Egypt’s New Labor Law: Modern Employment Framework, Alignment with Global Standards

Egypt’s New Labor Law, effective from September 2025, introduces modern employment structures, updated parental protections, and streamlined dispute resolution, enhancing employer-employee relations.

On May 3, 2025, the Egyptian government officially published its long-awaited New Labor Law in the Official Gazette, with the law scheduled to come into force on September 1, 2025. Replacing Labor Law No. 12 of 2003, the new legislation introduces broad reforms aimed at modernizing employment relations, expanding employee protections, and aligning Egypt’s labor market with international norms. The New Labor Law also clarifies long-contested provisions and introduces digitally adaptive employment structures, creating a more predictable legal environment for businesses and foreign investors operating in Egypt.

Scope and exclusions

The New Labor Law applies to all private-sector employees in Egypt but explicitly excludes public-sector employees and domestic (household) workers, who are expected to be governed under a separate legislative framework. Workers in free zones and investment zones continue to fall under their existing regulatory regimes. Foreign labor is subject to a defined permit system, with work permits ranging from EGP 5,000 (US$98.9) to EGP 150,000 (US$2,969) depending on sector and role.

Contractual formalities and employment terms

Employment contracts must now be written in Arabic and issued in four original copies, for the employer, employee, Social Insurance Office, and a designated administrative authority. If an employment contract is unwritten or work continues post-expiry without renewal, it will be deemed an indefinite-term agreement. Employment contracts for non-Arabic speakers must include a translated copy, but the Arabic version prevails in case of legal disputes.

Under the new rules:

• The default employment arrangement is an indefinite-term contract;
• Fixed-term contracts can be renewed indefinitely, but if they extend beyond five years and are terminated, employers must pay one month of compensation for each year of service;
• Probation remains capped at three months and can only be imposed once; and
• Employees receiving employer-funded training are obligated to serve for a specified period or reimburse the training cost.

Wage structures and annual increments

The New Labor Law shifts the basis for wage increases. The minimum annual raise is now set at three percent of the insured wage (rather than seven percent of base salary under the old law). However, employers experiencing financial hardship can petition the National Wages Council for a reduction or exemption from this obligation. This shift is intended to better align wage growth with economic realities while maintaining employee protections.

Working hours, overtime, and new labor models

Daily work hours are limited to eight hours, and weekly work cannot exceed 48 hours, excluding rest breaks. Employees are entitled to a one-hour break every five continuous hours of work.

Overtime pay is set at:

• 35 percent extra for daytime work;
• 70 percent extra for nighttime work; and
• 100 percent extra for work done on official days off, plus compensatory leave in the following week.

The law formally recognizes modern work arrangements such as remote work, part-time employment, flexible hours, and job-sharing. Employees may hold multiple jobs provided they honor confidentiality agreements and avoid conflicts of interest.

Parental leave and childcare provisions

Parental protections under Egypt’s New Labor Law have been notably strengthened. The duration of maternity leave has been increased from 90 to 120 days, and it is now accessible from the first day of employment. This marks a departure from the earlier requirement of ten months of service before eligibility. Female employees are entitled to maternity leave up to three times throughout their employment. Employers are expressly prohibited from terminating employment during maternity leave, ensuring greater job security during the prenatal and postnatal periods.

In addition to maternity leave, new provisions support paternal participation in childcare. Fathers are now entitled to one day of paid emergency paternity leave per child, with a maximum of three children. This inclusion, while modest, acknowledges the importance of shared parental responsibility.

Further, the law mandates that employers with more than 100 female employees must either establish onsite childcare facilities or provide subsidized childcare. This initiative not only supports working parents but also reflects alignment with broader international labor standards on gender equity and work-life balance.

Leave entitlements

The New Labor Law introduces a tiered approach to annual leave, offering increased entitlements with tenure and age. Employees are entitled to 15 days of paid annual leave during their first year of employment. This increases to 21 days starting from the second year. Once an employee has completed 10 years of service or has reached the age of 50, the annual leave entitlement rises to 30 days. Employees with disabilities are eligible for 45 days of leave annually, recognizing their additional needs and promoting workplace inclusivity.

Public holidays, both national and religious, are granted as paid leave to all employees, regardless of their personal religious affiliation. This ensures uniformity in holiday observance and fosters an inclusive work environment. The revisions to leave policy collectively reflect an effort to codify fair labor practices and enhance worker well-being.

Foreign labor regulations

The Labor Minister may restrict foreign worker access to specific sectors and establish quotas. Non-resident investors and professionals must obtain work permits, and employers must notify authorities if a foreign worker is absent for 15 or more consecutive days without justification.

Dispute resolution and labor courts

A major structural innovation is the establishment of specialized labor courts and appellate chambers, set to become operational by October 1, 2025. The law introduces expedited rulings through an urgent matters judge and assigns substantive appeals to the Court of Cassation. Additionally, a mediation and arbitration center will handle collective labor disputes.

Employees are now exempt from court fees in labor disputes. Worker claims will take precedence in liquidation cases, even over legal fees, significantly enhancing employee protection in insolvency scenarios. Strikes are more tightly regulated, with prior union notice required and bans imposed on strikes in essential services. Employers are not obligated to pay wages during strike periods.

Training fund contribution reform

Employers’ contributions to the Training and Rehabilitation Fund have been adjusted. Contributions are now tied to 0.25 percent of the minimum insured wage, capped at EGP 30 9US$0.59) per employee annually and applicable only to employers with 30 or more employees. Previously, businesses paid 1 percent of profit once they reached 10 employees. Companies with internal training programs may seek exemption. Pending disputes regarding past fund contributions have been nullified, offering regulatory clarity and reduced financial exposure.

In brief

By enhancing contractual clarity, modernizing work models, expanding parental and leave protections, and introducing streamlined dispute mechanisms, the law strengthens Egypt’s labor market competitiveness. For businesses, these reforms offer greater regulatory certainty and operational efficiency; for employees, they promise improved rights, protections, and workplace conditions.

(US$1 = EGP 50.5)

Read more: Egypt Approves Budget for FY2025-26 Amidst IMF Pressure

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