Labour regulations are undergoing a major transformation. The forthcoming draft Labour Law, set to replace Labour Law No. 12/2003, introduces crucial updates aimed at streamlining employment practices and fostering a more adaptable, business-friendly landscape. These reforms signal a shift towards a modernized framework that balances economic growth with workforce development.
At Shehata & Partners Law Firm, we have carefully examined the main differences between the existing law and the new draft, shedding light on the potential implications for both employers and employees.
Let’s break down these crucial updates to help you navigate the future of labour relations in Egypt.
1. Limited-Term Employment Contracts
2. Unlimited-Term Employment Contracts (Notice Period)
Currently, the notice period varies based on the employee’s tenure—two months for under 10 years, and three months for 10 years or more. The new draft law standardizes this notice period to three months for all employees, regardless of their tenure.
Current Law: Notice period ranges from two to three months.
New Draft Law: Standardized three-month notice period.
3. Maternity Leave
The current law grants women 90 days of maternity leave with full pay, but only after 10 months of service. The new draft law reduces the service requirement to just six months and extends maternity leave to four months. Additionally, it increases the number of leave entitlements from two to three times during their career.
Current Law: 90 days after 10 months of service.
New Draft Law: Four months after six months of service, with three entitlements over the employee’s career.
4. Resignation
Under the current Labour Law, Article 69 defines fundamental breaches that may justify termination, including unauthorized absences. Under this provision, an employer could dismiss an employee for excessive absences without valid justification.
The new draft law removes such absences from the category of fundamental breaches and instead treats them as resignations. An employee will be considered resigned if they are absent for more than 20 separate days or 10 consecutive days within a one-year period, without a legitimate justification.
This resignation takes effect after the employer follows a prior warning procedure, which requires:
- For separate absences: A warning must be issued after 10 days of absence.
- For consecutive absences: A warning must be issued after 5 days of absence.
- The warning must be delivered via registered mail with acknowledgment of receipt.
Current Law: Unauthorized absences could be classified as a fundamental breach under Article 69, allowing the employer to dismiss the employee.
New Draft Law: Extended absences are no longer a fundamental breach. Instead, the employee is considered to have resigned, shifting the burden from employer-driven dismissal to employee-initiated resignation.
5. Childcare Leave
The current law allows unpaid childcare leave of up to two years for female employees in larger establishments. The new draft law increases this leave to three times during employment, provided each leave is at least two years apart and that the female employee has been in work for at least one year for the employer.
Current Law: Unpaid leave for up to two years, twice during employment.
New Draft Law: Up to three times, with at least two years between leaves and one year of employment.
6. Medical Tests for Employees
One of the most notable additions in the new draft Labour Law is the provision allowing employers to request medical tests for employees to detect drug use or infectious diseases. These tests must be carried out confidentially, and employers are prohibited from disclosing employees’ medical information.
Current Law: No provision for medical testing.
New Draft Law: Employers may request medical tests, with confidentiality assured.
7. Wages and Payment Methods
The new draft law brings a key update in wage payment practices. Employers will now have the option to pay wages via bank transfer, in addition to the current method of paying at the workplace.
Current Law: Payment made at the workplace in cash.
New Draft Law: Payment may also be made to the employee’s bank account.
8. Disability and Employment of Disabled Individuals
The new draft law mandates rehabilitation entities to notify the competent administrative authority of a child’s rehabilitation, register their names, and issue a free certification to the child or their representative.
The competent authority must assist registered children with disabilities in finding suitable employment based on their age, skills, and location and provide a monthly report to the Directorate of Social Solidarity on employed children.
Current Law: No formal registration or employment support for rehabilitated children with disabilities.
New Draft Law: Requires registration, certification, and job placement support, ensuring greater workforce inclusion.
9. Child Labour
The new draft law raises the minimum employment age from 14 to 15 years old and increases the minimum age for eligibility for training programs from 12 to 14 years, ensuring that training does not interfere with children’s education.
Current Law: Minimum employment age is 14, training age is 12.
New Draft Law: Minimum employment age is 15, training age is 14.
10. Temporary Suspension of Employees
The new draft Labour Law expands the conditions under which an employer may temporarily suspend an employee, introduces a right to appeal, and clarifies the judicial review process for such suspensions.
Under Article 122 of the draft law, an employer may suspend an employee for up to 60 days with full pay in the following cases:
- If the employee is under investigation for a violation committed inside the workplace, and the investigation’s interest requires suspension.
- If the employee is accused of a felony or a misdemeanour related to honour, trust, or public morals, or any other misdemeanour within the workplace.
- If the employer requests the labour court to dismiss the employee from service.
A major new provision allows employees to appeal their suspension under the first two points above. The appeal must be filed within three (3) days of notification with the Judge of Temporary Matters at the competent labour court, which must rule on the appeal by the next day. If the judge finds the suspension unjustified, the employee must be reinstated immediately.
Additionally, an employer may request an extension of the suspension beyond 60 days, with half-pay, by submitting a request 10 days before the suspension expires. If the court does not rule on the request before the period ends, the employee will continue receiving full wages until a decision is made. If the request is rejected, the employee must return to work immediately.
Current Law: Suspension up to 60 days with full pay, subject to labour court approval.
New Draft Law: Suspension remains 60 days, but introduces an employee right to appeal, judicial oversight, and potential extensions with reduced pay.
11. Sick Leave
The new draft Labour Law extends paid sick leave duration and increases compensation rates for employees in industrial establishments.
Under Article 108 of the draft law, an employee proving illness is entitled to sick leave every three years of service as follows:
- First 3 months: Full pay (previously 1 month).
- Next 6 months: 85% of wages (previously 8 months at 75%).
- Final 3 months: 75% of wages (previously unpaid).
These benefits apply if the competent medical authority deems recovery likely.
Current Law: 1 month full pay, 8 months at 75%, 3 months unpaid.
New Draft Law: 3 months full pay, 6 months at 85%, 3 months at 75%.
Why These Changes Matter for Employers and Employees
The new draft labour law reflects Egypt’s efforts to modernize its workforce regulations to meet international standards and make the country more attractive for investment. These changes not only aim to protect employees’ rights but also encourage businesses to establish more flexible and sustainable employment practices.
For employers, the introduction of clear rules regarding limited-term contracts and medical testing, along with increased obligations for maternity and sick leave, calls for a proactive review of current employment practices. Meanwhile, employees stand to benefit from enhanced leave entitlements, stronger protections against unjust termination, and clearer pathways for career stability.
At Shehata & Partners, we’re committed to helping our clients navigate these changes and ensure compliance with Egypt’s evolving labour laws. If you have any questions or need assistance in understanding how the new law will impact your business or employment contracts, don’t hesitate to reach out.
Stay informed, stay compliant, and thrive with Shehata & Partners.
For more information, please contact us.
