{"id":663868,"date":"2025-04-16T00:00:00","date_gmt":"2025-04-16T00:00:00","guid":{"rendered":"https:\/\/enterpriseam.com\/egypt\/2025\/04\/16\/the-long-awaited-new-labor-law-is-finally-here\/"},"modified":"2025-04-16T00:00:00","modified_gmt":"2025-04-16T00:00:00","slug":"the-long-awaited-new-labor-law-is-finally-here","status":"publish","type":"post","link":"https:\/\/enterpriseam.com\/egypt\/2025\/04\/16\/the-long-awaited-new-labor-law-is-finally-here\/","title":{"rendered":"The long-awaited new Labor Law is finally here"},"content":{"rendered":"

The House passes Egypt\u2019s long-awaited Labor Act \u2014 finally, and in full.<\/strong> After years of back-and-forth between the government, parliament, business groups, and labor unions, the House has officially passed Egypt\u2019s new Labor Act.<\/p>\n

When does it come into effect? There are a few months yet. <\/strong>The 2003 labor law will be in effect for at least 90 days \u2014 the new act needs to be published in the Official Gazette and we\u2019ll need to see the executive regulations to it. The country\u2019s specialized labor courts (a key feature of the law) are expected to start operating on 1 October 2025 when the new judicial year kicks off. <\/p>\n

Who's covered?<\/strong> The new law does not apply to public-sector employees, except in certain cases. It also excludes domestic workers, who will instead be governed by a separate, upcoming law designed specifically for labor in private households.<\/p>\n

Freezone and investment zone workers will remain under their own systems.<\/strong> The new legislation preserves the autonomy of freezone and investment zone employment regulations. The lawmakers cited \u201ceconomic considerations these laws represent and the unique nature of the labor relations governed by their regulations.\u201d<\/p>\n

\n

KEY FEATURES OF THE LAW-<\/p>\n

Annual raises will be calculated differently:<\/strong> The law sets a minimum annual raise of 3% of an employee\u2019s insured wage, replacing the previous 7% of base salary standard. While the percentage is lower, the insured wage calculation could mean a potentially higher raise in absolute terms, according to the House joint committee\u2019s report. Employees are only eligible for a raise after a full year on the job. Employers facing financial hardship may apply to the National Wages Council for a reduction or exemption.<\/p>\n

Clarity on contract terms:<\/strong> The law makes open-ended contracts the default, unless otherwise specified in writing. A contract is considered indefinite if it is not written or if it continues after the expiry of a fixed term without renewal. Probation periods remain capped at three months, and an employer may not put a worker on probation more than once. Workers who receive employer-funded training are required to remain with the employer for a set period or repay training costs if they leave early.<\/p>\n

Four signed copies \u2014 and in Arabic:<\/strong> Employment contracts must be drafted in Arabic and issued in four copies \u2014 one each for the employer, the employee, the Social Ins. Office, and the relevant administrative authority. If the worker is a non-Arabic speaker, the contract must also be written in their language, but the Arabic version prevails in case of disputes.<\/p>\n

New work formats get legal clarity:<\/strong> The law formally recognizes modern ways of working including remote work, part-time contracts, flexible and split-hour arrangements, and job-sharing roles. Workers may now be employed by more than one employer simultaneously, provided they respect confidentiality obligations and do not freelance while being employed.<\/p>\n

On foreign labor:<\/strong> The labor minister will have the authority to set quotas for foreign workers and prohibit non-Egyptians from working in specific sectors. A permit system will be introduced for select foreign investors without official residency. Work permit fees will range from EGP 5k to EGP 150k. Employers must report any foreign worker\u2019s absence for 15 consecutive days without valid excuse.<\/p>\n

Work hours + overtime:<\/strong> Employees cannot be required to work more than eight hours a day or 48 hours a week, excluding breaks for meals and rest, which must total at least one hour and prevent more than five hours of continuous work. The law grants a minimum overtime pay of 35% during the day and 70% at night. Workers who are required to work on their weekly day off will be entitled to double pay and another day off in the following week.<\/p>\n

Leave entitlements:<\/strong> Employees receive 15 days of paid leave in their first year, 21 days starting year two, and 30 days after a decade of service or turning 50. People with disabilities are entitled to 45 days of annual leave. Non-Muslims are entitled to leave on their religious holidays in addition to national holidays.<\/p>\n

New protections for working parents:<\/strong> The new law grants female workers a four-month paid maternity leave covering the period before and after delivery \u2014 including at least 45 days post-birth \u2014 without requiring a minimum period of service, scrapping the previous condition of 10 months with the employer. Employers are prohibited from terminating employment during maternity leave. Fathers are entitled to one day of paid emergency leave on the day of their child\u2019s birth, up to three times during their employment, without it counting toward their annual leave balance. The law also gives companies employing over 100 women the option to either establish an in-house childcare center or subsidize childcare costs, with conditions to be set by the relevant ministries.<\/p>\n

A specialized judiciary for labor disputes: <\/strong>The new law establishes a dedicated judicial system for labor cases, including specialized labor courts and appellate chambers to hear appeals against rulings issued by the labor courts. It also introduces a judge for urgent matters to handle urgent issues, and outlines the procedures for appealing those rulings. For the first time, the Court of Cassation is granted authority to rule on the substance of labor-related cases. Additionally, a new court enforcement division will be created to execute labor judgments. The legislation also allows parties in collective labor disputes to refer their cases to a newly established Mediation and Arbitration Center, as an alternative to formal litigation.<\/p>\n

Lighter financial burdens for both sides:<\/strong> The legislation simplifies judicial procedures and exempts workers from court fees. It also revises contributions to the Labour Ministry\u2019s Training and Qualification Fund, linking them to insured wages rather than net incomes. Employers of over 30 workers must contribute 0.25% of the minimum insurable wage to the fund \u2014 between EGP 10 and EGP 30 per worker annually. Employers who provide in-house training are fully exempt from these contributions.<\/p>\n

Streamlined dispute resolution mechanisms:<\/strong> The legislation promotes social dialogue and alternative dispute resolution mechanisms \u2014 from collective bargaining to institutional arbitration \u2014 to prevent prolonged conflicts. It establishes a Supreme Council for Social Dialogue tasked with proposing solutions for national labor disputes, especially during economic crises that may lead to full or partial suspension of operations.<\/p>\n

Strike action now comes with tighter rules:<\/strong> Workers cannot go on strike unilaterally \u2014 only their registered trade unions may declare a strike under the new law. The union must notify both the employer and the competent authority at least ten days in advance. Strikes are prohibited in facilities providing essential services, and employers are not obligated to pay wages during a strike.<\/p>\n

Labor inspectors get full power: <\/strong>Labor inspectors will have judicial enforcement authority and must carry an official ID card. They are entitled to access and inspect workplaces, review documents, and request any necessary information or records from employers or their representatives to ensure compliance with the law and its executive regulations.<\/p>\n

Workers\u2019 rights take priority in liquidation:<\/strong> The new legislation grants workers priority over all of an employer\u2019s assets \u2014 even before legal expenses \u2014 when settling outstanding dues in the event of liquidation. It also ensures that mergers, acquisitions, and asset sales do not automatically terminate employment contracts.<\/p>\n

\n

THE REACTION-<\/p>\n

The preliminary approval of the law was met with mixed reactions:<\/strong> Head of the Trade Union Federation Abdel Moneim El Gamal insisted that some articles of the bill come at the expense of workers and their rights, while the Justice Party\u2019s Abdel Moneim Imam argued that the bill is biased against the private sector. Meanwhile, Labor Minister Mohamed Gobran called it \u201cone of the most important pieces of legislation in recent years.<\/p>\n

T<\/strong>he law m<\/strong>oves the needle \u2014 but doesn\u2019t go all the way:<\/strong> House Manpower Committee Deputy Chair Ihab Mansour told EnterpriseAM that while the new labor law is \u201ca step forward\u201d in achieving a more balanced relationship between workers and employers, \u201cit does not fulfill all ambitions.\u201d Mansour noted that the law emerged following a series of hearings aimed at creating consensus. He added that he advocated for linking annual raises to inflation rather than setting them at 3% of insured wages \u2014 a clause the Federation of Egyptian Industries opposed, instead lobbying for a reduction.<\/p>\n

A victory for job se<\/strong>curity:<\/strong> Fellow committee Deputy Chair Solaf Darwish praised the law for eliminating the long-abused practice of pre-signed resignations \u2014 AKA Form #6. The law now requires resignations to be signed by workers and verified by administrative authorities to protect employees from unfair dismissal.<\/p>\n

Still out of step wi<\/strong>th the private sector?<\/strong> Private Sector Workers Syndicate head Shaaban Khalifa criticized the new law for not aligning with the realities of Egypt\u2019s private sector. He told EnterpriseAM that some employers pressure workers to sign promissory notes for equipment or company property, which could still be used to exert pressure on employees.<\/p>\n

Khalifa also flagg<\/strong>ed issues with hiring practices:<\/strong> He warned that the 1% wage deduction from new hires in their first year \u2014 paid to recruitment companies \u2014 could encourage firms to bypass social insurance obligations and income tax by relying on outsourcing firms. \u201cSome employers deduct as much as 2.5% of wages as commission for these firms to circumvent the burdens of the law,\u201d Khalifa said.<\/p>\n

Immediate<\/strong> insurance registration is a burden, some argue:<\/strong> National Wages Council member Alaa El Sakty, who also heads the SME Union, said that requiring companies to insure workers from day one imposes a burden on business owners. He called for a three-month probation period before triggering insurance obligations, giving employers time to evaluate worker capabilities.<\/p>\n

Calls to cap foreign labor:<\/strong> Engineering Export Council Chair Sherif El Sayad stressed the need for clear limits on the share of foreign labor allowed at Egyptian businesses to protect local employment and curb joblessness. \u201cUnlike countries in Europe that import skilled labor, Egypt has a skilled workforce across most industries,\u201d he said, warning that some factories might lean on low-wage foreign labor to skirt local regulations and pay less wages.<\/p>\n

Some are worrying about the potential impact of<\/strong> foreign labor<\/strong> poses a <\/strong>long-term risk:<\/strong> A member of the Egyptian Businessmen\u2019s Association (EBA) told EnterpriseAM that the lack of clear quotas for foreign workers in the law \u2014 or leaving it to ministerial discretion \u2014 could be dangerous in the long run. Egypt has taken in large numbers of refugees in recent years, many of whom would work for any wage just to stay in the country, according to the EBA official, who added that without clear controls, this could have serious implications for the local labor market and economy.<\/p>\n","protected":false},"excerpt":{"rendered":"

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The amended legislation is expected to\u2026","rel":"","context":"In "Speed Round"","block_context":{"text":"Speed Round","link":"https:\/\/enterpriseam.com\/egypt\/category\/speed-round\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/ent.news\/internal\/536550.png?resize=350%2C200&ssl=1","width":350,"height":200},"classes":[]},{"id":640247,"url":"https:\/\/enterpriseam.com\/egypt\/2024\/08\/22\/what-draft-laws-are-up-for-a-vote-at-parliaments-next-session\/","url_meta":{"origin":663868,"position":1},"title":"What draft laws are up for a vote at parliament\u2019s next session?","author":"enterpriseam admin","date":"22 August 2024","format":false,"excerpt":"The House will discuss the Labor Act that was pulled last year after backlash from the business community","rel":"","context":"In "LEGISLATION WATCH"","block_context":{"text":"LEGISLATION WATCH","link":"https:\/\/enterpriseam.com\/egypt\/category\/legislation-watch\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/ent.news\/2024\/8\/1972.jpg?fit=%2C&ssl=1&resize=350%2C200","width":350,"height":200},"classes":[]},{"id":635524,"url":"https:\/\/enterpriseam.com\/egypt\/2017\/12\/06\/house-approves-labor-unions-act-youth-institutions-act-ban-on-drones\/","url_meta":{"origin":663868,"position":2},"title":"House approves Labor Unions Act, Youth Institutions Act, ban on drones","author":"enterpriseam admin","date":"6 December 2017","format":false,"excerpt":"LEGISLATION WATCH- The House of Representatives approved yesterday in its plenary session the contentious labor unions and youth institutions acts, Ahram Gate reports. The Labor Unions Act has been under fire from the International Labor Organization, the World Federation of Trade Unions, and the Egyptian Federation of Trade Unions as\u2026","rel":"","context":"In "Speed Round"","block_context":{"text":"Speed Round","link":"https:\/\/enterpriseam.com\/egypt\/category\/speed-round\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/ent.news\/internal\/536550.png?resize=350%2C200&ssl=1","width":350,"height":200},"classes":[]},{"id":625747,"url":"https:\/\/enterpriseam.com\/egypt\/2018\/08\/14\/house-to-look-at-family-planning-in-the-next-house-session\/","url_meta":{"origin":663868,"position":3},"title":"House to look at family planning in the next House session","author":"enterpriseam admin","date":"14 August 2018","format":false,"excerpt":"LEGISLATION WATCH- House to look at family planning in the next House session: House of Representatives Economic Committee Chair Mohamed El Emary has drafted a new law that would set incentives for those willing to cap their reproduction at two children, he tells Al Shorouk. The law would not work\u2026","rel":"","context":"In "Speed Round"","block_context":{"text":"Speed Round","link":"https:\/\/enterpriseam.com\/egypt\/category\/speed-round\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/ent.news\/internal\/536550.png?resize=350%2C200&ssl=1","width":350,"height":200},"classes":[]},{"id":637381,"url":"https:\/\/enterpriseam.com\/egypt\/2017\/11\/14\/labor-unions-slam-labor-unions-act-as-unconstitutional\/","url_meta":{"origin":663868,"position":4},"title":"Labor unions slam Labor Unions Act as unconstitutional","author":"enterpriseam admin","date":"14 November 2017","format":false,"excerpt":"A group of independent labor unions announced their rejection of the Labor Unions Act currently being discussed by parliament, Al Shorouk reports. Speaking at a press conference yesterday, General Coordinator of the Center for Trade Unions Kamal Abbas said the legislation is both unconstitutional and in violation of Egypt\u2019s agreement\u2026","rel":"","context":"In "Egypt Politics + Economics"","block_context":{"text":"Egypt Politics + Economics","link":"https:\/\/enterpriseam.com\/egypt\/category\/egypt-politics-economics\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/ent.news\/internal\/536550.png?resize=350%2C200&ssl=1","width":350,"height":200},"classes":[]},{"id":637113,"url":"https:\/\/enterpriseam.com\/egypt\/2017\/11\/08\/house-gives-preliminary-nod-to-basket-of-legislation\/","url_meta":{"origin":663868,"position":5},"title":"House gives preliminary nod to basket of legislation","author":"enterpriseam admin","date":"8 November 2017","format":false,"excerpt":"LEGISLATION WATCH- House gives preliminary nod to basket of legislation: The House of Representatives gave a preliminary nod to a basket of legislation yesterday, votes on which had been postponed due to lack of quorum. 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