On 19th of August 2019, the Egyptian Parliament issued a new Social Insurance Law No. 148/2019. It entered into force on the first of January 2020, except with regard to certain articles (i.e. 111, 112, 113, and 114) related to the obligations of the state treasury, which had entered into force on 20th of August 2019. It is expected to have the executive regulations of the new Social Insurance Law within the upcoming few months. However, until the issuance of the new executive regulation of the new Social Insurance Law, and on a condition that it will not conflict with the new provisions of the Law, the current related regulations and ministerial decrees will still apply.

The New Social Insurance Law comes in 170 articles regulating and unifying all the rules related to pensions and employees’ rights by replacing Law No. 179/1975 on Social Insurance, Law No.  108/1976 on Social Insurance for Employers and the like, Law No. 50/1978 on Social Insurance for Egyptians working abroad, as well as various other regulations and decrees. In the following lines, we will highlight the main, not all, features of the new Social Insurance Law:

  • Extension of social insurance protection to new categories of employees and employers; as it covers a number of insurance and pension beneficiaries, including 10 categories covered for the first time, such as temporary and seasonal workers, housekeepers, small-scale agricultural tenants, property owners, the overland transportation employees, the fishermen, domestic workers, and owners of environmental, rural and familial industries. the new Social Insurance Law also covered a new category of employers i.e. the owners of one-person companies) as a result for the amendments done to the Companies Law in 2017.
  • Increasing the pensionable age; as it provides one method for calculating pension entitlement for all eligible employee; as , starting from the first of July 2032, the retirement age will increase from age 60 to 61 and will be increased by one year every two years until reaching the age 65 by 2040. Employees will become eligible for pension benefits after at least 15 years of contributions, up from 10 years.
  • Unifying the Calculation base of the contribution rate. Employers and employees are required to contribute 12% and 9% respectively, calculated on the employee’s total salary excluding exempted allowances. . Each contribution rate will increase by 0.5% every seven years to reach a maximum combined rate of 26%.
  • A Unified Funding system. A unified retirement fund will be allocated for all the personnel and insurances mentioned by the Law. A separate account will be made for each type of insurance. Under the Old Social Insurance Law, there were two separate funds for civil servants and employees in the private sector. They will now be transferred to the new fund.
  • Unemployment Insurance (from three up to seven months); as the new Social Insurance Law has set-up an unemployment insurance as a new privilege for those who become unemployed during their coverage period if they have contributed to the social insurance system for at least one year. And such insurance shall be paid for 12 weeks for those who contributed for a period less than 36 months and for 28 weeks for those who contributed for a period exceeding 36 months.
  • Pension benefits. The basic pension for all workers will be at least 65% of the monthly minimum wage and capped at 80%, subject to having at least 15 years of insured employment. The National Wage Council will set the minimum wage for private-sector employees. It will increase annually up to 15% of inflation. Workers employed in hazardous or difficult jobs will receive increased pension benefits, but their employer will have to pay higher contributions. In certain circumstances (for example if an employee leaves Egypt), the employee will be eligible to receive a one-time indemnity payment in lieu of paid pension contributions.
  • Early retirement. The new Social Insurance Law provides the employees with the option of having an early retirement provided that they contributed for at least 25 years (up from 20 years) to receive a pension.
  • Penalties. Most of the new penalties imposed by the new Social Insurance Law are considered of a financial-nature penalties (i.e. Fine), except for the violations made to the obligations toward injured employees and in case of some of the violations by the social insurance officials as the penalty can trigger up to six months’ imprisonment, and it differs according to the violations or breaches committed whether by the employees or the employers. In general, the fines range from EGP 10.000 to EGP 100.000 depending on the kind of the committed violation.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.