Egypt’s Labor Law Reform: New Employees’ Rights and Work Patterns, Recognition of Digitalization, and Disputes’ Settlement Changes

OVERVIEW

Marking a New Era in regulating Employment Relationships, Egypt officially enacted Labor Law No. 14 of 2025 (the “New Law”) on May 5th, 2025, replacing the old long-standing Labor Law No. 12 of 2003 (the “Old Law”) and Law No. 125 of 2010 on Employee’s Privileges. This comprehensive legislative reform underscores Egypt’s strategic move to modernize its labor relationships in line with international labor standards and evolving workplace dynamics.

Substantively, the New Law introduces sweeping reforms across numerous facets of employment, including, inter alia, new flexible work patterns, resignation and termination procedures and grounds, rights and entitlements upon termination, foreign employment, female employment, leaves’ entitlements, protection for people with disabilities, labor dispute resolution, and the legal recognition of electronic documentation and modern employment models.

Against this backdrop of legislative transformation, the New Law brings forward a series of significant provisions that warrant close attention. What follows is an overview of some key changes introduced under the New Law, each carrying significant implications for employers, employees, and practitioners alike.

KEY CHANGES

Enforcement Timelines and Regulatory Continuity
Despite its promulgation, the New Law shall not take immediate effect. A transitional grace period has been granted during which the provisions of the Old Law shall continue to apply. The New Law’s language leaves the precise effective date somewhat ambiguous, as it shall enter into force by either August 1 or September 1, 2025. Specialized Labor Courts, designated to handle disputes under the New Law, shall begin operating on October 1, 2025.
It is not expected that executive regulations will be issued under the New Law. Rather, as was the case with the Old Law, the labor framework shall primarily rely on implementing ministerial decrees to give details and guidance for the implementation of the law provisions. Until such decrees are issued under the New Law (which should be issued within 90 days as of the New Law effective date), those currently in force under the Old Law shall remain applicable.

Mandatory Employee Data Submission

Employers shall submit a comprehensive employee data statement to the Ministry of Labor within 30 days from the effective date of the New Law. Thereafter, employers are obliged to provide annual updates to the Competent Authority reflecting any changes to this information.

Contract Renewals and Recognition of New Work Patterns

Unlike the Old Law, the New Law expressly recognizes the modern work patterns, which evolved throughout the time, including remote work, part-time scheme, flexible work, and job-sharing models. Practical guidance and further details are expected through ministerial decrees and the law’s implementation in practice.

Entitlements for working during Public Holidays

Employees are granted the option to choose between receiving part of their entitlements for working on a public holiday, either in cash or to take an alternate day off. If the employee selects the day off, it must be explicitly requested in writing and documented in the employee’s employment file.

Employee’s Files: Recognition of Electronic Documents and Updated Retention Periods

Under the New Law, employers now have the option to keep the employee’s file in an electronic format. Electronic means are now officially recognized as a legally valid method for record-keeping.

The retention period of the employee’s files is now five (5) years. However, in cases involving legal disputes, the file shall be retained until a final and binding judgment is issued.

Female Employment: Threshold Requirements and Work Regulations

The New Law broadened the scope of compliance by requiring establishments employing one or more female employees to adopt Female Work Regulations. The regulations shall specifically provide for flexible working hours and remote work arrangements, with particular consideration for women caring for children with disabilities or dwarfism, promoting a more equitable work environment for female employees.

Foreign Employment

The New Law introduces enhanced regulatory oversight of foreign labor in Egypt. It empowers the Minister of Labor to impose sector-specific restrictions and set quotas limiting the employment of foreign workers. Foreign workers shall obtain valid visas and work permits, with permit fees now ranging from EGP 5,000 to EGP 150,000, depending on the permit type.
Employers shall notify the competent authorities if any foreign employee is absent for 15 consecutive days without justification, and shall cover the repatriation costs of the foreign employee upon termination of the employment relationship, unless otherwise stipulated in the employment contract.

It is worth noting that the principle whereby a foreigner’s definite-term employment contract does not convert into an indefinite-term contract, even if the parties continue to perform it beyond its expiry in the absence of an explicit agreement, is not provided for under the New Law.

Vocational Training Fund

The New Law introduces a significant amendment to employer contributions to the Vocational Training Fund, replacing the previous 1% levy on net profits with a more structured and predictable formula. Establishments employing 30 or more employees shall now contribute 0.25% of the minimum salary (based on which the social insurance subscriptions are calculated) per employee on an annual basis, with an annual cap ranging between EGP 10 and EGP 30 per employee.

The Minister of Labor is authorized to issue exemption rules for employers who provide training aligned with company needs or approved internal policies.

Furthermore, employees who receive employer-funded training are obliged to remain in service for the agreed-upon duration or else repay training costs if they resign or terminate the contract.

Leave

Maternity Leave

The New Labor Law significantly improves maternity leave entitlements. Female employees are now entitled to 4 months of paid maternity leave, up from the previous 3 months, and may take this leave up to three times throughout their service period, compared to two times under the Old Law.

Notably, the eligibility condition requiring 10 months of prior service has been abolished, allowing access to maternity leave from the first day of employment.

Childcare Leave

The New Law enhances childcare leave for female employees, allowing them to take up to three periods of unpaid leave throughout their service period, with (2) years gap between each leave. Female employee shall have completed a minimum of one year of service with the employer to qualify.

Paternity Leave

For the first time under Egyptian labor legislation, paternity leave is officially recognized. Male employees are granted one day of paid leave on the day of their child’s birth, available up to three times during their service period. This leave is separate from the annual leaves balance.

Sick Leave

The New Law stipulates that if an employee has been in contact with a family member suffering from an infectious disease, the competent medical authority may prohibit them from working for up to three months, with the specific diseases defined by the Minister of Health. Additionally, the New Law extends paid sick leave and raises compensation rates for employees in industrial establishments.

Casual & Annual Leave

Under the New Law, casual leave has been increased from six to seven (7) days annually. With respect to annual leave, employees are entitled to 15 days in their first year of service, then 21 days per year thereafter. Additionally, employees with disabilities or dwarfism receive 45 days of annual leave, reflecting a stronger commitment to inclusivity.

Study Leave

The New Law also enhances study leave entitlements. Furthermore, exam days are no longer deducted from the annual leave balance, subject to two conditions: (i) the employer is notified 10 days before the exam, and (ii) proof of attendance is submitted.

Absence without justification/approval

The New Law now deems sudden absence of employee without valid justification or prior approval as voluntary resignation rather than serious misconduct. Specifically, if an employee is absent for more than 20 interrupted days or more than 10 consecutive days within a year, it shall be treated as resignation.

Termination and Compensation

Under the New Law, employees on definite contracts are entitled to an end-of-service gratuity/remuneration equals to one month’s salary for each year of service if the employer terminates such employment relationship. However, the New Law remains unclear as to this new rule, which triggers a number of conflicting views with regard to the application of such remuneration/gratuity. This point is likely to be clarified through implementing regulations, scholars’ interpretations, or court precedents.
For indefinite contracts, the New Law maintains the principle established under the Old Law: if the employer terminates the contract without cause, the employee is entitled to compensation of no less than two months’ salary for each year of service.

Specialized Labor Courts and Appeal Restrictions

Effective 1 October 2025, the New Law introduces specialized labor courts dedicated to resolving employment-related disputes. Notably, in dismissal cases, these courts are required to render a judgment within three months from the first hearing, ensuring a more efficient resolution process.

Enhanced Disciplinary Procedures and Investigation Framework

The New Law introduces a more structured and formalized approach to employees’ investigations and disciplinary actions. It designates the establishment’s legal department as the sole competent authority to carry out investigations. Delegation to another party is allowed only under specific conditions and in the absence of a legal department, contrasting with the broader flexibility under the Old Law, which permitted the employer to personally conduct the investigation or appoint another qualified individual, provided they hold a position not lower than the employee under investigation.

Additionally, the New Law imposes a maximum timeframe of three (3) months to complete investigations, with a one-time extension permitted if new evidence emerges. This replaces the Old Law’s open-ended approach. Further, the period during which repeated offenses may justify increased disciplinary penalties is extended from 6 months to one year, signaling a shift toward stricter compliance and accountability standards in the workplace.

In light of the foregoing, we invite the companies/employers to review and update their employment contracts and internal policies and regulations, to ensure full compliance with the New Law once enters effect. Our team is available to assist with drafting or revising workplace regulations and policies, and employment contracts to meet the new legal requirements and mitigate any incompliance risks.

By ‎OGH Legal, Egypt, a Transatlantic Law International Affiliated Firm. 

For further information or for any assistance please contact egypt@transatlanticlaw.com

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