Egypt’s new labor law changes leave and pay entitlements
Egypt’s House of Representatives has approved new labor laws, effective from September 1, 2025, introducing changes to employee leave, pay entitlements, and working arrangements, as reported by WTW.
The updated law comes after years of public and parliamentary debate, and will replace the existing 2003 framework. It aims to bring Egypt’s employment laws in line with international standards and respond to a rapidly evolving labor market.
The legislation extends maternity leave, introduces paid paternity leave, enhances end-of-service compensation, and incorporates mandatory wage increases.
In addition to these changes, the law also recognizes modern work models such as flexible hours, part-time jobs, and remote work, and formally establishes legal protections against workplace harassment. Specialized labor courts will be introduced starting October 1, 2025, to streamline dispute resolution.
The New Employment Benefits in Detail
The law will have substantial implications for both private and public sector employers operating in Egypt.
From a compliance standpoint, HR departments must prepare for significant changes to employment contracts, benefits policies, and payroll systems. In particular, employers with large pools of fixed-term workers will face new financial obligations under the expanded end-of-service payout rules.
Maternity and Paternity leave
Maternity leave will increase from 90 to 120 calendar days. This leave can now be used three times over a worker’s career, instead of the previous limit of two times. This marks a progressive step in supporting women in the workforce and bringing Egypt closer to international norms regarding maternal health and caregiving support.
Paid Annual Leave
Under the current labor framework, employees become eligible for paid leave only after six months of continuous work. The new law revises this condition, granting all employees 15 days of paid leave in their first year of employment, with this allowance pro-rated from a total of 21 workdays annually.
Additionally, workers with disabilities are now entitled to 45 days of paid annual leave.
Sick Leave
Employees are now entitled to receive 100% of their salary during the first three months of certified sick leave. This rate drops to 85% for the subsequent six months and then to 75% for the final three months.
Previously, workers received 75% for the first 90 days and 85% for the next 90 days.
End-of-Service Benefits
The updated law introduces a significant financial obligation for employers with fixed-term employees. If a fixed-term employment contract has lasted for five years or longer, employers are now required to provide one month’s salary per year of service as an end-of-service benefit.
This provision does not apply to indefinite contracts or fixed-term agreements under five years, which means its financial impact will be most heavily felt in sectors where long-term contract labor is common, such as construction, IT services, and education.
Employers may need to rethink staffing models to either shift toward more permanent hiring or ensure adequate provisioning for the new payouts.
Salary Increases
The new law mandates a minimum annual wage increase of 3% of covered pay.
This change reduces uncertainty for employees and standardizes pay growth across the labor market. It also gives labor unions and advocacy groups a stronger position when negotiating future employment terms.
Training Fund Contribution
Organizations with 30 or more workers must now contribute 0.25% of their monthly wage bill to a central training fund. There is a minimum contribution of E£10 and a cap of E£30 per employee. However, companies that conduct approved in-house training may apply for exemptions.
This replaces the previous requirement for firms with 10 or more workers to contribute 1% of their net profits to training initiatives, making the process more predictable and tied directly to payroll.
Flexible Work, Equal Pay, and Workplace Protections
For the first time, Egyptian labor law formally recognizes modern work formats. These include remote work, flexible schedules, part-time roles, and job-sharing arrangements. This change is especially relevant in the post-pandemic era, where digital workspaces have become the norm for many industries.
In addition, the law introduces a legal commitment to the principle of ‘equal pay for equal work.’ It also includes new protections against workplace harassment, giving employees a clearer path to report and challenge misconduct.
These updates bring Egypt’s legal code closer in alignment with international labor standards, promoted by the International Labour Organization (ILO) and other global institutions.
Termination and Dispute Resolution
The notice period for the termination of indefinite-term contracts is now standardized at three months, regardless of the employee’s length of service. This introduces a fairer process for both parties and provides a stable window for transition planning.
What are indefinite-term contracts?
An indefinite-term contract is an employment agreement that does not have a set end date and continues until either the employer or the employee decides to terminate it.
Employee resignations must now be officially ratified by the Administrative Control Authority. Furthermore, employees have 10 calendar days to withdraw a resignation, adding a layer of protection against rushed or pressured decisions.
Finally, labor courts will be established starting October 1, 2025, to handle employment disputes. These courts are expected to streamline case handling and reduce legal backlog.
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