Is Egypt Adopting a New Approach of “Furloughs” and “Involuntary Temporary Leaves”?
A collective bargaining agreement (“CBA”) was concluded in Egypt last June between a group of companies including Schlumberger Logelco, Dowell Schlumberger ME, MI Overseas, WesternGeco and others (the “Companies”) and the Trade Union for Petroleum Employees from the other side.
The CBA gave the Companies the power to place their employees on a temporary leave system to face the exceptional economic circumstances affecting the petroleum sector due to Covid-19.
The Companies are allowed to request employees to take special leaves for up to three months. This applies to any employee selected by the Companies according to its discretion. Selected employees are obliged to take the leaves in the date and for the period determined by the Companies without rejecting or refusing the decision.
During this temporary leave employees will receive their basic salary only and maintain the medical insurance coverage.
We believe this CBA introduces the concept of ‘furlough’ and ‘involuntary temporary leaves’ into the Egyptian labor law system for the first time as an alternative for redundancies to face exceptional economic circumstances.
Furlough allows an employer to put some or all of their employees on involuntary temporary leave due to special needs of the company or economic conditions or exceptional circumstance of the company or in the society as a whole (i.e. current coronavirus pandemic).
In general, employees are not paid during furloughs but they do keep some employment benefits, such as health insurance. Furlough as a “job retention scheme” has to be agreed between the employer and the employee. It enables businesses to continue and guarantees employment continuity to employees. Furloughs can be a suitable alternative for those employees that would otherwise have been laid-off.
The use of “furlough” became relatively common in countries like USA, UK, France and Germany after the outbreak of the Covid-19 pandemic.