Employment Law In Egypt 2018 – Employment and HR – Egypt – Mondaq News Alerts


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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