Around 96% of the 73 million Egyptians live in the Nile Valley and Delta, with 16 million residing in Cairo and 6 million in Alexandria. Approximately one-third of the workforce is employed in agriculture. An estimated 47% of Egypt's economic and social establishments are in the Cairo and Alexandria governorates, which host 25% of the labor force.
The number of non-Egyptian employees in any establishment must not exceed 10 percent of the total work force for unskilled or semiskilled workers. For skilled workers the limit of Egyptian labor is 25 percent. Also total compensation of foreign employees must not exceed 35 percent of the total payroll of the establishment.
The Egyptian labor market is regulated by the new unified Labor Law No. 12 for 2003. The new Law comprises 257 articles that address all the legal aspects regulating the Egyptian labor market. The new law aims at increasing the private sector involvement and at the same time achieving a balance between employees' and employers' rights. Amongst the most important issues that the new law addresses is the right of an employer to fire an employee and the conditions pertaining to this as well as granting employees the right to carry out a peaceful strike according to controls and procedures prescribed in the new law.
Employment contracts are required to be in writing, in triplicate and in Arabic language. The employer, employee and social insurance office each keep one copy of the employment contract, which must include certain information as specified in the Labor Law.
A typical labor contract would include:
Name of the employer and the address of the work place.
Name, qualifications, occupation and address of the employee and the documents required to prove his identity, and his social insurance number.
Nature and kind of work subject to the contract.
The wage agreed upon and method and time of payment.
If an employee is hired on probation, the employment contract should indicate the probationary period, which cannot exceed three months.
An employment contract may be drawn up for a fixed-term or indefinite period of time. In case the employee and the employer continue in implementing a fixed-term contract after its term, such shall be considered as a renew of the contract for an indefinite term.
It is necessary that both the employer and employee agree on essential matters in the law concerning wages, job description, and contract period.
It is also important to state the kind of work, which the employee is obliged to do, and the entity to which he/she is questionable if work is not performed.
Contract Period The legislator regulates a maximum of five years for a fixed contract. If the employer and employee agree on a longer employment duration, then the latter has the right to terminate the contract after the initial five years, without receiving compensation; however, the employer must be notified within an agreed upon time period, which is a three-month prior notice.
The probation period shall be specified in the labor contract and no employee shall be appointed under probation for a period exceeding three months, neither shall an employee be appointed under probation more than once with the same employer.
Working Hours Employees should not work more than eight hours a day or 48 hours over a six days working week.
Most private sector employees work 5 days a week, usually Sunday to Thursday. The number of working hours may be increased to 9 hours a day in certain circumstances.
Employees are entitled to one whole working day off each week. Certain exceptions apply when work is intended to prevent a serious accident or to cope with a heavy workload. In such situations, the employee must be paid overtime.
Article 77 of the Law No. 12/2003 states that the employer should establish a file for each of his/her employees where he/she shall detail the employee's name, occupation, level of skills, educational degree, his address, military status, social status, date of appointment, wage and changes in wage, penalties imposed, leaves obtained, and finally the date of service termination and the reasons for it.
The employer should also deposit any investigation reports, any reports by the employee's supervisor concerning performance, and any other document related to the employee's service.
Moreover, the employee should keep the above-mentioned file for at least one year after the termination of the labor relationship. Reasons behind this commitment is to prevent any dispute that may take place on wages, leaves, firing or dismissal reasons and to facilitate the employer's administration regarding accomplishing the Labor Law requirements.
The previously referred to data in Article No. 77 represent the least amount of data that should be provided in the employee's file. There are no restrictions to adding any more data such as: the employee's age, sex (male, female), qualifications acquired and certificates of experience.
The Labor Law obliges the employer to present the following records to the Ministry of Manpower and Migration:
Disabled Record
Regarding the employment of disabled individuals according to Law No. 39 of 1975, which entails qualifications and employment of the disabled, this law obliges private sector employers, whose number of workers equals to or exceeds fifty employees, to employ 5% of the total number of workers from the disabled as recommended by the Manpower Offices.
The employer also has the right to appoint disabled individuals he chooses provided they are holding the registry certificate which proves their disability.
Any employer who hires a disabled worker should send a registered mail letter with receipt confirmation to the manpower office in charge during the first fifteen days of the employment of the disabled worker/employee.
Foreigners' Record
In an attempt to enforce control on employing foreigners, the ministry obliges organizations employing foreigners to make a record including the following:
The foreigners name, surname, nationality and religion
Birth date
Job title and exact job description
Qualifications
Date and number of his employment permit.
The wage (Article 13 of MD 136 of 2003)
Financial Penalties Record
An employer shall make entry of the financial penalties imposed on employees in a special register, detailing the reasons why such penalties were imposed, the name of the employee and his/her salary. According to Article 2 of the Ministerial Decree 123 of 2003, all financial penalties imposed on the employees should be spent over the social, cultural, and sports activities for the employees.
Duration of Probation
The probation labor contract should not exceed three months neither shall an employee be appointed under probation more than once for the same employer.
A probation contract is a conditional labor contract, in case the employee proves unsuitable for the job during the allotted period; thus, allowing the employer to cancel the contract.
Dismissal & Termination
Article 69 of the Labor Law, lists the grounds under which an employee may be dismissed. An employee may not be dismissed until the matter is brought before a committee with judicial powers at the Ministry of Manpower and Migration. The committee shall decide the request for dismissal brought to it within (15) days from the date of the first session and its decision shall be final. However, the employer may thereafter dismiss an employee and the employee retains the right to challenge the dismissal in court.
Egyptian Labor Courts retain discretion in reviewing an employment dismissal. Compensation awards may be granted to employees for wrongful dismissal on the basis of a review of the facts and circumstances of each case.
An employee is entitled to 60 days notice for dismissal if his period of service does not exceed 10 years and 90 days if that period exceeds 10 years. (Should the employer desire to dismiss the employee without giving him the relative notice period, the employee shall receive two or three months salary payment instead of such notice).
Article 122 Labor Law states that the compensation shall not be less than the wage of two months' salary for each year of employment for wrongful dismissal. Throughout the notification period the labor contract shall remain ruling.
Grounds for legal termination without notice include the expiry of a fixed-term employment contract, retirement, resignation, death or a court ruling.
An employee is entitled to a minimum annual paid leave of 21 days every one full year of service and proportionally if his period of service is less than one year. This annual leave is increased to one month after the employee has worked for 10 consecutive years or is over 50 years old. In addition, every employee is entitled to full pay for official holidays designated by the Ministry of Manpower and Immigration, not to exceed 13 days a year.
If employees are required to work during official holidays, the employees are entitled to overtime (paid at twice their normal rate). The weekly days off and the official holidays shall not be counted as part of the annual leaves.
Accidental Leave
Accidental leave is the leave taken by an employee, as a result of unexpected circumstances, in which he has no choice except desisting from work, after that he should inform the employer with the reasons of desisting.
Article No. 51 of the Labor Law states that desisting from work with accidental reason should not exceed six days per year with a maximum of two days each time, and this leave will be counted from the annual leave of the employee.
Sick Leave
The Labor Law provides that an employee whose sickness is established and determined by the concerned medical responsible is entitled to sick leave, and shall be compensated according to the Social Insurance Law (up to six months of paid sick leave annually at between 75% and 100% of the employee's normal wage).
A worker shall be entitled to benefit from his accumulated annual leaves in addition to leaves of sickness and he shall also have the right to request his leaves of sickness to be transferred to the annual leave balance.
An employer shall not terminate the employee's service due to sickness unless the employee has utilized the above-mentioned period.
Official Leaves (Public Holidays)
According to ministerial decree No. 112/2003 regarding identification of the official leaves, which are fully paid, are as follows:
The 1st day of Moharam (Islamic new year)
The 12th day of Rabie the first (Prophet Mohamed's birthday)
The 1st and 2nd days of Shawal (1st Bairum)
The 9th, 10th, and 11th days of Zoelhega (2nd Bairum)
The seventh day of January (Eastern Christmas)
Spring day (Sham El Nessim)
The 25th of April (Sinai Liberation Day)
The 1st of May (Labor Day)
The 23rd of July (Revolution Day)
The 6th of October (Armed Forces Day)
Performing Pilgrimage or Visiting
Jerusalem
Regarding religious respects, Article No. 53 of the new Labor Law stated that an employee who has spent five consecutive years in the service have the right to full paid leave for a period not exceeding one month for performing pilgrimage or to visit Jerusalem and such a leave shall be enjoyed only once during the period of service.
Maternity and Child Care Leave
A female having spent 10 months in the service of an employer shall be entitled to a maternity leave of 90 days with full wage payment including the period preceding giving birth. The female employee is not entitled to this maternity leave for more than twice during her working period.
During the 24 months following the date of childbirth, she has the right to two period of rest daily (30 minute each) for breast-feeding her child, with the option to combine both periods in one.
The Social Security System and
Public Health Insurance
Social security is a public program designed to protect individuals and their families from income losses due to unemployment, old age, sickness, or death and to improve their welfare through public services (e.g. Medical Care).
For Egyptian employees, who must constitute a significant part of a company's workforce, there is a social security system under which the employer pays contributions equivalent to approximately one-fourth of the salary earned, up to a certain limit of salary.
Contributions in the private sector under social security regulations are levied only on Egyptian nationals who are in full-time employment. Contributions are required at the following rates:
On the monthly basic salary up to LE 700, at 26% and 14% for employer and employee, respectively; and on any amount in excess of the basic salary (LE 700), or other allowances or overtime, up to LE500 monthly, at 24% and 11% for employer and employee, respectively.
For seasonal and temporary workers employed by construction contractors, a different system applies, Social Security contributions by the contractor amount to 18% of the percentage that labor costs bear to total contract costs. This levy may significantly increase labor costs on projects.
Benefits provided under the social security scheme are pensions, disability payments, sickness payments, maternity and death allowances, and unemployment insurance. These benefits are not given to non-Egyptians.
All private sector companies in Egypt are required to provide free health care for their Egyptian employees either through the Medical Insurance Plan of the Ministry of Social Insurance or privately. They are also required to contribute to the Pension Insurance Fund of the Ministry of Social Affairs and Insurance.
Other Benefits
1. Annual Increment
Employees are entitled to a periodical annual increment of not be less than (7%) of the basic salary on which the social insurance subscriptions are calculated. Thus until the National Council for Wages issues the decisions regulating the payment of that increment.
2. Overtime Pay
The minimum overtime premiums are 35 per/cent of normal pay for overtime worked during daylight, 70 per/cent for that worked at night, and 100 per/cent on rest days and 200 percent on official holidays. Production incentive bonuses are tax-free.
3. Minimum Wage
Not yet determined by the National Council for Wages.
4. Profit Sharing
Employees of a Joint Stock Company, Limited Liability Company, or Foreign Branch are entitled to a share in the distributable profits. The share is fixed at an amount not less than 10% of distributable profits and not more than the total annual salaries of the employees. However, Limited Liability Companies with capital less than LE 250,000 are not subject to this distribution of profit share.
5. Bonuses
There is no obligation to pay annual bonuses.
Special
Special Requirements for Foreign Residents
Visas
Tourists and visitors are generally permitted to enter the country with a minimum of immigration formalities. Except for nationals from certain countries who must obtain visa from the Egyptian Consulate in the country where they live, most visitors require temporary visas to enter Egypt. These are issued at ports.
1. Tourist Visas
Tourist visas are issued to foreign nationals visiting Egypt for recreational purposes or to foreign nationals whose stay in Egypt will not exceed three months. It is possible to renew this visa for similar durations.
2. Temporary Visas
Temporary visas are issued to foreign nationals who are entering Egypt for reasons other than recreational purposes and whose stay will exceed three months but will not exceed one year.
Work Permits
All Egyptian workers, except part-time or temporary staff, must obtain work certificates.
Foreigners interested in employment in Egypt have to obtain work permits and follow the corresponding regulations issued by the Ministry of Manpower and Migration in this regard. After a work permit is obtained, the foreign national's visa (whether tourist or temporary) is converted into a work visa, with the same duration as the work permit.
Work permits are easier to obtain for technical staff than for unskilled or semi-skilled workers. Work permits are usually granted to foreigners for a period of one or less than one year. It may also be issued for a period exceeding one year after settling the relative fee for the requested period.
Documents Necessary for Obtaining Work And Residence Permits for Foreigners in Egypt:
Letter from the Work License of Foreigners Department to issue the visa approving his work in Egypt to be addressed to the Passport Authority, and to the competent Manpower Department, the Companies Department, or the General Authority for Investment & Free Zone (GAFI).
Filling the applications forms for work permits of foreigners willing to work in Egypt. These application forms may be obtained from the work permit department at the Manpower and Training Directorate-Tahrir Complex.
Passport for perusal. It is important to apply while residence is valid.
Copies of passport size photographs of the foreigner.
Copies of the company incorporation contract.
Copies of the Tax ID Card.
A copy of the commercial register.
Copies of the certificates of academic degrees and experience of the foreigner.
The license for exercising the profession in the cases where such license is required.
A memorandum justifying the recruitment of the foreigner for that job, stating the reasons for not recruiting an Egyptian as well as the tasks assigned to the foreigner together with the name of the Egyptian assistant whose qualifications and experience are consistent with the foreigner.
Approval of the related Authority (e.g. Investment Authority, Egyptian General Petroleum Corporation … etc.).
A delegation from the company to the person who is going to apply for the work permit on behalf of the foreigner.
A certificate from a public hospital or a recognized laboratory such as the vaccination laboratory of the Ministry of Health, confirming that the foreigner is free of HIV.
The approval of the concerned security authorities. This can be arranged through the department of work permits at the Manpower and Training Directorate at Tahrir complex.
Evidence of settlement of the work permit fees.
Fees for issuing the permit are set as follows:
Issuing the permit for the first time or on its renewal for both Aliens and nationals of Arab countries is approximately L.E. 1,000.
The fee should be due in full for the whole year or its fractions.
The unemployment insurance law, officially known as the Emergency Subsidy Fund Law No. 156 of 2002, establishes a fund to compensate workers/employees whose wages are suspended due to firm closure or downsizing. The Fund’s resources will come from a 1 percent deduction from the base salaries of the government sector, public enterprises and private sector employees in firms with over 30 workers, a government contribution, and other donations.
Employers must pay social insurance contributions to the Ministry of Social Insurance and Social Affairs with respect to their Egyptian employees. Egyptian employees also are liable for contributions. Employees' contributions are withheld by the employer from the employees' salaries and wages each month and paid to the ministry; together with the employer's own contributions, within the first two weeks of the following month.
Social Insurance Contribution Rates
Employer (%)
Employee (%)
On basic monthly salary up to L.E. 700/month
26
14
On variable pay (such as production incentive bonuses)-up to L.E. 500/month
