New Decree on Minimum Salary and Annual Increment
The Egyptian Minister of Planning and Industrial Development issued the long debated decree to set the minimum salary for private sector in Egypt.
According to the decree the minimum salary of private sector employees starting from 1st January 2022 shall be EGP 2,400 monthly. This minimum salary may comprise both fixed and/or variable salary elements (i.e. bonuses, incentives, profit share, remuneration, in-kind benefits…etc).
Companies who will not be able to apply the minimum salary due to economic hardship shall submit an exemption request to the relevant federation by no later than 31 October 2021, this request shall highlight the reasons for seeking an exemption accompanied by all supporting documents. It is not clear in the decree what is meant by the ‘federation’ and if it refers to the “labor union” or the “chamber of commerce” relevant to each sector.
On the other hand, the decree has decided that the annual salary increment for private sector employees – starting from July 2021 – shall not be less than 3% of the social insurance salary with a minimum of EGP 60. Currently, the social insurance salary in Egypt has a minimum of EGP 1,150 and a cap of EGP 8,050 per month.
We believe it is essential – in light of the issued decree – to amend the long-debated article (34) of the labor law (regulating minimum salaries and annual increment) to align with the new decree. Such amendment should reflect the following:
– The mechanism of increasing the decided minimum salary in the future and the exemption therefrom.
– The replacement of the previously decided 7% salary increment that was based on the ‘basic’ social insurance salary with the newly decided 3% increment that is based on the ‘unified’ social insurance salary decided under the new Social Insurance Law No. 148/2019.
For any questions, please contact Dr. Eman Riad