Implementing economic structural reforms has been a priority for Egypt since the current administration took office in 2015. “The state continues its efforts to … achieve economic growth led by the private sector [by] implementing structural reforms that enhance the capabilities of the Egyptian economy and provide an attractive environment for local and international investments,” Rania Al-Mashat, minister of planning and economic development, told the media in April.   

The latest reform was in April, when Parliament approved a new labor law. It reflects the changing workplace, makes the new legislation more business-friendly and leaves most regulations unchanged to create continuity. 

It applies only to private sector employees and professionals owning registered establishments. According to CAPMAS, the 2025 law affects nearly 25 million employees — 82% of Egypt’s labor force last year. Excluded employees are those in state-owned enterprises; civil workers; home service workers, like maids, cooks and drivers; and other jobs without formal employment arrangements. 

Something new

The 2025 labor law introduced several new entries. One makes all employment agreements open-ended by default, unlike before when standard contracts were annual and typically  renewed automatically. 

However, the 2025 law gives employers the option to sign “time-limited” employment agreements if they give “solid justification,” leaving its legal meaning to the executive regulation, which had not been published at press time. The new law adds that if both parties continue their work relationship beyond the agreement’s duration, it automatically becomes a “permanent” contract. 

The legislation document said those changes “ensure workers’ right to have a stable and continued relationship with the employer.” 

The new labor law also explicitly states, for the first time, that if an employer pays for employee training, both parties must sign an agreement that obliges the worker to stay in the company until a set date. Only the employer can authorize early departure. If the employees decide to leave before the agreed date, they would be held legally liable to pay for the training they received.

The 2025 regulation document also “acknowledges new work trends that have emerged over the past few years, including remote work, working on digital platforms for multiple contractors, freelancers and part-time employees.”

It stated that regardless of the work relationship or setup, the employer must give all workers the same rights, including social protection and social security, compliance with the national minimum wage and collective wage bargaining.

The new law allows freelancers and others who have unconventional relationships with their employers to work for multiple companies, which traditional full-time employees can’t do. 

Meanwhile, if those freelance and unconventional workers don’t have a written employment agreement, all they need is a signed or stamped paper or receipt from the employer to prove the relationship between them.  

The 2025 labor law also introduces the concept of  “non-disclosure,” mainly for those working for multiple employers. The new legislation puts them in legal jeopardy if they reveal “company secrets,” leaving the executive regulation to determine what is classified as a “company secret.”

The new law also requires equal treatment, leave and pay regardless of gender or race. The legislature made discrimination a criminal offense. 

Lastly, the new law stated the executive regulation would be published after negotiations with labor and professional unions and business associations. Its focal points will include standardizing contracts and rules for various work formats, mechanisms to prove employment status to apply for collateralized loans, for example, and pathways to resolve conflicts for part-time workers.  

Something modified

The new labor law has also modified several regulations from the outgoing iteration. First, employers must have four signed copies of employment contracts instead of three (for the employer, employee, and the social security and pension authority). The fourth copy goes to the administration department of the legal body authorized to handle labor conflicts.

The new law also requires additional details in employment contracts. The list now includes the date of signing the contract, its duration, employer name and address, employee name, academic degree, role and tasks in the company, insurance file number, address and ID number or other proof of identity. The contract also must contain the net salary, when it is due, and benefits and bonuses, whether financial or non-financial. 

Hiring foreign workers requires the employer to translate the Arabic contract into the employee’s mother language. However, the Arabic version would take precedence in the event of any ambiguity.

Some things unchanged 

The law kept several points unchanged from the outgoing legislation. The most prominent is that employees alone are responsible for proving their relationship and employment status with the employer if their agreement is verbal. 

Another unmodified entry is the three-month probation period. During this time, the employee can’t seek employment in other companies, even if it is freelance. That is despite not having a permanent contract with the first employer. 

The 2025 labor law also continues to prohibit the employer from changing an employee’s tasks, job description or responsibilities without changing the contract to reflect the new relationship. 

Yet, the 2025 law allows employers to reassign employees “in extreme cases” on a “temporary” basis. It didn’t disclose if the criteria for either would differ from the outgoing law. Lastly, the law requires employers to offer free training to employees assigned new tasks.

Employers also must continue to “annex” a “paper or electronic” document to employment contracts containing information such as promotions, changing roles, penalties, bonuses, leaves of absence, and open and closed investigation documents and their outcomes. The document also would include appraisals, medical information and treatments purchased using the company’s medical insurance. 

That “annexed” file could be viewed only by “legally eligible” individuals. The executive regulation will determine if that legal definition changes. Employers can’t disclose the file’s contents except in court or by court order. 

The company must store files in its databases for at least five years after the employee leaves.

Firing and resignation regulations remain essentially unchanged. They still give employers the right to shorten the three-month legal notice period, determine the legal notice start date and the ability to terminate an employment contract with no repercussions if the employee surpasses their legal absence limits.  

What investors want

There is a direct correlation between having a flexible labor law and FDI. Research from the National University of Australia, published in 2022, stressed, “The positive effects of [labor laws] in … emerging countries … are most likely due to the FDI motive to exploit the abundant labor as most FDI to these countries goes to labor-intensive industries.”

Attracting FDI will be crucial to realizing Prime Minister Mostafa Madbouly’s ambitious plan to add almost 8 million new jobs from 2024 to 2030. 

Mohamed Fawzy, the Minister of Parliamentary Affairs, stressed during a legislative session that the 2025 labor law “takes into consideration economic and social environment aspects to ensure a stable work environment. The law will increase investor confidence and entice workers to increase productivity.” 

If successful at achieving the government’s goals, that iteration could be short-lived. “Countries have room to attract FDI by making their hiring and firing regulations more flexible,” the report said. “As a country progresses, it can afford to institute more rigid [labor laws] with the objective to protect domestic workers while keeping foreign investors coming.”

This article first appeared in May’s print edition of Business Monthly.