What key changes does the New Labor Law introduce?

We have identified some key changes that may be of interest to businesses:

• Despite speculations in the press over the past five years and previously circulated drafts of the legislation, employers can continue to renew definite/fixed-term employment agreements for subsequent terms without restriction (i.e., no limit on the number of years of renewal). However, the New Labor Law introduces an end-of-service compensation (of one month per year of service) if a definite-term employment agreement that has been renewed for more than five years is terminated.
• The notice period for indefinite-term agreements is now three months across the board, regardless of the number of years of employment.
• Maternity leave has been increased from 90 days to 120 days and may be claimed up to three times during the term of the employment (instead of two times under the former law). Maternity leave can now be claimed on the first day of employment (as opposed to 10 months under the former law).
• Resignations must be ratified by the Ministry of Manpower or labor offices and can be retracted within 10 days (instead of seven days under the former law). The legal repercussions of the lack of ratification remain unclear.
• Employers and employees must now sign four original employment agreements (instead of three originals under the former law).
• A major and welcomed change is the resolution of long-standing debates and disputes related to the contributions payable to the Training and Rehabilitation Fund. The New Labor Law significantly reduces the contribution payable by businesses from 1% of profit to 0.25% of the minimum social insurance wage, capped at EGP 30 per employee, and applicable when the workforce's size reaches 30 employees (as opposed to 10 employees in the past). Employers that offer internal training programs may apply for an exemption from this payment obligation. Moreover, the New Labor Law orders the termination of all pending disputes on this subject matter and expressly states that any disputed amounts or claims will no longer be due.
• Additionally, the New Labor Law refers employment disputes to a specialized labor court.

This change reflects a significant step forward in modernizing labor relations in Egypt and providing a more balanced and fairer framework for both employers and employees. Ministerial decrees are yet to be issued to address some of the newly introduced concepts. There are other important changes introduced that will have an impact on how businesses operate.

Our Egypt Employment Team is well versed in the New Labor Law and would be delighted to support you in updating your employment contracts and policies in preparation for the upcoming changes. We will also roll out training sessions and workshops throughout the year. We are currently working with a number of companies on exploring the impact of the New Labor Law on their businesses and creating practical action plans to facilitate a smooth transition. Please reach out to our Employment Team if you require assistance. To speak to us in relation to the New Labor Law or any labor- or employment-related matters, please feel free to contact any member of our team.

* * * * *

© 2025 Helmy, Hamza and Partners. All rights reserved. Helmy, Hamza and Partners is a member firm of Baker & McKenzie International, a global law firm with member law firms around the world. In accordance with the common terminology used in professional service organizations, reference to a "partner" means a person who is a partner, or equivalent, in such a law firm. Similarly, reference to an "office" means an office of any such law firm. This may qualify as "Attorney Advertising" requiring notice in some jurisdictions. Prior results do not guarantee a similar outcome.