• Egypt’s new Labor Law replaces the 2003 version, overhauling contracts, wages, and parental leave to reflect modern realities.
• The law standardizes notice periods, formalizes flexible work formats, and strengthens legal protections through dedicated labor courts.
• Key updates impact sick leave, wage payments, gender pay equality, and dismissal conditions, with stricter compliance expected from employers.

New Labor Law

After years of drafts and debates, Egypt’s new Labor Law has been passed by parliament. It replaces the 2003 law and brings changes to how businesses and employees operate. So, what changed?

Timing 

The draft law is awaiting presidential approval, after which it will be posted on the Official Gazette, with the date it will go into effect. Until then, the 2003 law remains in effect. 

Contracts 

Contracts must be written in Arabic, issued in four copies, and include all key details. It also stipulates that probation periods remain limited at 3 months without repetition.

A major change sets a minimum one-year duration for limited-term contracts, which convert to indefinite after four years. To terminate a contract within the first four years, employers must give two months’ notice and pay severance if they initiate the termination.

If the employer wants to terminate the contract after it becomes indefinite (i.e., more than four years of employment), they must follow the rules for ending an indefinite-term contract, which usually require a valid reason and additional protections for the employee.

Notice Period 

Under the current law, the notice period ranges from two to three months based on the employee’s tenure. The new draft law standardizes the notice period to three months for all employees, regardless of tenure.

Employee Rights

Leave 

Under the draft law, Maternity leave increased from 3 to 4 months, with eligibility after 6 months of service, no longer 10. The law also allows women to take up to three maternity leaves during their careers, instead of two. 

Under the new draft law, female employees can take unpaid childcare leave up to three times during their career. Each leave must be at least two years apart, and the employee must have worked for over a year to qualify.

The new draft law also expands paid sick leave. Under the new law:

• Employees will receive full pay (100%) for the first three months of sick leave, a benefit not currently offered.
  
• For the next six months, employees will receive 85% of their wages, up from the current 75%.
  
• In the final three months, employees will receive 75% of their wages, where there was currently no pay during this period.

As for the annual leave, it would start at 15 days in the first year, increase to 21 days after that, and then reach 30 days after 10 years or at age 50. Employees with disabilities can get up to 45 days of annual leave. Additionally, non-Muslims can take leave for religious holidays in addition to official ones.

Wages 

The new draft allows employers to pay wages via bank transfer. It also mandates equal pay for male and female employees performing work of equal value. This includes benefits, incentives, and salaries.

Currently, employees recieve a minimum annual raise of 7% of their base salary. The new draft law sets the minimum raise at 3% of the insured wage. This links it to social insurance contributions rather than just the salary.

Labor Minister Mohamed Gebran defended the change, saying the insured wage typically increases each year, which could lead to higher absolute raises over time.

Mahmoud Abu Sharkh, Executive Director of Brite, a SaaS company based in Cairo, notes that while the law offers more stability for investors, it may not fully address workers’ needs. “The private sector employs about 80% of workers, so it bears the bulk of employment. The new law could attract investors due to stable wages, but it also means lower raises in real terms,” he said. Abu Sharkh adds that Egypt’s labor regulations are somewhat better than those in the GCC, where strikes are banned and annual raises are generally lower.

Employers

Excessive Absences

The current law allows employers to dismiss employees for excessive absences without valid justification. The new draft law treats extended absences as employee-initiated resignations.

Suspension 

The draft Labor Law extends the conditions under which an employer may temporarily suspend an employee for up to 60 days with full pay. Conditions include investigations for a workplace violation, a workplace-related crime, or if the employer seeks dismissal through the labor court. It also introduced an employee’s right to appeal, judicial oversight, and potential extension with reduced pay.

Medical Tests

The current law does not have a provision for medical testing. However, in the new draft law, employers may request medical tests with the assurance of confidentiality. 

The big takeaway: The law modernizes how Egypt’s labor market works. Additionally, it also imposes stricter documentation, clearer obligations, and tighter dispute processes. While it offers greater stability for investors and formalizes key protections, some argue that it may not fully meet workers’ needs, particularly with changes to wage raises. Despite concerns, the law’s focus on transparency, fairness, and judicial oversight creates a more structured environment for both employers and employees, with an overall aim of fostering a fairer, more predictable labor market in Egypt.