Egypt: Employment Law In Egypt 2018

Last Updated: 22 January 2019
Article by Andersen Tax & Legal Egypt
Most Popular Article in Egypt, January 2019

INTRODUCTION

With a population of over 100 million and a work force of 31.2 million, it comes as no surprise that the vast majority of the legal inquiries that we receive are concerned with Egyptian Labour Law. With this in mind, we decided to create a guide which is designed specifically to assist entrepreneurs with some of the common dilemmas they face when they are initiating or terminating employment agreements within their business.

This book does not detail every aspect of the law, but rather gives entrepreneurs an insight into the most frequently asked questions which we believe particular attention should be paid too. The overall aim of this book is to help investors engage in employment agreements that are transparent, legal and balanced and to avoid future litigation.

Those who are interested in attaining general information on the Egyptian investment climate can reference our first publication "Egypt Land of Opportunities" which outlines the most lucrative areas of investment in post-revolutionary Egypt. If however, you are more interested in finding out detailed information about the Egyptian taxation system, reference should be made to our second book "Egypt Tax Summaries 2018" which summarises corporate and personal tax rates within the country.

To begin, it is important to attain some general knowledge on the regulatory system in place for employment agreements within Egypt. Firstly, it should be noted that there are four essential laws which govern employment relationships in the country, namely, Law No.47 for the year 1978, which applies to civil servants of the State; Law No.48 for the year 1978, which organizes the rules applicable to public sector employees; Law No.203 for the year 1991, which was promulgated to address special requirements for employees working in the public commercial sector of the State; and Law No.12 for the year 2003, which aims at regulating the relationship between employers and employees in the private sector. This book will only be looking at Law No. 12 of 2003 since we are primarily concerned with private sector relationships, however, reference will also be made to Social Insurance Law No. 79 of 1975, which details the insurance due to permanent and temporary employees in both the private and public sectors from their employers, as well as a number of other related laws to help paint a complete picture of employment in Egypt.

Secondly, it is important to keep in mind that the law was drafted in a manner which favours the employee as it is primarily written for their protection, and judicial application of the law tends to follow this motive, which is why an attempt at amicable reconciliation prior to litigation is encouraged. With regards to the mediums in which the law is heard, the Labour Department of the court of first instance handles employment-related complaints and disputes, whereas the Labour Office is the administrative institution before which all labour-related disputes begin.

Below, you will find Egypt's country profile, as well as some more general information regarding the Egyptian labour force and the law that governs it.

Country Profile

Area -
Total: 1,001,450 sq. km
Land: 995,450 sq. km
Water: 6,000 sq. km

Land Boundaries -
Total: 2,612 km
Border countries: Gaza Strip 13 km, Israel 208 km, Libya 1,115 km, Sudan 1,276 km

Climate -
Moderate climate throughout the year (Summer °35-°25, Winter -°15 °25 C).

Natural Resources -
Petroleum, natural gas, iron, ore, phosphates, manganese, limestone, gypsum, talc, asbestos, lead, rare earth elements, zinc

Government Structure -
Republic

Currency -
Egyptian Pound

Time Zone -
(UTC + 2)

Establishment -
3200 BC

Geographic Importance -
Egypt controls the Sinai Peninsula, it is the land bridge between Africa and remainder of Eastern Hemisphere; controls the Suez Canal, acts as a sea link between the Indian Ocean and Mediterranean Sea; size, and juxtaposition to Israel, establish its major role in Middle Eastern geopolitics; dependence on upstream neighbors; dominance of Nile basin issues; prone to influxes of refugees from Sudan and the Palestinian territories.

The Capital -
Cairo

The National Day -
23rd of July

Population -
106,207,983

Language -
Arabic is the official language, however, English and French are commonly used in the commercial fields.

Telephone code of Cairo - Giza -
00202

Cities and Ports -
The biggest cities are Greater Cairo, Zagazig, Alexandria, Port Said, Al Mahala Al Kubra, Luxor, Mansoura, Tanta, Asyut, and Menya.

Administrative Division -
The Republic is administratively divided into 27 governorates. The governorates are either completely urban, or a blend of urban and rural areas.

Ports -
There are 43 ports in Egypt due to the extension of the coastlines to the north and east, and the most important ones are Alexandria, Damietta, Suez, Port Said and Safaga.

Official Workdays -
Official workdays in the ministries, government departments and general authorities and local administrative units are Sunday to Thursday leaving Fridays and Saturdays as the official weekend.

Legal Definitions

Worker: any natural person working in return for a wage with and under the management or supervision of the employer excluding:

  • Public servant of any state entity, including the local government units and the public departments.
  • Domestic servants and the like.
  • Employee's family members that they support.

Employer: any natural or judicial person employing one or more workers in return for a wage.

Wages: everything that the worker obtains in return for his work, whether fixed or variable, in cash or in kind. This includes commission, performance based percentages, increments, bonuses, allowances, workers profit share and tips

Minimum Wage: 1,200 pounds ($68).

Labour Contract: a contract whereby one of the parties agrees to work for the account and under the management or supervision of another party in return for a wage the other party undertakes to pay.

Labour contracts are required to be in writing, in triplicate and in the Arabic language. The employer, employee and social insurance office each keep one copy of the employment contract.

A claim regarding a labour contract may only be initiated within a year from the time that the contract terminates. After the lapse of a year the claimant loses his right to claim.

Statistics

As of the 4th quarter of 2017 the total Egyptian labour force (the term labour force here comprises people ages 15 and older who meet the International Labour Organization definition of the economically active population, namely, all people who supply labor for the production of goods and services during a specified period) reached 31.2 million.

The statistics below show the sectoral distribution of this labour force

  • Agriculture: 84%
  • Industry: 25%
  • Services: 49%

An estimated 47% of Egypt's economic and social establishments are in the Cairo and Alexandria governorates, which host 25% of the labour force.

Labour force in Egypt is both readily available and highly affordable by global standards, particularly in entry to midlevel positions.

We will now turn to look in detail at the most pressing and ambiguous issues within Egyptian Labour Law. We will begin by giving the basic requirements of any contract , followed by an overview of Egyptian national wage to provide a foundation for the remaining information in the book. After this, the book will detail some of the more intricate matters of the law, such as terminating a contract, penalties, collective labour agreements, the rights of women, children and disabled individuals, vacations, the employment of foreigners in Egypt, and other related issues. Our aim is to provide the reader with a comprehensive understanding of employment law in Egypt through the combined knowledge of these topics.

CONTRACTS

Contracts are the foundation of any binding and legal employment agreement, so it goes without saying that the utmost care and precision should be employed in their drafting. Samples of employment contracts can be found easily online to provide a visual representation of the information in this section, to start however, it is important to take note of the impending information. In Egypt, Employment contracts are required to be in writing, in Arabic, and in triplicate, with the employer, employee and social insurance office each keeping a copy of the employment contract.

Generally speaking, the contract should include the following data:

  • Name of the employer and the address of the place of work.
  • Worker's name, qualifications and profession or craft, social insurance number and home address.
  • Nature and type of work subject of the contract.
  • Agreed upon wage and method and time of its payment, as well as any other benefits in cash and in kind as agreed upon.
  • A probationary period of no more than three months must be specified in the contract.

Under Egyptian Labour Law, an employment contract may be drawn up for a definite or indefinite period of time, or for the fulfillment of a particular work each of which has a particular set of rules governing them. Like most jurisdictions, the main difference between definite and indefinite contract is that a definite contract is terminated without need of any formalities upon duration of the specified term and without compensation or advance notice (unless terminated early), while an indefinite contract is only terminated with express notice by the employer or the employee and payment of compensation.

Definite Contracts

These are contracts which have an express or implied specific duration which is agreed by both parties and the agreement terminates when this term expires. Generally, the contract may be renewed by express agreement between both parties for other similar works.

Egyptian law stipulates that if both parties continue carrying out their duties as per the agreement, the contract will be considered renewed for an indefinite period. It is important to note however that this rule does not apply to contracts made with foreigners. A definite contract may also be renewed through express agreement between the parties for one or more periods. If however, the contract is concluded for more than 5 years the worker is permitted to terminate without indemnity by providing 3 months' notice prior to his termination.

Indefinite Contracts

Indefinite contracts are characterized by their lack of a specific expiration date, and the prohibition of termination without adequate cause by the employer. Employers often avoid contracting for an indefinite period due to their obligation to provide a justification for terminating an employee, and tend to use definite contracts, or contracts for a particular work instead.

Termination of an indefinite contract is therefore somewhat more difficult, however either party may terminate provided that they notify the other party in writing prior to termination. Employers are not permitted to terminate the contract except for 'reasonable reasons' (examples of which are provided below) or unless the employee's inefficiency is established in accordance with the provisions of the company's endorsed regulations. Generally speaking, if either party of the contract terminates without legitimate and adequate justification, he must compensate the other party for the harm incurred as a consequence of the termination. Naturally, a labour contract terminates with the workers total incapacity to perform his work, regardless of the cause of the incapacitation.

In general, if an employer wishes to terminate a contract they must give the employee two months' notice prior to terminating the contract if the employee has been working at the establishment for less than 10 years, or 3 month notice if he has been working there for more.

An employee's service period will begin on the date they have received their work up to the date when the notice period will end. It is also important to note that the contract will remain valid throughout the notification period. If a contract termination is notified by the employer, the worker shall have the right to absent himself a full day per week or eight hours during the week to look for other work, whilst still receiving full wages.

Furthermore, if an employer terminates the labour contract without notification or prior to the end of the notification period, he is obliged to pay the worker an amount equivalent to his wage for that time, or the part remaining thereof. This notification period will be part of the workers overall service period, so the same obligations will be applicable on both parties.

An employee who resigns may later withdraw his resignation in writing within a week from the date that the resignation was accepted, in which case it shall be deemed ineffective.

As a form of guidance, the law provides a non-exhaustive list of the situations in which an employer can terminate indefinite contracts which an employer can refer to, namely:

  • If it is established that the worker has assumed a false identity or submitted false documents.
  • If it is established that the worker has committed an error resulting in serious damages to the employer provided that the employer shall notify the event to the competent authorities within 24 hours from the time he learns of its occurrence.
  • If the worker repeatedly neglects observing the instructions necessary for the safety of workers and the establishments even though such instructions are issued in writing and displayed in a prominent place.
  • The worker absents himself without good reason more than twenty intermittent days during the same year, or more than 10 consecutive days, provided that prior to his discharge a written warning notice will be sent to him via certified mail, 10 days after his absence in the first case and 5 days after his absence thereafter.
  • If it has been established that the worker has divulged the secrets of the establishment he works in, leading to serious damage or harm to the establishment.
  • If the worker embarks on competing with the employer in the same activity.
  • If during the employee is found to be intoxicated during work hours.
  • If it is established that the worker has aggressed the employer or the general director, or if he commits a serious aggression on any of his superiors during the work.

Finally, employees, similar to employers, have the right to terminate the contract if the employer defaults on any of the substantial obligations agreed upon, the law or articles of association of the establishment, or if the employer/ his representative commit a hostile act towards the employee or a member of his family. Terminations in this case are treated as the same as if the employer had terminated without lawful justification, and therefore compensation will be due.

Despite this, the court may order indemnification for a worker who has been dismissed even if the dismissal was not ordered by the employer, if it is found that the employer's acts or violation of contract terms lead the employee to terminate the contract, and gave the impression that this was the employee's desire.

Contract for a Particular Work

Such contracts may be valid until a particular work is provided, in which case they will terminate upon the completion of this work.

For contracts which terminate upon the completion of a work and the accomplishment of that work exceeds five years, the employee cannot legitimately terminate the contract prior to the accomplishment of that work. Alternatively, if upon the completion of the specific work the two parties continue to perform their duties the contract will be considered renewed for an indefinite period.

If the work is renewable by nature, and the contract continues to be performed upon completion of the initial project, the contract will be implicitly renewed for the term necessary to perform the same work again.

To read this Guide in full, please click here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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