Marghany Advocates

1

GENERAL PRINCIPLES

Forums For Adjudicating Employment Disputes

The employment dispute in Egypt may be settled in the Labour Courts and this is the most common way of settling a labour dispute in Egypt. Disputes can also be settled by mediation as well as arbitration.


The Main Sources Of Employment Law

The main sources of Employment Law in Egypt are the Employment Law no.12 of year 2003 and its amendments, in addition to that the new social Insurance Law (no148/2019) as amended, and its executive regulations which regulate matters related to social security, and civil law.


National Law And Employees Working For Foreign Companies

The national law is applied to national employees as well as foreign employees and employers who are working for foreign companies within the Egyptian territory.


National Law And Employees Of National Companies Working In Another Jurisdiction

If a national employee who works for national company is employed abroad, the Egyptian Employment Law shall apply to this employment relation.


Data privacy

Generally speaking, labour law protects employees from employers’ abuse. Employee’s privacy and personal data are protected by the general rules of law and more specifically by the Personal Data protection Law no 151 of year 2020.

2

HIRING THE EMPLOYEE

Legal Requirements As To The Form Of Agreement

There must be a written employment contract, and the essential terms that are required to be evidenced in writing are the:

  • Employer’s name;
  • Employee’s name, address, education, work experience and social insurance number;
  • Nature and type of job;
  • Wage;
  • Documentary evidence of work credentials; and
    • However, it is worth mentioning that in case of disputes, the Employee shall be entitled to prove the employment relationship using all proof means available by law, regardless of the existence of a written agreement.

Mandatory Requirements
  • Trial Period

    • Probation period shall not exceed three months, and the employee shall not be appointed under probation for more than once with the same employer.

  • Hours Of Work

    • The Labour Law restricts and limits working hours to nine hours per day, with a one-hour rest per day, and 48 hours of rest per working week. The working hours shall include one or more break periods, not less than one hour in total for meals and rest, while determining this period it should be observed that the worker shall not work more than five continuous hours. The working hours and break periods shall be reorganised so that the period between the start and the end of working hours shall not be more than 10 hours a day. The break period shall be counted as attendance hours.

  • Special Rules For Part-time Work

    • The Labour Law is silent regarding part-time employees; hence, the general rules of law based on a contractual relationship with an employer, based on the principle of “the contract is the law of the parties” apply. On the other hand, the Labour Law sets fixed-term employees’ relationships with employers.

  • Earnings

    • The wages shall be determined according to the labour contract, if the wage is not determined, employees shall be entitled for wage equivalent to the employees in the same position. Discrimination in the wages because of the gender, origin, language, religion or creed shall be prohibited; the current minimum wage is EGP 1200, which should be doubled (EGP 2400) starting from January 2022.

  • Holidays/Rest Periods

    • The annual leave is 21 days for employees who have spent at least a full year with their current employer, which is increased to 30 days for workers who have been with the same employer for over 10 years; weekends and official holidays do not count within the annual holiday. An employee can accumulate and roll over his or her annual leave for a maximum of three years.

    For employees who spend less than a year in the service, they shall be entitled to annual leave in proportion to the period they spent in the service

    In all cases, the period of the annual leave shall be increased by seven days for the workers engaged in hard, dangerous works, or in the remote areas to be determined by virtue of a decree of the concerned minister. The employer shall determine the dates of the annual leave according to work conditions.

    The worker whose sickness is established shall have the right to a sick leave to be determined by the concerned medical quarter. During that period, he shall be entitled to a compensation for the wage as shall be determined by the Social Insurance Law.

  • Minimum/Maximum Age

    • The minimum age of hiring an employee is 14 years old (under certain conditions) and the retirement age by law is 60 years. Continuation of the employment after reaching the age of 60 is at the discretion of the employer.

  • Illness/Disability

    • According to the rights of disabled people law no.10 of year 2018 governmental and non-governmental agencies and every employer who employs 20 or more workers, whether they work in one place or separate places, and whatever the nature of their work, is obligated to hire at least 5% of the number of workers with disabilities who are nominated by the concerned ministry.

  • Location Of Work/Mobility

    • If the employer hires employees to work in places unreachable by normal means of transportation, they are obligated to provide appropriate means of transportation. In cases where the employer hires employees who work in remote areas, he must provide them with adequate nutrition and housing.

  • Pension Plans

    • The basic pension for all workers will be at least 65% of the monthly minimum wage and capped at 80%, subject to having at least 15 years of insured employment. The National Wage Council will set the minimum wage for private-sector employees. It will increase annually up to 15% of inflation. Workers employed in difficult jobs will receive increased pension benefits, but their employer will have to pay higher contributions.

  • Parental Rights (Pregnancy/ Maternity/ Paternity/ Adoption)

    • If female employees worked for the employer for 10 months, they are entitled to three months of paid maternity leave for each children born. They won’t be entitled to more maternity leaves if they have three children. In other words, the employee is allowed maternity leaves only twice during their employment term with the employer.

    Women employed in companies with more than 50 employees are entitled to two years of unpaid maternity leave in accordance with the Labour Law. Within 24 months after the child is born, women are entitled to two 0.5-hour care breaks per day, or a combination of one-hour long breaks.

    Labour Law does not contain provisions on paternity leave or adoption. For companies with 100 or more employees, the employer is obliged to provide a kindergarten in the company or help find nursery for the child until his or her age is ready for education.

  • Compulsory Terms

    • Everything that is mentioned in the Labour Law is compulsory and neither employer nor employee can waive their rights or obligations.

  • Non-Compulsory Terms

    • There is nothing in the law that is not compulsory.


Types Of Agreement
    1. Definite labour contracts

      2. This is where the agreement is made for a definite term. It automatically terminates after the lapse of such term unless renewed by the parties or the parties have continued to carry on their obligations under the agreement after the lapse of its term the same shall be deemed an indefinite period agreement, if the agreement and the renewal of the same reached a threshold of five years or more, the employee may terminate the agreement after the lapse of the five years period with no compensation by virtue of three months prior notice.

    2. Indefinite labour contracts

      3. This is when an agreement is made without a definite term, the same entitles either party to terminate the agreement by virtue of a written notice (without prejudice to the above, the notice period is two months if the regular service period is between (0-10) years and three months if more than 10 years).

      Contract for particular work, this is when an agreement is made for the execution of a certain job and shall be deemed terminated as soon as the job is completed unless the parties have decided to carry on with their liabilities, in such case the agreement shall be deemed indefinite period renewal, also if the employment relationship has reached a threshold of five years, the employee may not terminate the agreement unless the project is completed.

      The difference between the definite and indefinite agreement rises mainly in the termination notice period and the number of annual leave days.


Secrecy/Confidentiality

The Labour Law is silent regarding confidentiality, however, in practice, the parties may agree to confidentiality clause in the employment contract in which they shall the decide that the employee shall keep all the data, information of the work confidential and they also may agree that after the termination of the employment contract the employee shall keep the employer company’s confidential for a certain period of time.


Ownership of Inventions/Other Intellectual Property (IP) Rights

IP law in Egypt no.82 of year 2002 regulates the cases of ownership of invention as follows: If the employer commands an employee to make specific invention, all rights derived from such invention shall belong to the employer. Moreover, the employer shall have all the rights derived from the inventions discovered by the employee during the period of work relation/employment, insofar as the invention falls within the scope of the work contracts.

The name of the inventor shall be mentioned in the patent, and he shall be remunerated in all cases. If such remuneration was not agreed on, he shall be entitled to a fair compensation from the employer.


Pre-Employment Considerations

Generally speaking, there are no restrictions or prohibitions against background checks on applicants. Background checks can be conducted by obtaining experience certificates from, or directly contacting, applicants’ former employers, an employer has the right to require a medical examination in jobs requiring extra care before or during employment for narcotics or alcohol. Employers have the right to dismiss employees who test positive.


Hiring Non-Nationals

It is allowed for non-nationals to work in Egypt, however, certain conditions need to be fulfilled in order for foreigners to work in Egypt. For example, the foreigner must be legally authorised to stay in Egypt for the purpose of work and must obtain a work permit from the Ministry of Manpower in order to be able to work in Egypt. Moreover, the employer is restricted by keeping a ratio of 10 Egyptian employees for each foreign employee.


Hiring Specified Categories Of Individuals

Labour Law prohibits discrimination in employment based on gender, race, language, religion or beliefs.


Outsourcing And/Or Sub-Contracting/Temporary Agency Work

Recruitment agencies must obtain a licence from the Ministry of Manpower before recruiting from within Egypt or abroad, pursuant to the Labour Law.

3

MAINTAINING THE EMPLOYEE RELATIONSHIP

Changes To The Contract

The employer and the employee can’t make changes to the employment contract without the consent of the other party – i.e. the changes in the contract can’t be unilateral.


Change In Ownership Of The Business

Labour Law protects employees in the event of a business transfer owing to a sale, insolvency, bankruptcy or merger.


Social Security Contributions

The Social Security Rate is a tax related with labour income charged to both companies and employees; the rate paid is based on the employee's monthly wage. It is a total of 29.75% whereby 11% is borne by the employee and 18.75% is borne by the employer.


Accidents At Work

According to Social Insurance Law, when an injury occurs, the employer is obligated to transport the injured employee to the place of treatment, and the competent authority is responsible for disbursing the wage compensation by paying the expenses of transporting the injured by the usual means of transportation from the place of residence to the place of treatment if it is outside the city in which he resides, the employer may treat the injured employee medically whenever the authority concerned with health insurance permits him to do so.


Discipline And Grievance

According to the Law, the employee must perform all tasks with accuracy, honesty, and determination, to perform tasks in a timely manner and stick to the guidelines and recommendations of supervisors. Cooperate with the co-workers on a daily basis, to adhere to company policy, brand values, company culture and core corporate messages, cannot perform any work for another employer. Moreover, employees must not reveal the company’s confidential information to competitors, never accept gifts, compensations, commissions or any other objects in favour of anyone in order to perform his/her work. The law does not obligate the employer to take any grievance against the employees.


Harassment/Discrimination/Equal pay

Labour Law prohibits discrimination in employment based on gender, race, language, religion or beliefs. Harassment is not regulated in labour law, however, cases of work harassment is subject to the Egyptian Penal Code.


Compulsory Training Obligations

Employers are obliged to train employees to perform a different job than the one they were contracted for (if an emergency arises) as the general rule is that the employee should be liable to perform the job they have been contracted for.


Offsetting Earnings

It is not regulated under the Egyptian Labour Law.


Payments For Maternity And Disability Leave

In case of maternity leave, the female employee is entitled for three months paid maternity leave. On the other hand, there is no such a thing in Egyptian Labour Law called disability leave. In cases where the employee is totally disabled, whatsoever the cause of this disability, the employment contract is terminated. However, in cases of partial disability, the employment contract doesn’t get terminated unless it is proven that the employer has no other vacancy that the employee can perform satisfactorily.

If it is proven that other work exists that fits the employee, the employer shall, at the request of the employee, transfer him to that work without prejudice to the provisions of Social Insurance Law.


Compulsory Insurance

According to Social Insurance Law, the employer is obliged to provide insurance for his employee within two weeks of the employee joining the company of the employer; the employer deducts the insurance value from the wages of the insured workers.


Absence For Military Or Public Service Duties

The law is silent regarding this matter, but in practice, it depends on the employer and the company’s policy.


Works Councils or Trade Unions

The establishment of employees’ representation in the workplace is organised under the Workers’ Unions Law (Law No. 35/1976), as amended, and its executive regulations. The workers unions have the power to:

  • Preserve the workers’ legitimate rights;
  • Defend the workers’ rights; and
  • Take steps to improve the workers’ situation and the work environment and conditions.

Employees’ Right To Strike

The workers have the right to carry out a peaceful strike, however, the strike needs to be carried out through their labour union, and the strike’s purpose and duration has to be approved by at least two-thirds of the labour union members. The employer should be notified via a registered letter of receipt 10 days before the determined date of strike, the notification should always include the reasons for carrying out the strike and its duration.

Calling for strikes are prohibited in strategic or vital institutions that would disturb national security or basic citizens services.


Employees On Strike

Workers on strike are considered on unpaid leave until the strike ends.


Employers’ Responsibility For Actions Of Their Employees

An employer is held liable for the acts or conduct of its employees, which implies the responsibility of the superiors for the actions done by their employees when the actions are performed in the course of employment.

4

FIRING THE EMPLOYEE

Procedures For Terminating the Agreement

Article 69 of the Labour Law provides that an employer is not entitled to terminate an employment contract unless the employee breaches the contract by committing a ‘grave fault’, following referral to a committee with judicial competence. Grave fault constitutes the following:

  • An assumption of false identity or the submission of forged documents;
  • Continuous violation of safety instructions;
  • Absence from work for more than 20 non-consecutive or 10 consecutive days in a given year;
  • Disclosure of the employer’s secrets, resulting in material loss;
  • Competition with the employer in the same line of work;
  • Being in an intoxicated state during working hours;
  • Assault of the employer, general manager or any of the superiors; and
  • Professional incompetence.

    • An investigation must be conducted with the employee before dismissal, and then the question of his or her dismissal should be referred to the Labour Court.


Instant Dismissal

If one party terminates an employment contract for no justified reason, the terminating party shall compensate the other party for the damage incurred as a result of terminating the contract. If the terminating party is the employer and the termination is unlawful, the employee shall have the right to claim compensation is not less than two-month wage for each year of service.


Employee's Resignation

The employee may resign at any time without prejudice to the notice period duration and under the conditions that the resignation must be in writing, or it shall not be considered, moreover, the reason for the resignation has to be legitimate and sufficient.


Termination On Notice

A two-month notice of termination must be given before the dismissal of employees whose service period does not exceed 10 years, and a three-month notice of termination must be given before the dismissal of employees whose service period exceeds 10 years.


Termination By Reason Of The Employee's Age

The retirement age by law is at least 60 years. The continuation of the employment relationship after reaching the age of 60 is at the discretion of the employer, provided that the wages entitlement age as provided in the social security law should always be considered and the employer must allow the employee to work until they reach the said age so they would be entitled to their full wages. The employer may not prematurely terminate the agreement.


Automatic Termination In Cases Of Force Majeure

The labour law is silent regarding force majeure cases, but the employer can request to terminate the company’s activity totally or partially or reduce its size or activity.


Collective Dismissals

An employer is allowed to terminate the company’s activity totally or partially or to reduce its size or activity and collectively dismiss employees for economic reasons. In this event, the employer is obliged to pay employees whose employment contracts are terminated for economic reasons a sum equal to one month of the employee’s total wage for each of his or her first five years of service and one and half month’s wage for each year of service after the first five years.


Termination By Parties’ Agreement

The parties may agree to terminate the employment contract upon a written notice delivered to the other party, in all cases both parties must comply with the notice period in case of termination.


Directors Or Other Senior Officers

Terminating/dismissing a senior officer or a director shall be done by the normal means of dismissing/terminating any employee.


Special Rules For Categories Of Employee

There are no special rules for specific category of employees, Labour Law prohibits discrimination.


Specific Rules For Companies in Financial Difficulties

If the employer, for economic reasons, would have to partially or wholly close/downsize his organisation, the employer should present a request of closure/downsizing of the company to the concerned authority. The authorities in coordination with the general federation or trade union, determine the numbers and names of the workers to lay off, in case the employer terminates some working contracts, the employee should take a compensation of one-month total wage for each of the first five years of service, and one and half month for each year to follow. The employer can change some conditions into the working contract and can reduce wages. In this case the employee can end his contract without abiding by a notice period.


Restricting Future Activities

According to the Civil Law, if the employee is engaged in the employer’s business to the extent of knowing trade secrets, and in contact with the employer’s clients, the parties may agree that the employee may not, after the termination of the contract, compete with the employer, nor participate in any project that competes with him.


Whistleblower Laws

Whistle-blowers are not regulated in Egyptian Law.


Special Rules For Garden Leave

According to the Law, if the employer sent a notification to the employee to terminate his employment contract, the employee is entitled in the notice period duration to be absent for a full day in a week or eight hours during the week in order to search for another job, while he is entitled to his wages for the days/hours of absence.

The employee has the right to choose the day or hours of absence, provided that he shall inform the employer one day prior to the absence.


Severance Payments

Severance pay is calculated at the rate of a half a month’s wage for each of the first five years of service and one month’s pay for each of the following years, and the indemnity is calculated on the basis of the last wage paid to the employee.


Special Tax Provisions And Severance Payments

Taxes imposed on employees’ salaries are payable by the employer, including the taxes imposed on employees’ shares of profits under Law No. 91/2005, as amended.


Allowances Payable To Employees After Termination

If an employee is unwarrantably dismissed, he/she is eligible to claim compensation. The compensation is decided and identified by the competent court, but must be at least two months’ full wages for each year of service or, in the event of a definite term agreement, the wage for the remainder of the contract period.


Time Limits For Claims Following Termination

The limitation period for bringing employment claims is one year of the termination or rescission of the employment contract.

5

GENERAL

Specific Matters Which Are Important Or Unique To This Jurisdiction

None.



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Contact a Contributing Author:
Amir Marghany
Marghany Advocates
Egypt


Merna Osama
Marghany Advocates
Egypt


Disclaimer:

© 2021, Marghany Advocates. All rights reserved by Marghany Advocates as author and the owner of the copyright in this chapter. Marghany Advocates has granted to Multilaw non-exclusive worldwide license to use and include this chapter in this guide and to sublicense Lexis Nexis, a division of RELX Inc. and its affiliates certain rights to use and distribute this Guide.

The information in the How to Hire and Fire Guide provides a general overview at the time of publication and is not intended to be a comprehensive review of all legal developments nor should it be taken as opinion or legal advice on the matters covered. It is for general information purposes only and readers should take legal advice from a Multilaw member firm.

Publication Date: June 2021