Egypt’s New Labor Law: Modernization, Enhancement, and Alignment

The New Labor Law was published in the Egyptian Official Gazette on May 3 and will take effect on Sept. 1. 

The New Labor Law successfully balances the interests of both employers and employees. Overall, several objectives have been achieved with the introduction of this law.

Firstly, it incorporates modern concepts, such as remote working, job sharing, flexible work arrangements, part-time employment, equal pay for women, one-day paternity leave, protection against harassment and bullying in the workplace, and the use of electronic systems in the workplace.

Secondly, it improves the balance between the rights and obligations of employers and employees, addressing some of the former law’s shortcomings and bringing certainty and clarity without severely shifting well-established concepts. 

Thirdly, it aligns some of the provisions of the New Labor Law with other related laws, such as the Pensions and Social Insurance Law and the Child Law, ensuring consistency.

Key Changes Introduced

Despite speculation in the press over the past five years and previously circulated drafts of the legislation, employers can continue to renew definite/fixed-term employment agreements for subsequent terms without restriction (i.e., no limit on the number of years of renewal). However, the New Labor Law introduces an end-of-service compensation (of one month per year of service) if a definite-term employment agreement that has been renewed for more than five years is terminated.

The notice period for indefinite-term agreements is now three months across the board, regardless of the number of years of employment. 

Maternity leave has been increased from 90 days to 120 days and may be claimed up to three times during the term of employment (instead of two times under the former law). Maternity leave can also now be claimed as early as the first day of employment (as opposed to 10 months after that date under the former law).

Resignations must be ratified by the Ministry of Manpower or labor offices and can be retracted within 10 days (instead of seven days under the former law). The legal repercussions of the lack of ratification remain unclear.

Employers and employees must now sign four original employment agreements (instead of three under the former law).

A major and welcome change is the resolution of long-standing debates and disputes related to the contributions payable to the Training and Rehabilitation Fund. The New Labor Law significantly reduces the contribution payable by businesses from 1% of profit to 0.25% of the minimum social insurance wage, capped at EGP 30 per employee, and applicable when the workforce’s size reaches 30 employees (as opposed to 10 employees in the past). Employers that offer internal training programs may apply for an exemption from this payment obligation. Moreover, the New Labor Law orders the termination of all pending disputes on this subject matter and expressly states that any disputed amounts or claims will no longer be due. 

Additionally, the New Labor Law refers employment disputes to a specialized labor court.

These changes reflect a significant step forward in modernizing labor relations in Egypt and providing a more balanced and fairer framework for both employers and employees. Ministerial decrees are yet to be issued to address some of the newly introduced concepts. There are other important changes introduced that will have an impact on how businesses operate.

Ghada El Ehwany, Heba Samy, and Peryhane Gawish are attorneys with Baker McKenzie in Cairo.  © 2025 Baker McKenzie. All rights reserved. Reposted with permission of Lexology.

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