Egypt: Private sector - Minimum wage and minimum annual increase is now set

In brief

In a significant development, the National Council for Wages has finally set the long awaited salary thresholds applicable to the private sector:

  • Minimum wage:  EGP 2400 per month
  • Minimum annual salary increase: 3% per year   

This changes implemented by virtue of decree No. 57 of 2021  apply as of 1 January 2022.


Contents

What has changed? Recommended actions

Effective January 2022:

  • All companies must ensure that their employees  receive no less than EGP 2400 per month.
  • All companies must award employees a minimum salary increase of 3% per financial year. It is important to note that the increase does not apply to the entire salary as set out in an employee's contract. It is only applicable to the portion of the employee's salary used for social insurance purposes. Currently, the minimum salary for social insurance purposes is set at a minimum of EGP 1200 per month and capped at EGP 8,100 month. However, we are expecting an update to the social insurance thresholds in light of the new law.

While employers in Egypt will be already familiar with the requirement to adhere to a mandatory yearly salary increase, this is the first time that the Egyptian government has expressly set a minimum wage applicable to the private sector. (Previously, a de facto minimum wage was in place by virtue of the Social Insurance Law which required a minimum salary of EGP 1200 in order to enroll employees in the social security system).

The move to set the minimum wage and uplift the current minimum mandatory salary increase level thresholds is indicative of the Government's intention to ensure the welfare/adequate standards of living for its citizens and residents.

Failure to comply with the new rules risks fines being issued by the Labor office

Are there any exemptions?

Exemptions are limited. Only those employers facing economic difficulties and who are unable to meet the minimum wage requirements  may submit a reasoned exemption request to the [National Council for wages by the 31st of October 2021].

* * * * *

For further information and to discuss what this development might mean for you, please get in touch with your usual Baker McKenzie contact.

LOGO_Egypt Helmy Hamza & Partners_Cairo

This client alert was issued by Helmy Hamza & Partners, 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.


© 2021 Baker & McKenzie. Ownership: This site (Site) is a proprietary resource owned exclusively by Baker McKenzie (meaning Baker & McKenzie International and its member firms, including Baker & McKenzie LLP). Use of this site does not of itself create a contractual relationship, nor any attorney/client relationship, between Baker McKenzie and any person. Non-reliance and exclusion: All information on this Site is of general comment and for informational purposes only and may not reflect the most current legal and regulatory developments. All summaries of the laws, regulation and practice are subject to change. The information on this Site is not offered as legal or any other advice on any particular matter, whether it be legal, procedural or otherwise. It is not intended to be a substitute for reference to (and compliance with) the detailed provisions of applicable laws, rules, regulations or forms. Legal advice should always be sought before taking any action or refraining from taking any action based on any information provided in this Site. Baker McKenzie, the editors and the contributing authors do not guarantee the accuracy of the contents and expressly disclaim any and all liability to any person in respect of the consequences of anything done or permitted to be done or omitted to be done wholly or partly in reliance upon the whole or any part of the contents of this Site. Attorney Advertising: This Site may qualify as “Attorney Advertising” requiring notice in some jurisdictions. To the extent that this Site may qualify as Attorney Advertising, PRIOR RESULTS DO NOT GUARANTEE A SIMILAR OUTCOME. All rights reserved. The content of the this Site is protected under international copyright conventions. Reproduction of the content of this Site without express written authorization is strictly prohibited.