buildings only). That said, it includes supply contracts, and service contracts (i.e. cleaning,
• and design and renovation contracts), etc. Hence, Companies are advised to consider that their suppliers/vendors are paying the contractor’s social insurance subscriptions, and submit an evidence of such payment (or the exemption therefrom, if applicable) before settling such suppliers’ invoices. Companies are entitled to suspend the payment of the suppliers’ entitlements if they fail to submit such evidence.
• Employers should ensure that the amount of salaries mentioned in the financial statement is consistent with the salaries disclosed in the SI form (2), to avoid any potential issues or liabilities with the SI Authority.

By ‎OGH Legal, Egypt, a Transatlantic Law International Affiliated Firm. 

For further information or for any assistance please contact egypt@transatlanticlaw.com

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