Q&A: Labour & Employment Law in Egypt

Legislation and Agencies

What are the main statutes and regulations relating to employment?

The main statutes and regulations relating to employment in Egypt are as follows:

• Labour Law No. 12/2003, as amended, and its executive regulations;
• Social Security Law No. 79/1975, as amended, and its executive regulations; and
• the Civil Law.

Is there any law prohibiting discrimination or harassment in employment? If so, what categories are regulated under the law?

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

What are the primary government agencies or other entities responsible for the enforcement of employment statutes and regulations?

The main government agencies and other entities responsible for the enforcement of employment statutes and regulations are as follows:

• the Ministry of Manpower and Immigration;
• unions’ associations;
• the Social Security Organisation; and
• various committees allotted judicial competence.

Worker representation

Is there any legislation mandating or allowing the establishment of employees’ representatives in the workplace?

The establishment of employees’ representation in the workplace is organised under the Workers’ Unions Law No. 35/1976, as amended, and its executive regulations.

What are their powers?

The workers’ unions have the following powers:

• to preserve the workers’ legitimate rights;
• to defend the workers’ rights; and
• to take steps to improve the workers’ situation and the work environment and conditions.

Background information on applicants

Are there any restrictions or prohibitions against background checks on applicants? Does it make a difference if an employer conducts its own checks or hires a third party?

Generally speaking, there are no restrictions or prohibitions against background checks on applicants. Background checks can be realised through experience certificates from, or through direct contact with, applicants’ former employers.

Are there any restrictions or prohibitions against requiring a medical examination as a condition of employment?

An employer has the right to require a medical examination in jobs requiring extra care (eg, working with machinery or engines) and before or during employment for narcotics or alcohol. Employers have the right to dismiss employees who test positive.

Are there any restrictions or prohibitions against drug and alcohol testing of applicants?

An employer has the right to refuse to hire an applicant who does not submit to drug and alcohol testing or who provides a positive test.

Hiring of employees

Are there any legal requirements to give preference in hiring to, or not to discriminate against, particular people or groups of people?

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

Must there be a written employment contract? If yes, what essential terms are required to be evidenced in writing?

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

• employer’s name;
• employee’s name, address, education, work experience and social insurance number;
• nature and type of job;
• salary;
• documentary evidence of work credentials; and
• confirmation of a three-month probation period.

To what extent are fixed-term employment contracts permissible?

Fixed-term employment contracts are permissible and the maximum duration of such contracts is five consecutive years with the same employer.

What is the maximum probationary period permitted by law?

The maximum probationary period permitted by law is three months, which is not extendable.

What are the primary factors that distinguish an independent contractor from an employee?

The relationship between an employer and his or her employee is regulated by the Labour Law, while the relationship between an independent contractor and the company contracting him or her is regulated by the Civil Law. There are several factors distinguishing an employee from an independent contractor, including:

• an employee is subordinate to his or her employer;
• an employer is responsible for an employee’s mistakes, while a contractor is responsible for his or her own mistakes;
• an employee’s work term is concluded upon the end of its duration or once the employee reaches the age of retirement, while a contractor works on a fixed-term contract; and
• the responsibility of the employee falls within the doctrine of respondeat superior, while the contractual responsibility of a contractor is based on the responsibility for tort.

Is there any legislation governing temporary staffing through recruitment agencies?

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

Foreign workers

Are there any numerical limitations on short-term visas? Are visas available for employees transferring from one corporate entity in one jurisdiction to a related entity in another jurisdiction?

Egyptian law gives employers the right to recruit foreign employees who have experience and skill that is not available in Egypt, up to a maximum of 10 per cent of the number of Egyptian workers, after approval by the competent minister.

Are spouses of authorised workers entitled to work?

Spouses of authorised workers are not entitled to work unless they have obtained the necessary work permit from the competent authorities.

What are the rules for employing foreign workers and what are the sanctions for employing a foreign worker that does not have a right to work in the jurisdiction?

Chapter 2 of the Egyptian Labour Law addresses the issue of foreign workers and obliges employers to obtain work licences for the foreign workers from the Ministry of Manpower. Any breach will be fined E£500 to E£5,000 for each worker, which is doubled in the case of recidivism.

Is a labour market test required as a precursor to a short or long-term visa?

The Ministry of Manpower verifies whether the foreign nationals’ experience is unavailable in the local workforce before issuing a work licence to the employer.

Terms of employment

Are there any restrictions or limitations on working hours and may an employee opt out of such restrictions or limitations?

The Labour Law restricts and limits working hours to 8 hours per day, with a one-hour rest, and 48 hours per week.

What categories of workers are entitled to overtime pay and how is it calculated?

All categories of workers are entitled to overtime, and this is calculated as an extra 35 per cent of the salary for each extra hour of daytime work, 70 per cent of the salary for each extra hour of work during the night and an extra day’s salary for working during a day off.

Can employees contractually waive the right to overtime pay?

Employees may contractually waive the right to overtime pay, provided that they are not forced to waive it.

Is there any legislation establishing the right to annual vacation and holidays?

Annual vacation and holidays are established under the law and the annual entitlement is 21 days for employees with 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 allowance. An employee can accumulate and roll over his or her annual leave for a maximum of three years.

Is there any legislation establishing the right to sick leave or sick pay?

This right is granted to manual labour workers and those in industrial institutions, and it means that employees in these entities are entitled to one month of paid sick leave for every three years of service, in addition to any additional period that may be determined by the competent ‘medical physician’, which is an additional benefit to these employees.

In what circumstances may an employee take a leave of absence? What is the maximum duration of such leave and does an employee receive pay during the leave?

Workers may abstain from work for a casual reason for a period not exceeding six days during the year with a maximum limit of two days each time. This casual leave shall be counted as part of the annual leave determined for the worker.

What employee benefits are prescribed by law?

There are numerous employee benefits prescribed by law, including that any terms contravening the law are invalidated (eg, an employer cannot reduce an employee’s salary, except pursuant to the provision of the law) and that any prior benefits granted to employees through by-laws, contracts and regulations shall remain in force.

Are there any special rules relating to part-time or fixed-term employees?

The Labour Law is silent regarding part-time employees, and hence the general rules of law based on a contractual relationship with an employer, based on the principle of pacta sunt servanda, which means that the contract makes the law of the parties, applies.

On the other hand, the Labour Law sets fixed-term employees’ relationship with employers.

Must employers publish information on pay or other details about employees or the general workforce?

Employers are not obliged under the law to publish information on employees’ pay. However, employers are required by law to present a copy of the employment contract to both the social insurance office and the labour office.

Post-employment restrictive covenants

To what extent are post-termination covenants not to compete, solicit or deal valid and enforceable?

Post-termination covenants not to compete, solicit or deal are contractual terms (the contract makes the law of its parties), in order to protect employers’ secrets. As a matter of custom, they are valid for three years after termination of the contract, pursuant to the provisions of the Universal Declaration of Human Rights.

Must an employer continue to pay the former employee while they are subject to post-employment restrictive covenants?

After termination of the employment contract, an employer is under no obligation to continue to pay the former employee while he or she is subject to post-employment restrictive covenants.

Liability for acts of employees

In which circumstances may an employer be held liable for the acts or conduct of its employees?

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

Taxation of employees

What employment-related taxes are prescribed by law?

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

Employee-created IP

Is there any legislation addressing the parties’ rights with respect to employee inventions?

Law No. 82/2005 protects intellectual property rights in Egypt.

Is there any legislation protecting trade secrets and other confidential business information?

There is no legislation in Egypt protecting trade secrets and other confidential business information, despite the issuance of Commercial Law No. 17/1999, article 66, which defines illegal competition and the compensation for the harm ensuing therefrom.

Data protection

Is there any legislation protecting employee privacy or personnel data? If so, what are an employer’s obligations under the legislation?

Generally speaking, the Labour Law protects employees from employers’ abuse. Employees’ privacy and personal data are protected by the general rules of law and more particularly by the Penal Law. In other words, there is no special law (lex specialis) governing the specific issue of employees’ privacy or personal data.

Business transfers

Is there any legislation to protect employees in the event of a business transfer?

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

Termination of employment

May an employer dismiss an employee for any reason or must there be ‘cause’? How is cause defined under the applicable statute or regulation?

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:

• assumption of false identity or 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 causing 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.

If an employee is unwarrantably dismissed, he or she is eligible to claim compensation. Such 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 case of a definite term agreement, the salary for the remainder of the contract period.

Must notice of termination be given prior to dismissal? May an employer provide pay in lieu of notice?

A two-month notice of termination must be given prior to dismissal of employees whose service period does not exceed 10 years and a three-month notice of termination must be given prior to dismissal of employees whose service period exceeds 10 years. The employer may provide pay in lieu of notice.

In which circumstances may an employer dismiss an employee without notice or payment in lieu of notice?

An employer may not dismiss an employee without prior notice or payment in lieu of notice.

Is there any legislation establishing the right to severance pay upon termination of employment? How is severance pay calculated?

Social Insurance Law No. 79/1975 establishes the right to severance pay upon employees reaching the age of 60. Severance pay is calculated at the rate of a half-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 shall be computed on the basis of the last salary paid to the employee.

Are there any procedural requirements for dismissing an employee?

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 Bureau or the Labour Court (articles 69 and 71 of the Labour Law).

In what circumstances are employees protected from dismissal?

The Labour Law only protects an employee from unwarranted dismissal, and, during the life of the employment contract, gives the employee the right to sue the employer for his or her rights and benefits unduly provided by the employer.

Are there special rules for mass terminations or collective dismissals?

Collective labour relationships are addressed under Book 4 of the Labour Law (articles 145 to 201). An employer is allowed to terminate activity of the establishment totally or partially or to reduce its size or activity and collectively dismiss employees for economic reasons. In this case, 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 salary for each of his or her first five years of service and one and a half month’s salary for each year of service over and above the first five years.

Are class or collective actions allowed or may employees only assert labour and employment claims on an individual basis?

Collective actions are allowed by law where employers’ abuse is made against a group of employees. At the same time, individual actions against the employer are also allowed.

Does the law in your jurisdiction allow employers to impose a mandatory retirement age? If so, at what age and under what limitations?

Retirement age by law is 60 years. Continuation of the employment after reaching the age of 60 is discretionary to the employer up to the end of a project under execution.

Dispute resolution

May the parties agree to private arbitration of employment disputes?

Arbitration is the course to be taken for resolving collective disputes if an employer has to wind up the business activity for economic reasons, such as for bankruptcy or insolvency.

May an employee agree to waive statutory and contractual rights to potential employment claims?

The law prohibits and invalidates an employee’s agreement to waive statutory and contractual rights without his or her full consent or under no duress. The court would invalidate an employee’s waiver if he or she files a claim that this waiver was made under duress.

What are the limitation periods for bringing employment claims?

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

Update and trends

Are there any emerging trends or hot topics in labour and employment regulation in your jurisdiction? Are there current proposals to change the legislation?