The New Draft Labor Law in Egypt

By: Masaar – Technology & Law Community

Conceptualized and commissioned by Access to Knowledge for Development for the Fairwork project, in collaboration with the Oxford Internet Institute and the WZB Berlin Social Science Center, with support from the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ).

General Context 

In 2014, the Egyptian Government formed a committee to develop a new draft labor law to replace the applicable Labor Law (No.12 of the Year 2003). By the end of 2016, the committee had finalized the draft law. The Government then referred the draft law to the legislative department of the State Council for technical review and comment. After the review, it was referred to the House of Representatives in 2017. The House of Representatives then referred the draft law to the Senate for further discussion and review before the adoption thereof.¹ The Joint Committee, composed of the Energy, Environment, and Manpower Committee and the Constitutional and Legislative Affairs Committee of the Senate, approved the draft law after a final review. The Joint Committee issued a detailed report on the Law in December 2021.²       

In general, the new Labor Law lacks provisions that govern the employee-employer relation in cases of temporary employment and self-employment, though these types of employment became more common in the past years, especially after the prevalence of telework during the Coronavirus pandemic.  

This new reality is not reflected in the new draft labor law, where proof of the labor relation, the related wages, bonuses, leaves and other topics pertaining to the traditional labor relations are still points of contention. The new law does not address self-employment or part-time employment relations. In addition, trade unions and syndicates have not yet realized the changes in the labor market, as the self-employed are not integrated under specific divisions in such entities. Moreover, it is not perceivable to create trade unions or organizations for this category to represent their different interests.   

The key provisions introduced in the new draft labor law

Newly introduced definitions and provisions 

The Draft Law introduces a number of definitions, inter alia, the definition of the following:

Irregular worker: “Every worker who performs work that is not permanent by nature for others for a wage”. 

Workplace: “The place where the worker performs the work assigned to him or is likely to be present at on account of this work”. 

The provision, also, stipulates that the Law shall exclusively govern all employment relations. In addition, the Law shall deem any condition or agreement that violates the provisions hereof null and void, even if the said condition or agreement came into force by virtue of Law. The Law shall deem any agreement that abolishes or denies the worker his rights arising from the employment contract, during the term of the said contract or within three months as of the termination, null and void. The Law prohibits discrimination in employment terms or conditions.  

Individual employment contract

The new draft labor law stipulates that an employment contract shall be deemed an indefinite contract, as a rule. If it is a fixed-term contract, the said term shall not be less than a year, and the said contract shall be renewable. The employment contract shall be deemed an indefinite contract in the following cases: 

• If the contract is concluded for an indefinite term. 
• If the contract is concluded for a definite term and the two parties continue to execute the said contract upon the termination of the term without a written agreement. 
• If the contract is concluded for a definite term and the two parties agreed on renewing the said contract for a term that exceeds four years.  

The Law stipulates that the contract shall be concluded in quadruplicate copies; one copy for the Insurance Office, another copy for the competent administrative authority, and a copy for each party. In case the contract is concluded in more than one language, Arabic shall prevail in the event of a conflict between the two versions. The Law stipulates that the employer shall keep the worker’s files for at least five years as of the employment termination instead of one year pursuant to the applicable Law. The new draft law grants employees, solely, the right to proof of employment and the rights resulting thereof through any means.  

Wages 

The new draft law stipulates that the worker’s wage shall not be less than the minimum wage. Whereas the current law obligates the employer to pay the due wage to the worker upon the termination of the employment, the new draft law obliges the employer to pay the employee’s entitlements within a period not exceeding seven days whatever the case may be with no exceptions. The new law forbids retention of the wage or a part hereof for an unlawful reason. An exception applies to the event of voluntary resignation where the wage shall be paid within a period not exceeding seven days. 

Termination of individual employment 

The new draft labor law maintains what has been stipulated by the currently applicable Law pertaining to the termination of the employment contract upon the termination of the term thereof. It stipulates that any party of the fixed-term contract may terminate the contract provided that the said party notifies the other party in writing two months prior to termination. This shall apply to fixed-term contracts that were terminated and had been renewed for a term not exceeding four years, but this shall not apply to foreigners’ employment contracts, as opposed to the current law  which allows the employee only to terminate the fixed-term employment contract after five years if the said contract was concluded for a term exceeding five years.  

Whereas, in an indefinite contract, the Draft Law allows the termination of such, provided that the notice shall be issued three months prior to termination during suitable work conditions with an adequate and reasonable justification. Accordingly, the new draft law facilitates the indefinite employment contract termination by the two parties, in contrast to the current Law that requires the presence of a fatal mistake so that the employer can notify the worker of the indefinite contract termination. The worker shall, then, provide a justification that shall be deemed reasonable only if the said justification is related to the worker’s health, economic, or social conditions.  

Employment termination, dismissal, and compensation 

The new draft law allows the worker to ask for compensation upon dismissal if the employer terminated the indefinite contract for an unjustified reason. The worker shall be entitled to compensation, for any damage inflicted thereon as a result of termination, equal to the pay of two months for each year of service, without prejudice to the worker’s right to demand the rest of his lawful entitlements. Examples of unlawful dismissals are as follows:   

1. Joining a trade union or taking part in a syndicate-related activity within the scope of the Law. 
2. Pursuing or occupying the position of Labor Commissioner currently or previously. 
3. Filing a complaint or a lawsuit, or taking part therein, against the employer for violating the Law, provisions, or employment contracts. 
4.  Withholding the worker’s entitlements and benefits at the disposal of the employer.
5. Taking the leaves granted by the Law. 
6. Dismissal due to color, sex, social status, family responsibilities, pregnancy, religion, or political views. 

Resolution of individual employment-related disputes 

The new draft law stipulates two methods for resolving individual disputes that arise between the worker and the employer: 

• Method 1: directly resorting to the Labor Court pursuant to the constitutional right to litigation. 
• Method 2: resorting to the Dispute Resolution Committee, for an amicable resolution, that is reformed by virtue of the new draft law and comprises the Director of Labor Department or a Chairman mandated thereby, the worker or a representative member, and the employer or a representative member, with the possibility of hiring an expert by the Chairman. The said Committee shall finalize its work within twenty-one days of the resolution request submission.   

In the event of reaching a resolution, the Chairman shall prove such in minutes signed by the two disputing parties and submitted to the Judge Ad Hoc of the Labor Court to apply it. However, in case no resolution was reached, the Chairman shall take minutes including the Committee’s point of view, and the dispute shall be referred to the Court upon the request of any of the disputing parties. The Court shall hold a hearing within no later than twenty days of the request’s date, as opposed to the current  Law that allows a duration of forty-five days as of the termination of the resolution to resort to the Court, after which, the right to resort to Court shall be forfeited.  

The Draft Law obliges the competent Labor Court to issue a summary judgment on a worker’s dismissal request within three months of the first hearing. If the Court establishes prima facie the validity of the worker’s request, it shall issue a final judgment that obliges the employer to pay an amount equal to the pay for a maximum of six months. The said amount shall be deducted from the mandated compensation or any other amounts payable to the worker. Compensation shall mean the compensation for arbitrary dismissal only and not the compensation pertaining to the indefinite employment contract termination. If the arbitrary dismissal is due to the worker’s participation in a syndicate-related activity, the Court shall rule in favor of the worker, and he shall return to work if he requests so. 

The Draft Law replaces the Labor Court with the committee stipulated in the current law as the competent authority to settle the workers’ grievances pertaining to amounts deducted from his pay as a penalty for losing or damaging materials or products that were at his disposal.   

Qualitative provisions in favor of specific categories

Gender provisions 

The new draft law grants mothers who work in a premise that hires twenty-five employees or more the right to an unpaid childcare leave for a period exceeding two years for a maximum of three times within the period of service. The law in force grants the same right; however, the new draft law facilitates the terms of the said leave. The existing law grants the said leave for a maximum of two times only within the period of service if the mother works in a workplace that hires fifty employees or more. The latter condition was initially reiterated in the Draft Law submitted by the Government; however, the Senate has amended it.    

The New Law exclusively grants female employees the right to terminate their employment without prejudice to the rights thereof in the event of marriage, pregnancy, or childbirth by notifying the employer in writing within three months of marriage, pregnancy, or childbirth.  

The Law obliges the employer who hires one or more female employees to post up in the workplace a copy of the regulations governing women’s employment, in contrast to the existing Law and the version of the Draft Law submitted by the Government before the amendment, which both require a minimum of five female workers to oblige the employer to do so. 

The version of the Draft Law submitted by the Government maintains a three-month-maternity-leave entitled to female workers as stipulated in the current Law. However, the Senate amended the provision, and the maternity leave proposed is now four months. Additionally, the draft law  included an amendment pertaining to how often female workers are entitled to maternity leave. Instead of a maximum of two times, pursuant to the current law, the Draft Law amends it to three times. It also maintains the nursing female worker’s right to two breaks, the duration of each being above half an hour, for two years as of giving birth.   

Child-related provisions 

The Draft Law generally prohibits employing children under the age of fifteen. It obliges the employer who hires a child under the age of sixteen to grant the child a card certified by the Administrative Authority to prove that the child works for the employer. The Draft Law submitted by the Government stipulates that the intern, who is hired by the employer to learn a job or a craft, shall not be under the age of thirteen. However, the Joint Committee of the Senate was of the opinion that the intern’s minimum age should be fourteen years in accordance with the international agreements ratified by Egypt, including Convention No.138 on the minimum age of employment that was adopted by the General Conference of the International Labor Organization, as opposed to  the law in force that stipulates that the minimum age of the intern shall be twelve years. The Draft Law prohibits dividing, merging, or postponing the employed child’s annual leave.

Provisions for “persons with special needs” and “dwarfs”

The New Draft Law grants privileges and exceptional rights for persons with special needs and dwarfs. For example, they shall be entitled to forty-five days of paid annual leave, in distinction to the general rule that stipulates that employees are entitled to fifteen days in the first year, twenty-one days as of the second year, and thirty days if the years of service exceed ten years. The Law also prohibits dividing, merging, or postponing their annual leaves.   

Seniors 

The Draft Law increases the paid annual leave of workers who are older than fifty years of age to be forty days, whether the worker has spent ten years of service or only one year, whereas the paid annual leave of younger workers shall not exceed thirty days.  

The New Draft Labor Law points of contention

• Annual Raise: The Draft Law stipulates that the minimum percentage of the annual raise shall be 3% of the basic salary upon which the social insurance contributions are calculated. On the other hand, the existing Law stipulates that the minimum percentage of the annual raise shall be 7% of the worker’s basic salary. 
• Maternity leave: the increase of maternity leave to four months instead of three months as per the current Law, in addition to the increase of the number of times that the female worker is entitled to a maternity leave to a maximum of three times within the period of service instead of a maximum of two times as per the existing Law. The employers’ representatives have objected to this point. 
• Annual leave: the increase of the paid annual leave to forty-five days exclusively for specific categories such as workers aged fifty and above, persons with special needs and dwarfs, compared to the applicable Law that allows a maximum of thirty days paid annual leave. On the other hand, the Draft Law decreases the leave in the first year of work to fifteen days instead of twenty-one days and maintains the twenty-one-day leave in the second year. The employers’ representatives have objected to this point. 
• Indefinite employment contracts: lengthy discussions on the nature of employment contracts have taken place. The Draft Law stipulates that an individual employment contract shall be deemed an indefinite contract, as a rule, and it permits a written agreement if parties desire to set a fixed term for the contract. The Draft Law deems the contract an indefinite one in the event of concluding a fixed-term contract and then renewing the said contract, as agreed by the two parties, for a period exceeding four years. Some employers’ representatives have objected to this point. 
• The minimum term of fixed-term employment contracts: the New Draft Law stipulates that the fixed-term employment contract’s term shall not be less than a year. This condition is stipulated by the general regulations and shall not be breached. Some employers’ representatives have objected to this point. 
• Resignation: The New Draft Law stipulates that resignations shall be in writing, signed by the employer or his agent, and certified by the Administrative Authority. The same applies to resignation withdrawal, contrary to the law in force, which stipulates that the resignation shall be in writing only. This was used arbitrarily to force the worker to sign a preemptive resignation upon the commencement of employment (signing form no.6). Some employers’ representatives have objected to this point.   
• Parental leave: The Senate rejected a proposal concerning granting the male worker a leave for up to ten days during the first six months following the birth of his child. Some employers’ representatives have objected to this point.   

^{_{1.  An article published on November 21, 2021 on the BBC Arabic website, entitled “The New Draft Labor  Law in Egypt: Years of Faltering and Obstacles” – Last access on August 18, 2022}}

^{_{2. Report No. (2) A Draft Law submitted by the Government and referred by the House of Representatives – The report issued by the Joint Committee of the Energy, Environment and Manpower Committee and the Office of the Constitutional and Legislative Affairs Committee – The first legislative term, The second regular session.}}

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