Key Reforms in Egypt’s New Labor Law: Modern Protections, Inclusive Policies, and Employment Innovation

The Egyptian parliament has recently introduced a 2025 draft of the new Labor Law (the “New Law”), replacing the current Labor Law No. 12 of 2003 (the “Current Law”), which has stipulated and reflected changes to the employment relationship and will fully replace the overall employment framework drawn by the Current Law. Throughout this article we shall thoroughly discuss the transitional phase and the most significant updates to the Current Law.

The transitional Phase:

The New Law will come into effect on the first day of the month following ninety (90) days from its publication in the Official Gazette. Specialized labor courts shall begin functioning as of the first of October following the implementation of the New Law.

The drafters of the law have considered the interests of both employers and employees, as follows:

a. First, the ninety (90) day gap before the implementing of the law aims to facilitate financial calculations between the parties to the employment relationship and grant those subjects to its provisions sufficient time to regularize their status and economically adapt to the new regulatory framework

b. Second, the New Law does not affect any granted rights to the employees under the provisions of laws, regulations, systems, agreements, and internal decisions prior to its enforcement.

c. Third, the New Law reduces employee’s financial burden by terminating all pending cases — not yet finally adjudicated — between the Training & Rehabilitation Fund and employers, where the dispute concerns the collection of the 1% contribution to the Fund.

In light of the aforementioned transitional provisions, the New Law refers all disputes and lawsuits which have not yet been adjudicated to the newly established specialized labor courts. This measure ensures the application of the principle of “fair and expedited justice” to all employment-related disputes.

The significant changes:

Scope of Applicability

The New Law maintains its traditional boundaries by clearly stating that its provisions do not apply to civil servants or domestic workers. Despite broader discussions about inclusivity in employment regulation, these categories remain outside the law’s coverage. Notably, employers’ family members are now included, despite their previous longstanding exemption from the general labor framework.

However, the exclusion of domestic workers is being addressed through a separate draft law currently under development. This upcoming legislation aims to formalize the employment of domestic workers, ensure access to legal protections, and introduce minimum age requirements, anti-discrimination measures, and standardized contracts.

Definitions

One of the most notable changes introduced in the New Law is the modification of key legal definitions. The law now stipulates that traineeships must be compensated, defining a trainee as “any person seeking employment with an employer for the purpose of acquiring a profession, trade, or craft, in return for remuneration.” In addition, the law formally introduces a definition for apprenticeship, thereby distinguishing between different forms of professional preparation.

The New Law has also introduced amendments to the definition of salary factors. The New Law distinguishes between fixed/base and variables within the salary, and further clarifying that in-kind benefits are not to be received in cash. It also introduces the concept of the insured salary as a basis for calculating benefits and contributions, which shall be further discussed below (see Wages, Payments & Annual Raises).

The New Law also makes passing reference to service agreements, acknowledging them through the concept of payment of services – particularly in the context of the tourism and hospitality sectors. Adding to the above, in terms of employment types, the New Law provides definitions for Irregular Employment/Employees and Employment within the Informal Sector, incorporating both under unified regulatory provisions.

Perhaps the most progressive development in the new draft is the explicit criminalization of workplace misconduct, including harassment, bullying, and forced labor. These actions are now formally prohibited and punishable by a fine ranging from EGP 5,000 (five thousand Egyptian Pounds) to EGP 50,000 (fifty thousand Egyptian Pounds), marking a significant step toward promoting safer and more equitable work environments.

Promoting Digital documentation:

In contrast to the Current Law, the New Law has promoted digital documentation in various aspects of employment relationships, which can facilitate the process of collecting and retaining data by the Human Resources department. An example of this is as follows;

An electronic registry for recording Modern Employment Relationships contracts;
Keeping employee medical tests in an electronic record;
Storing the data of the employee with disabilities in an electronic record;
Facilities may keep an electronic record includes the salary and the data of the employees.
An employee profile can be created in digital form.

Safeguarding the Employee

The New Law introduces key employee safeguards, including anti-discrimination provisions that protect affirmative measures for women, children, and persons with disabilities. It grants employees priority claims over employer assets, even before legal and public treasury expenses. Not to mention, managers can be held personally liable for violations if proven aware, with the employing entity bearing joint liability for financial penalties and compensation.

Working Hours & Overtime

In case of applying overtime to face unusual business requirements or exceptional circumstances, the New Law requires the employers to notify the competent authority within seven (7) days prior to the implementation of the overtime work timings, contrary to the Current Law where prior approvals are not required.

Training & Rehabilitation Fund

Unlike the Current Law, the contributions to the Training and Rehabilitation Fund have been reduced under the new draft. Entities in the public sector, public business sector, and private sector with more than thirty (30) employees are now required to contribute only 0.25% of the minimum insurable salary, instead of the previous 1% of net profit required from establishments with more than ten (10) employees.

The New Law further stipulates that workers who receive employer-funded training must stay with the company for a set period during which the salary obtained by the employee is equal to the training’s funding or as specified by the employer; or, repay the training costs in case of opting leave early or terminate the employment contract before said period lapses.

Modern Employment Relationships

The New Law introduces several new forms of employment relationships by recognizing that any non‑traditional work performed by an employee under an employer’s supervision, in exchange for remuneration, constitutes an employment relationship. Specifically, it identifies the following categories:

i. Remote working;

ii. Working through electronic and virtual platforms;

iii. Part Time job;

iv .Work of a fixable nature, which is preforming the working hours on non-consecutive times to be agreed upon by both parties; and

v. Job sharing between employees.

In light of these newly introduced employment relationships, the New Law also establishes an electronic registry for recording employment contracts and grants employees the right to engage with multiple employers, provided there is mutual agreement and the employee continues to honor any confidentiality obligations.

Specialized Judiciary System for Labor Disputes and Expedited procedures

The Current law has delegated labor disputes to be resolved by the civil procedure rules, while on the other hand, the drafters of the New Law have insured that the employment disputes will be expedited by adopting the methodology of having separate specialized court over employment disputes likely as the economic court and family court.

The aforementioned adopted methodology represents a true enhancement for judiciary process as labor courts will have more efficient specialized judges and will have its own admiratives employee which will lead to the ultimate application of “fair and expedited justice” principle. The new system establishes a labor circuit within each first-instance court and court of appeal, responsible for all labor-related disputes, including expedited and enforcement cases. Additionally, labor circuits will be integrated into the court of cassation system.

Moreover, the system includes an Expedited circuits that will make prima facie decisions without affecting the substance of the case. The system relayed on trade unions as part of the adopted amicable dispute settlement mechanism.

Ergo, collective employment disputes shall first be resolved amicably by a Tripartite committee composed of the Director of the Labor Department, a representative of the competent trade union, and a representative of the employer. If not resolved by the Tripartite Committee, the dispute shall then be referred to the Expedited Circuits as the competent forum.

Finally, under the New Law, disputes stemming from collective agreements may be referred to a specialized arbitration center for resolution.

Strike Action

The New Law has deemed strikes as a secondary resort for employees to defend their right, after resorting to an amicable settlement way – prescribed by the relevant law – in order to defend their rights and solve their disputes.

Foreign Labor

In Egypt, foreign labor is subject to strict regulations. The New Law require that foreign workers hold relevant visas and work permits to comply with local laws. The labor minister now has the authority to limit the number of foreign employees in certain industries and impose restrictions on non-Egyptians seeking employment in specific sectors.

Fees for work permits vary depending on the type, ranging from EGP 5,000 to EGP 150,000. Here’s an overview of the types of work permits and visas under the Current Law, which are necessary depending on the foreign worker’s status:

a. Temporary Work Permits: Issued for short-term projects or assignments, typically lasting a few months, requiring documentation from the employer about the scope of the work.

b. Freelancer Permits: For self-employed foreign nationals working with multiple clients, requiring proof of business registration and client contracts.

c. Part-time Work Permits: For foreign workers on part-time contracts, with the employer providing details on job duties and working hours.

d. Work Permits: Required for all foreign workers, generally valid for one (1) – three (3) years and renewable, subject to sector and company needs. Employers must demonstrate that the role cannot be filled by an Egyptian.

e. Specialized Worker Permits: For foreign nationals with specialized skills, requiring proof that local talent is unavailable for the position.

f. Employment Visas: Issued for foreign employees, usually valid for one (1) year and can be subject to renewal. The application requires submission of a work contract and proof of a valid work permit.

g. Investor Permits: For foreign investors running their own businesses in Egypt, requiring proof of investment and company registration.

h. Student Work Permits: Allow foreign students to work part-time during their studies, with restrictions on hours and job types.

i. Mission Visas: For foreign nationals on temporary assignments or short-term missions, valid based on the duration of the project.

When applying for any of these visas or permits, foreign workers must submit required documentation, such as contracts, qualifications, and sometimes medical tests. Employers are also legally obligated to report any foreign employees absent for over fifteen (15) consecutive days without valid reason or contact. It is worth noting that the above–stated permits and visas will be subject to review by the competent minister according to the draft of the New Law and a decree will be issued stipulating any updates.

Fixed-Term Employment Contracts & Indefinite Employment Contracts

New Law sets new rules has identified the Indefinite Employment Contracts as follows;

a. If the contract was unwritten;

b..If the contract is of indefinite duration; and

c. If it was concluded for a fixed term and the parties continued to perform it after the expiration of that term without a written agreement between them.

The draft of the New Law has followed the Current Law by giving the employees with limited-term contracts exceeding five (5) years a right to terminate the contract without compensation, provided they give three (3) months’ notice, additionally to that, the New Law made the employee Entitled to compensation – equal to one (1) month’s salary for each year they have worked – if the termination was by the employer.

The New Law defaults to open-ended contracts unless specified otherwise in writing. A contract becomes indefinite if not written or if it continues beyond its fixed term without renewal. Probation periods are limited to three (3) months, and an employee can only be on probation once.

In all cases, whether limited-term or unlimited-term employment contracts, the New Law requires that employment contracts are written in Arabic and prepared in four (4) copies—allocated to the employer, the employee, the Social Insurance Bureau, and the appropriate administrative body. If the employee does not speak Arabic, a bilingual or a translated version in their native language must be provided. However, should a dispute arise concerning the employment contract, the Arabic version will prevail in a court of law.

Severance Pay or End-of-Service Benefits:

Generally, the New Law preserves the End-of-Service Benefits provisions set out under the current law, subject to a minor amendment. As the New Law has explicitly limited compensation for termination by the employer to indefinite employment contracts only, it has nevertheless maintained the compensation rates payable to the employee.

Additionally, the methodology for paying the funeral expenses of the deceased employee has changed. The new law explicitly specifies to whom the payment must be made: it shall be paid to the widow; if she is unavailable, the payment shall be made to the eldest children, or to any person who can prove they have borne the funeral expenses.

Maternity Leave

The New Law grants female employees the right to maternity leave for a period of four (4) months, compared to the previous ninety (90) days, covering both the time before and after childbirth. This right applies to all women working within the state’s administrative apparatus, regardless of their length of service with the employer, again unlike the Current Law, which required ten (10) months of service with the employer to be eligible for said maternity leave. The reasoning behind this is to ensure equality among working women across all sectors.

Resignation instead of Termination in Cases of Continues Absence

Under the New Law, absences without valid justification will no longer be seen as serious misconduct. Instead, if an employee is absent for more than twenty (20) non-consecutive days or more than ten (10) consecutive days within a year, it will be considered voluntary resignation. Needless to mention that employers will need to issue formal warnings before taking any action. These warnings must be sent by registered mail with acknowledgment of receipt. This shift in the law places more responsibility on the employee for their conduct, potentially reducing legal conflicts over unfair dismissal claims.

Children leave & Minimum Number of Female Employees for Childcare Leave Entitlement

Previously, female employees working in larger organizations were entitled to unpaid childcare leave twice during their employment, each period lasting up to two (2) years. Under the New Law, this allowance has been expanded to three (3) times throughout their employment, provided there is a minimum two-year gap between each leave and the employee has completed at least one (1) year of service with the employer.

Businesses with fifty (50) or more total employees – regardless of gender – are required to offer this type of leave. This change may restrict access to childcare leave for employees in smaller companies.

In addition to the above, the New Law obligates Companies employing one-hundred (100) or more women at a single location are obligated to either set up an on-site nursery or make childcare arrangements for the children of their female employees in order to help in maintain their work-life balance following the lapse of the childcare leave. Also, if separate employers have fewer than one-hundred (100) female workers, individually, but operate in the same area, they are required to cooperate in establishing a joint childcare facility. Needless to state that these childcare centers must comply with the guidelines and regulations specified by the relevant minister, in accordance with the Child Law.

Medical Tests for Employees

A key feature in the New Law is the introduction of medical testing policies. Employers are now permitted to request health screenings for current or prospective employees to detect drug use or infectious diseases, a measure not addressed under the Current Law. These tests can be kept in an electronic record and must be conducted with strict confidentiality, and any medical information obtained must be kept private, in line with Egypt’s Personal Data Protection Law No. 151 of 2020.

Starting in 2025, all new hires are required to complete a pre-employment medical examination. The results must be documented using Form 111 (Pre-Employment Medical Examination Certificate) and submitted with Form 1 (Social Insurance Registration), which registers the employee with Egypt’s Social Insurance Bureau. Failure to submit both forms will prevent completion of the hiring process and delay social insurance registration.

Employers may carry out drug and alcohol tests at any point during employment. Refusal to comply or a positive result may result in termination, provided confidentiality standards remain upheld.

Wages, Payments Methods & Annual Raises

The New Law introduces major changes to wage payment practices, aiming to boost financial inclusion and align with global standards. Employers will now be allowed to pay wages through bank transfers, improving financial transparency.

The New Law also introduces a minimum wage of EGP 7,000 (seven-thousand Egyptian Pounds) per month for private sector employees starting in March 2025. Workers who exceed standard weekly working hours will receive overtime pay, calculated as:

a. 35% of their regular salary rate for overtime hours.

b. 70% for night shifts.

Moreover, the National Council for Wages (“NCW”) has set guidelines for annual salary increases in the private sector:

a. A mandatory 3% increase based on the employee’s insured salary. ii.

b. A minimum increase of EGP 250 (two hundred and fifty Egyptian Pounds) per month for fiscal year 2025.

Although it may seem that the public sector employees benefit from higher guaranteed raise percentages and a safety net for minimum increases, however, in the case of private sector employees, the annual raise varies depending on the company’s financial situation. This could mean either lower or no raises or significant raises in some cases.

Disabilities

The New Law obligates the employer to maintain an electronic or paper record of data concerning employees with disabilities.

Discrimination against employees with disabilities is prohibited, and employers must work with organizations to offer training and support. Employees can take legal action if they face discrimination or if the employment quota is not met. Employers who fail to meet the quota may face penalties.

Child labor

The New Law increases the minimum age for employment from 14 to 15, with a minimum age of 14 for training programs. Children under 15 who work must carry official identification, including a photograph and approval from relevant authorities. This will help ensure that child workers are not exploited and that their education remains uninterrupted.

Temporary Suspension of Employees

The New Law outlines provisions for suspending an employee temporarily if they are under investigation or accused of workplace violations. Suspensions can last up to sixty (60) days with full pay, after which employees can appeal the suspension. If the suspension is found unjustified, employees must be reinstated immediately. Employers can extend the suspension beyond the first sixty (60) days, but only with reduced pay and court approval.

Sick Leaves

The New Law extends paid sick leave and raises compensation rates for employees in industrial establishments where employees are now entitled to:

a. Three (3) months of full pay (previously one month),

b. Six (6) months at 85% of wages (previously eight months at 75%),

c. Three (3) months at 75% of wages (previously unpaid).

For sick leave up to 180 days per year, employees receive 75% of their salary for the first 90 days, and 85% for the next ninety (90) days. Beyond one-hundred and eighty (180) days, no pay is provided. A medical certificate is required to qualify, and employees are protected from termination during their sick leave.

Employees can use unused annual leave for additional time off if sick leave is exhausted. Employers may request periodic medical proof for extended sick leave.

Paternity Leaves & Protection of Working Parents

Under the Current Law, there are no statutory provisions for paternity leave, and employers had the discretion to grant it. The New Law however introduces a one-day paid paternity leave for fathers upon the birth of a child, marking a significant shift and establishing it as a legal entitlement. However, the law does not extend the leave beyond this one day, unlike the longer maternity leave for mothers. This reform reflects a broader trend towards recognizing fathers’ roles in child-rearing and promoting gender equality in caregiving responsibilities.

Leaves and emergency leaves

The Current Law grants the employee an emergency leaves for 6 days per year, on the other hand the New Law has increased the granted emergency leaves to be 7 day per year.

In conclusion, the New Law introduces significant updates to the employment landscape, modernizing key aspects of worker protections, wages, and employment practices. It establishes clearer rules for labor disputes, recognizes non-traditional work arrangements, and strengthens safeguards against harassment, discrimination, and forced labor. The law also addresses employee rights related to maternity and paternity leave, wages, and benefits, while introducing specific provisions for foreign workers and those with disabilities. Although certain groups, like domestic workers, remain excluded for now, ongoing efforts to address these gaps reflect a commitment to creating a more inclusive and transparent labor framework.