Companies extending into Egypt need a complete grasp of Egyptian employment contracts. They must decide which business structure best suits their vision for the future. In Egypt, the usual choice is to open a limited liability company as a subsidiary, partly due to the protection against liability it offers the parent company and its shareholders, founders and partners. The subsidiary needs approval from the General Authority for Investment and Free Zones (GAFI) and must comply with Egypt’s Companies Law and Investment Law. The Financial Regulatory Authority requires permission if it intends to operate in capital markets.
Additionally, the company’s employment relationship with its staff will be regulated by the Labour Law and the Law on Social Insurance, which set statutory minimums and entitlements. These are vital considerations for hiring, onboarding and drawing up contracts with new staff. Once Bradford Jacobs’ Professional Employer Organisation (PEO) recruitment networks have located the best talent for your company, we step in to steer you through Egyptian employment contracts.
Indefinite, open-ended employment contracts: They have no specified end date and generally do not allow termination unless there is just or grave cause as specified under the Labour Law. Indefinite contracts require the employer to give the employee two months’ notice if they have worked for less than ten years and three months for working over ten years.
Fixed-term or definite employment contracts: Both parties agree on a start and end date, but if they agree work continues beyond the end date, the contract becomes indefinite. These agreements can also be tied to a specific project. However, this does not apply to foreigners. The maximum period for renewing fixed-term contracts is five years with the same employer. If the employee wants to terminate early, they should give the employer notice. If the employer releases early, they must remunerate the worker for the remainder of the contract and compensate or allow unused leave.
Probationary periods in contracts: These must be stipulated in the contract and cannot exceed three months.
Collective Bargaining Agreements (CBAs): The Ministry of Manpower and Migration oversees and monitors collective agreements and negotiations. The new Labour Law 213/2017 restricted employees’ ability to organize union committees. A union committee can only be formed in a single company where there are more than 150 workers (previously 50); a general labour union requires at least 15 union committees representing at least 20,000 workers; a labour union federation requires at least ten public labour unions representing at least 200,000 members. When the new law was implemented, existing affiliations that did not meet the requirements were automatically dissolved. The new law allows union committees to sign collective agreements.