Egypt is experiencing a boost in manufacturing, ICT, financial services, and tourism industries. Major global markets in Europe, the Middle East, Africa, and the Indian Subcontinent are readily accessible when establishing a business in Egypt. Additionally, the country boasts a world-class infrastructure base.
Egypt has become a significant investment destination in the Middle East and North Africa. Employers with local business entities in Egypt can acquaint themselves with the country’s employment law to make the most of their investments.
50% of Egyptians are between the ages of 15 and 44. This makes this a great market to benefit from its youthful and highly skilled employees. The Egypt labor law is employee-centric and provides a legal framework for employers to maintain workplace standards and ensure employee rights are protected. The most relevant labor and employment rules in Egypt are
- minimum legal wage (approx. USD 152 per day)
- a maximum of 48 hours of work weekly
- minimum 21 working days of annual vacation leave
- 90 days of maternity leave in Egypt for foreigners and citizens, while there is no paternity leave
- a separate national data protection law puts the onus on employers to ensure employee data privacy while processing
This employment law in Egypt guide discusses the key aspects of employment rules relating to contracts, working hours, leave schemes, payroll obligations, employee termination, and employee data protection to help employers in complaint expansion.
Who is Covered by the Employment Act?
The labor law in Egypt applies to all private employers, regardless of their registered legal form of business entity in Egypt. This also suggests that residents and foreigners working for Egyptian employers may enjoy various entitlements under Egyptian labor act rules.
However, residents working for foreign entities abroad, even from Egypt, are not subject to these labor laws (although Egyptian income tax may apply).
An employment contract specifies the working relationship between an employer and an employee. Labor act rules in Egypt mention the particulars of the association, like the number of working hours, remuneration, job description, and more.
The employment regulations in Egypt recognize two types of contracts between an employer and an employee:
- A contract for an unspecified period or indefinite period
- A contract for a definite period
Employers in Egypt mostly prefer a definite period employment contract. It provides them with an additional option to terminate the agreement justly on the term expiry or the accomplishment of a particular task.
When an employee begins their employment, the employer is required to provide the following in writing in the employment contract:
- Employee’s name, age, permanent address, sex
- Location of recruitment
- Job title or job description
- Employment commencement date
- Duration of the contract
- Location of work
- Number of working hours
- Remuneration, its method of calculation, information about any payments or benefits in kind
- And any other important information
Key Provisions of the Act
Employment law in Egypt is primarily Egypt Labor Law No. 12 of 2003. Additionally, employment relationships in Egypt are subjected to the Egypt Civil Code and Egypt Social Insurance Law No. 79 of 1975 for matters outside the purview of the labor law.
Together, it forms the labor code of Egypt or, otherwise, employment rules in Egypt.
- Working hours in Egypt labor law are limited to eight hours per day or 48 hours per week.
- The usual work week in Egypt is six consecutive days.
- Mealtime or rest breaks are not included in Egypt’s working hours law calculations.
- Special provisions for minors (between the age of 14-18 years) & women employees apply per the labor act rules in Egypt:
- Working hours for minors should not exceed six hours per day or four consecutive hours per day.
- Working hours for women employees in Egypt must be scheduled between 7 AM to 7 PM.
As per Egypt labor law, employers may ask employees to work on public holidays for triple the daily remuneration:
- Coptic Christmas (7th January)
- Revolution Day (25th January)
- Coptic Easter Sunday (19th April)
- Sham El Nessim (20th April)
- Sinai Liberation Day (25th April)
- Labour Day (1st May)
- Eid Al Fitr (End of Ramadan – 24th – 28th May)
- Revolution Day (30th June)
- Revolution Day (23rd July)
- Eid Al Adha (Feast of the Sacrifice- 31st July – 3rd August)
- Hijri New Year (20th August)
- Armed Forces Day (8th October)
- Birthday of Prophet Muhammad (29th October)
Egypt employment rules provide various leave schemes for the welfare of employees that have worked for the same employer for at least six months.
The most notable leave schemes per the labor law in Egypt are mentioned below:
- Employees are entitled to a paid annual leave of 21 calendar days.
- Employees over ten years in service or over 50 are entitled to paid vacations of 30 days.
- Employers must extend paid annual holidays for employees working in dangerous workplaces or remote areas for seven more days.
- Any public holiday that falls within this period is excluded.
- Egypt paid maternity leave for employees who have worked for at least ten months for the same employer is 90 days.
- The employment regulations in Egypt mandate 45 days of leave after the delivery date.
- Employers with over 50 employees must grant unpaid maternity leave in Egypt for up to two years.
- There are similar provisions for availing of maternity leave in Egypt for foreigners.
Egypt labor law grants six days of casual leave on prior approval of the employer. Furthermore, employers must settle all leave balances every three years.
Payroll taxes & obligations
Employers, regardless of the business entity’s legal form of the business, have many obligations towards their employees and various authorities.
- Employers are obliged to deduct income tax from employee salary
- Employers must register themselves with the Egypt Tax Department to deposit the withheld tax amount
The prevailing income tax in Egypt is progressive and based on earned income.
- From 0 to 15,000 Egyptian pounds – 0%
- 15,000 to 30,000 Egyptian pounds – 2.5%
- 30,000 to 45,000 Egyptian pounds – 10.0%
- 45,000 to 60,000 Egyptian pounds – 15.0%
- 60,000 to 200,000 Egyptian pounds – 20.0%
- 200,000 to 400,000 Egyptian pounds – 22.5%
- More than 400,000 Egyptian pounds – 25.0%
- Employers must also register themselves with the Egypt Social Insurance Authority to deposit social security contributions.
- Employer social security contributions amount to 18.75% (Minimum taxable wages is 1,400 EGP and maximum is 9,400 EGP) and 1% for unemployment protection.
- Employers must also deduct 11.00% employee share of social security contributions (The minimum taxable wage is 1,400 EGP, and the maximum is 9,400 EGP)
- The minimum wage is the minimum acceptable remuneration that employers must legally transfer to every employee.
- Employers in the private sector are required to pay the minimum wage of 2,400 Egyptian pounds per the labor code in Egypt.
- The overtime working hours per Egypt labor law is limited to ten hours per day, effectively two hours per day.
- The labor regulations in Egypt mandate employers to provide overtime compensation amounting to
- 35% of employee salary for daytime working hours
- 70% of employee salary for night working hours
Termination of employment
- Both employees and employers can terminate the indefinite period employment contract. The notice period depends on the years of employee service.
- Less than ten years of service: two months in the notice period
- More than ten years of service: three months in the notice period
- Employers can dismiss employees without compensation per Egypt employment law termination guidelines, say
- if the employees are deemed inefficient
- if an employee committed gross misconduct
- Employers cannot seek compensation from female employees who terminate their employment contract for reasons related to marriage or pregnancy on a prior notice of three months.
Data protection and employee privacy
Egypt is the latest country in the MENA region to recognize employee data privacy and enact a different national data protection law to defend it.
By complying with Egyptian law, employers can assess an individual’s most direct personal data like name, ID number, photograph, and telephone number. Indirect information about an individual, like date of birth, gender, hobbies, and website searches, enjoys protection under the national data protection law.
Any employee data relating to their psychological or physical health, economic status, or cultural or social identity also enjoy protection under the law.
Labor law in Egypt enforces specific penalties for companies that are not committed to the employee welfare provisions.
- Private employers can be fined between EGP 1,000 and EGP 5,000 per employee for not applying the minimum wage standards.
- Employers will be fined for the breach of the Data Protection Law anywhere between 2,000,000 to 5,000,000 Egyptian Pounds. An imprisonment term of up to three years is also applicable.
- As per the amendment to Article 253, employers have to pay a fine amounting to LE 20,000 for forced labor and discrimination. The fine is doubled for repeat offenders.
- Employers must offer the tax-free end-of-service benefit of two months’ gross salary for each employed year, in addition to accumulated leave balance, bonuses, profit share, and so on, if the employment termination is not per the employment regulation in Egypt.
Upcoming Changes in the Egypt Labor Law
The prevailing employment law in Egypt is No.12 of the 2003 labor law.
The Egyptian Senate passed a draft 2022 labor law in February 2022, replacing the 2003 labor law in Egypt to keep in sync with the current labor markets and international labor agreements.
The new Egypt labor law will be enacted only after the House of Representatives clears the bill, and the President gives assent.
The draft law will act as a modernization force creating new employee-centric reforms such as
- The introduction of paternity leave in Egypt is one of the foremost liberal reforms.
- Employers must grant one day’s paid paternity leave to eligible employees.
- Egypt paid maternity leave will be extended from 90 to 120 calendar days.
- Employers with more than 25 or more employees may grant unpaid parental leave of up to two years to eligible new mothers.
Other leave entitlements
- The annual casual leave days will increase from six to seven.
- Sick leave would increase from six to 12 months. The payable benefit would also increase to 100% (present 75%) of covered earnings for the first three months, 85% for the following six months, and 75% for the last three months.
- Fifteen days of paid vacation leave is introduced for employees in their first year of employment. Employees over 50 are entitled to paid vacations of 45 days (present 30).
- New labor courts will have the power to dismiss employees deemed guilty of any of the eight violations per the current labor law in Egypt
- impersonating another person or submitting forged documents
- long unjustified absences
- repeatedly ignoring safety guidelines
- revealing secrets that harm the business
- competing with the business owner in the same business
- physically assaulting the business owner or any superiors
- being under the influence of drugs during work hours
- The notice period under fixed-term contracts would decrease from three to two months, while the notice period under indefinite-term contracts remains at three months, irrespective of years of service.
- Employers would contribute 0.25% of payroll to a central training fund.
- Employers must ensure guaranteed minimum annual pay increases equal to 3% of the covered pay ceiling for social security contributions.
- Fixed-term employment renewed for four years (instead of the present six years) would automatically be converted to indefinite-term, permanent employment.
- The maximum penalty for forced labor and discrimination in the workplace is raised from LE5,000 to LE20,000 per worker.
- The penalty is doubled for repeat offenders.
Compliance Strategies for Employers
Employers and global companies looking to hire and manage local talent may take note of the following compliance strategies for successful operations.
Following standard templates:
- The labor law in Egypt is comprehensive in providing guidelines on creating employment contracts and what particulars must be presented in written form to the employee.
- Entrepreneurs can follow the standard templates for drafting employment contracts in compliance with employment law.
Developing in-house resources:
- An employer can hire an HR manager to comply with Egypt labor law and other local regulations while hiring and managing talents.
- A dedicated HR manager will help employers supervise employee development, training, and employee benefits under the Egypt labor code.
- However, developing in-house resources is time-consuming and costly for most employers.
Outsourcing employment contract management
- Outsourcing will lower compliance costs and protect employers from legal liabilities.
- Employers can hire the services of third-party firms to draft employee documents, compliance audits, manage payroll and social security benefits under Egypt employment laws, and more.
- Service providers like Multiplier can automate employment contract generation in multiple languages and provide SaaS-based payroll management solutions.
How Can Multiplier Help?
Currently, Egypt is attracting private sector investment to boost economic development. It is also an excellent time for global companies and foreign entrepreneurs to expand their business operations in Egypt.
However, employers looking to hire and manage local talents must go through the nitty-gritty of the labor law in Egypt. For instance, employers can have only 10% of the foreign employees with salaries at most 20% of the total wages.
Managing operations and hiring in Egypt involves the in-depth reading of various provisions under Egypt labor codes, and you may need expert help.
Multiplier can help businesses stay compliant. Multiplier is an EOR/PEO solution that helps employers comply with various employment regulations in Egypt.
Our global employment solutions and products help companies draft employment contracts in Arabic or English, manage payroll, withhold taxes, distribute employee benefits, automate salary payments, and much more.
The expert team at Multiplier is adept with onboarding and employee management in over 150 countries, including Egypt.