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.
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.
