Egypt's New Labour Law: What Foreign Businesses Should Be Asking Now

1. Are our employment contracts strong enough?

The employment contract is now more important than ever. Under the new law, employment contracts must be in Arabic. If a foreign employee does not speak Arabic, the contract may also be prepared in the employee's language, but the Arabic version will prevail in case of inconsistency.

For foreign businesses, this means the contract should not be treated as a standard onboarding document. It should clearly address:

• salary
• allowances
• bonuses
• benefits
• job title
• reporting line
• place of work
• transfer rights
• confidentiality
• disciplinary rules
• termination provisions

A weak contract creates room for future disputes. A clear contract gives the employer a stronger starting point.

2. If there is a salary dispute, which salary will the court use?

This is one of the most important issues for foreign employers.

The new law gives priority to the salary stated in the individual employment contract. If the salary is clearly determined in the contract, that is the first reference point.

If the contract does not determine the salary, the law then moves to other sources, including collective labour agreements, approved internal regulations, prevailing wage, professional custom, and finally assessment by the competent labour court.

This hierarchy matters. It means the court should not immediately jump to what the employee claims, market salary, or informal practice. The starting point is the written contract.

3. Does the contract always win?

Not necessarily.

The contract takes priority, but employers must ensure that their later records do not undermine it.

For example, if an employee's contract states that the salary is EGP 10,000, but the employee later claims that the actual salary was EGP 80,000, the employer is in a stronger position if the contract clearly states EGP 10,000.

However, if the employer later issued signed increment letters, made regular additional payments, treated allowances as salary, or kept payroll records inconsistent with the contract, the employee may argue that the original contractual salary was amended or supplemented.

The practical rule is simple: the contract is the first reference point, but the company's records must support the contract.

Foreign businesses should therefore clearly separate:

• contractual salary
• allowances
• discretionary bonuses
• reimbursements
• commissions
• temporary payments
• one-off benefits

If everything is paid regularly without explanation, it may later be argued to form part of the wage.

4. What changed from the old law?

Under the old Labour Law, where there was no written contract, the employee alone had the right to prove employment rights by all methods of evidence.

The new law is more balanced. Where there is no written contract, both the employer and the employee may prove the employment relationship, its duration, and related rights by all available methods of proof.

This is important for foreign employers because company records may now play a stronger role in defending claims. Relevant records may include:

• payroll records
• bank transfers
• social insurance records
• emails
• HR approvals
• internal policies
• warning letters
• investigation minutes
• signed acknowledgments

In practice, the employer's file may become the employer's defence.

5. Can we terminate an employee directly?

Termination is one of the highest-risk areas under the new law.

For open-ended employment contracts, termination must be based on a legitimate and sufficient reason. It also requires written notice, unless a specific legal exception applies.

For disciplinary dismissal, employers should be especially careful. The law provides that only the competent labour court has jurisdiction to impose dismissal as a disciplinary penalty. Other disciplinary penalties may be imposed by the employer or its delegated authority, but dismissal requires particular care and procedure.

This means employers should not treat dismissal as a simple management decision. Before taking action, the company should ask:

• Is there a legitimate legal reason?
• Is the evidence strong?
• Was the employee warned?
• Was there an investigation?
• Was the employee given a chance to respond?
• Are the internal regulations clear?
• Can the company defend the decision quickly before the labour court?

6. What counts as a legitimate reason?

The new law identifies serious misconduct as a basis for dismissal. Examples may include:

• proven impersonation or falsified documents
• serious damage caused to the employer
• repeated breach of written safety rules after warnings
• disclosure of trade secrets causing substantial harm
• competing with the employer
• intoxication or drug use during working hours
• assaulting the employer, general manager, or supervisor at or because of work

Economic reasons may also justify workforce reduction or closure, but these require a separate process and proper supporting evidence. For foreign investors, the key point is that the reason must be real, documented, and procedurally defensible.

7. What if termination is found unjustified?

If termination is found unjustified, the employer may face significant liability.

For open-ended contracts, the employee may be entitled to compensation of not less than two months' wages for each year of service, in addition to any other statutory or contractual entitlements.

For fixed-term contracts, the contract generally ends at the expiry of its term. However, if termination is initiated by the employer in the relevant circumstances, the employee may be entitled to a payment equal to one month's wage for each year of service.

The financial exposure can therefore be significant, especially for long-serving employees or senior staff.

8. Can the employee obtain payment before final judgment?

Yes — and this is one of the most important litigation risks under the new law.

If a dismissal dispute is not settled amicably, the matter may be referred to the competent labour court. The court must schedule a hearing within 20 days from referral.

If the dispute concerns dismissal, the court must issue an urgent decision within approximately three months from the first hearing.

If, based on the documents, the court finds merit in the employee's claim, it may order the employer to pay the employee wages from the date of dismissal, capped at six months.

This is not automatic compensation. Amounts paid under that urgent ruling are deducted from any final compensation or other amounts later awarded.

However, it creates early financial exposure. The employer may not have years to build the case. The documents must be ready from day one.

9. What should foreign businesses do now?

Foreign businesses operating in Egypt should review their employment framework now, not after a dispute arises. Key documents to review include:

• employment contract templates
• Arabic versions of contracts
• salary clauses
• allowance and bonus policies
• increment letters
• payroll records
• social insurance records
• internal regulations
• disciplinary procedures
• investigation templates
• termination approval processes
• document retention policies

The goal is consistency. If the contract says one thing, payroll says another, social insurance records say a third, and emails suggest a fourth, the employer has created avoidable litigation risk.

Bottom Line

Egypt's new Labour Law is more structured, more employee-protective, and more documentation-driven.

For foreign investors, the main lesson is practical: the best protection in a labour dispute is not argument after the fact. It is a clean written record before the dispute begins.

The employment contract now carries significant weight in salary disputes. But the contract must be supported by consistent payroll records, increment letters, social insurance filings, and internal documentation.

Termination decisions also need to be defensible from the start. A weak dismissal file may create early exposure within approximately three months of the first hearing, including a possible wage payment order capped at six months.

Foreign businesses that treat HR documentation as a legal and compliance function will be better positioned to manage employment risk in Egypt under the new Labour Law.

If your business operates in Egypt, now is the time to review your employment contracts, salary structures, internal policies, disciplinary procedures, and termination process.

At MEASA, we help foreign businesses identify labour-law risks before they become disputes. In employment matters, prevention is almost always cheaper than litigation. A properly drafted contract and a clear internal process can save significant time, cost, and exposure later.

Contact us to review your labour contracts and procedures and ensure your business is better protected under Egypt's new Labour Law.