December 12, 2022

Dr. Eman Riad Participates in the Discussions of Draft Labor Law at the Egyptian Parliament

The Egyptian Parliament held several discussion meetings on the draft labor law (“Draft Law”) expected to be issued during 2023. The meetings were attended by all stakeholders including representatives from businessmen associations, the industrial and construction federations, chambers of commerce, labor unions, Ministry of Manpower as well as the Egyptian judiciary and legal experts.

Our partner, Dr. Eman Riad, participated in these meetings at the Parliament and had the opportunity to share her thoughts on the Draft Law.

Dr. Eman herein sheds light on the main debatable issues which were discussed during the meetings:

Labor Contract Duration and Termination

An extensive debate took place regarding the new amendment under the Draft Law whereby definite term contracts concluded for four years will be automatically converted into indefinite term contracts. This will have significant implications on the flexibility of terminating the employment relationship and end of service entitlements.

End of Service Benefit (EOSB)

The Draft Law introduces an obligation on employers to pay EOSB for terminating definite and indefinite term contracts. The interpretation of the relevant provisions and the way of its implementation was a debatable topic during the meetings.

Prohibiting Contracts for Less than a Year

The Draft Law includes a provision whereby employers cannot conclude employment contracts for a duration of less than a year. Such restriction was criticized during the discussions as a hinderance to hire temporary employees to perform certain tasks. Also, it prevents unemployed persons from occupying jobs and get income from temporary vacancies.

Annual Leave

The annual leave for senior employees (who are 50 years old or more) is proposed to be increased to 45 days (compared to 30 days under the current law). This matter was objected to by several attendees who highlighted that such provision may backfire against senior employees as companies might tend to terminate senior employees considering their high salaries and low productivity.

Increased Maternity and Childcare Leaves

The Draft Law increased the duration and number of maternity and childcare leaves. This raised concerns about the negative impact such amendment may create as employers may avoid recruiting married women.

Approved Resignations

Strong arguments were exchanged about the new requirement that employee’s resignation must be submitted and be pre-approved by the Labor Office. Participants highlighted that this provision involves several legal and logistics ambiguities.

Employers Contributions in the Vocational and Professional Training Fund

Discussions were raised about the continuation of this Fund under the Draft Law despite the longstanding legal debate about its constitutionality under current law.

During the meetings suggestions were made that the Draft Law should provide for exempting employers (fully or partially) from paying contributions to this Fund if they provide trainings to their staff. Also, objections were raised about the fact that the Fund shall not be transferred to the Egyptian treasury, it shall rather be allocated for training programs to be received by workers.

Establishment of New Fund for Irregular Workers

The Draft Law provides for the formation of a new fund for irregular workers (i.e., casual workers, seasonal workers, on-call workers). Employers will be required to pay regular contributions in this fund. Several attendees (particularly the representatives of businessmen associations) objected on this matter as it will increase the financial burdens on employers who already pay social insurance contributions for the hired irregular workers.

Additional Leave/Adjusted Work Hours for Employees who Care for Disabled Person

For the first time, the Draft Law addresses the possibility of granting additional annual leave or accommodated work hours for employees who take care of disabled persons.

New Work Types

The Manpower Committee in the Parliament promised to include provisions in the Draft Law to regulate certain types of employment including remote work, hybrid work and part-time work.

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