Egypt: Employment Law In Egypt: Contracts

Last Updated: 19 November 2018
Article by Andersen Tax & Legal

Contracts are the foundation of any binding and legal employment agreement, so it goes without saying that the utmost care and precision should be employed in their drafting. Samples of employment contracts can be found easily online to provide a visual representation of the information in this section, to start however, it is important to take note of the impending information. In Egypt, Employment contracts are required to be in writing, in Arabic, and in triplicate, with the employer, employee and social insurance office each keeping a copy of the employment contract.

Generally speaking, the contract should include the following data:

  • Name of the employer and the address of the place of work.
  • Worker's name, qualifications and profession or craft, social insurance number and home address.
  • Nature and type of work subject of the contract.
  • Agreed upon wage and method and time of its payment, as well as any other benefits in cash and in kind as agreed upon.
  • A probationary period of no more than three months must be specified in the contract.

Under Egyptian Labour Law, an employment contract may be drawn up for a definite or indefinite period of time, or for the fulfillment of a particular work each of which has a particular set of rules governing them. Like most jurisdictions, the main difference between definite and indefinite contract is that a definite contract is terminated without need of any formalities upon duration of the specified term and without compensation or advance notice (unless terminated early), while an indefinite contract is only terminated with express notice by the employer or the employee and payment of compensation.

Definite Contracts

These are contracts which have an express or implied specific duration which is agreed by both parties and the agreement terminates when this term expires. Generally, the contract may be renewed by express agreement between both parties for other similar works.

Egyptian law stipulates that if both parties continue carrying out their duties as per the agreement, the contract will be considered renewed for an indefinite period. It is important to note however that this rule does not apply to contracts made with foreigners. A definite contract may also be renewed through express agreement between the parties for one or more periods. If however, the contract is concluded for more than 5 years the worker is permitted to terminate without indemnity by providing 3 months' notice prior to his termination.

Indefinite Contracts

Indefinite contracts are characterized by their lack of a specific expiration date, and the prohibition of termination without adequate cause by the employer. Employers often avoid contracting for an indefinite period due to their obligation to provide a justification for terminating an employee, and tend to use definite contracts, or contracts for a particular work instead.

Termination of an indefinite contract is therefore somewhat more difficult, however either party may terminate provided that they notify the other party in writing prior to termination. Employers are not permitted to terminate the contract except for 'reasonable reasons' (examples of which are provided below) or unless the employee's inefficiency is established in accordance with the provisions of the company's endorsed regulations. Generally speaking, if either party of the contract terminates without legitimate and adequate justification, he must compensate the other party for the harm incurred as a consequence of the termination. Naturally, a labour contract terminates with the workers total incapacity to perform his work, regardless of the cause of the incapacitation.

In general, if an employer wishes to terminate a contract they must give the employee two months' notice prior to terminating the contract if the employee has been working at the establishment for less than 10 years, or 3 month notice if he has been working there for more.

An employee's service period will begin on the date they have received their work up to the date when the notice period will end. It is also important to note that the contract will remain valid throughout the notification period. If a contract termination is notified by the employer, the worker shall have the right to absent himself a full day per week or eight hours during the week to look for other work, whilst still receiving full wages.

Furthermore, if an employer terminates the labour contract without notification or prior to the end of the notification period, he is obliged to pay the worker an amount equivalent to his wage for that time, or the part remaining thereof. This notification period will be part of the workers overall service period, so the same obligations will be applicable on both parties.

An employee who resigns may later withdraw his resignation in writing within a week from the date that the resignation was accepted, in which case it shall be deemed ineffective.

As a form of guidance, the law provides a non- exhaustive list of the situations in which an employer can terminate indefinite contracts which an employer can refer to, namely:

  • If it is established that the worker has assumed a false identity or submitted false documents.
  • If it is established that the worker has committed an error resulting in serious damages to the employer provided that the employer shall notify the event to the competent authorities within 24 hours from the time he learns of its occurrence.
  • If the worker repeatedly neglects observing the instructions necessary for the safety of workers and the establishments even though such instructions are issued in writing and displayed in a prominent place.
  • The worker absents himself without good reason more than twenty intermittent days during the same year, or more than 10 consecutive days, provided that prior to his discharge a written warning notice will be sent to him via certified mail, 10 days after his absence in the first case and 5 days after his absence thereafter.
  • If it has been established that the worker has divulged the secrets of the establishment he works in, leading to serious damage or harm to the establishment.
  • If the worker embarks on competing with the employer in the same activity.
  • If during the employee is found to be intoxicated during work hours.
  • If it is established that the worker has aggressed the employer or the general director, or if he commits a serious aggression on any of his superiors during the work.

Finally, employees, similar to employers, have the right to terminate the contract if the employer defaults on any of the substantial obligations agreed upon, the law or articles of association of the establishment, or if the employer/ his representative commit a hostile act towards the employee or a member of his family. Terminations in this case are treated as the same as if the employer had terminated without lawful justification, and therefore compensation will be due.

Despite this, the court may order indemnification for a worker who has been dismissed even if the dismissal was not ordered by the employer, if it is found that the employer's acts or violation of contract terms lead the employee to terminate the contract, and gave the impression that this was the employee's desire.

Contract for a Particular Work

Such contracts may be valid until a particular work is provided, in which case they will terminate upon the completion of this work.

For contracts which terminate upon the completion of a work and the accomplishment of that work exceeds five years, the employee cannot legitimately terminate the contract prior to the accomplishment of that work. Alternatively, if upon the completion of the specific work the two parties continue to perform their duties the contract will be considered renewed for an indefinite period.

If the work is renewable by nature, and the contract continues to be performed upon completion of the initial project, the contract will be implicitly renewed for the term necessary to perform the same work again.

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.

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