Financial Sector Regulations
Financial Sector Liberalization
Since the early nineties, the Egyptian financial system with its three main sectors: the capital market, banking and insurance, has been undergoing ambitious legislative reforms to enhance performance and encourage competition especially from the private sector. Since 1993, the government has stopped intervening directly in the financial sector, and instead has been using indirect measures to control monetary aggregates such as bond issues. The government is currently focusing on reactivating the bond market, creating new financial institutions and building strategic links with international financial institutions.
Serious efforts are also being done to divest state ownership of joint venture and public banks and insurance companies, and increase private sector involvement in the financial sector.
Full private sector ownership, including foreign ownership, has been allowed in the banking and insurance sectors. Thereby, several financial intermediaries representing large international financial institutions in the areas of commercial and investment banking, mutual funds, insurance and securities trading are now operating in Egypt. The recent enactment of the mortgage law is also expected to bring liquidity to the market and enhance the retail-banking sector.
In 1995 and 1996, amendments to the Law No. 10 of 1981 were issued to regulate the insurance sector, and since 1996 tariffs on insurance have been almost eliminated, thereby reducing insurance premiums significantly.
Law No. 156 of 1998 and Decree No.45 of 1999 were promulgated to set a comprehensive legal framework for the supervision and control of the insurance sector in Egypt. The main provisions included:
The private sector is permitted to own up to 100% of the shares of an Egyptian insurance company that is fully owned by the government. This provision applies to both local and foreign private investors.
The Prime Minister's approval is required to own 10% or more of an insurance company's shares. This provision applies to individuals, except in case of inheritance, and entities.
Risk insurance must no longer be transacted in Egypt or executed by fully owned Egyptian insurance companies. Insurance operations, which are to be transacted outside Egypt, must apply for EISA's approval to be conducted by other companies abroad.
Managing directors of state-owned companies do not have to be Egyptians as was previously required by law 10 of 1981. The company's Board of Directors should include two expert members with experience in the insurance field, provided that one of them should be the executive manager.
Any company wishing to enter the market and get a new license must have a minimum issued capital of LE30 million, 50% of which should be paid upon establishment, however, if the company is to deal in life insurance, the cap is set at LE60 million. Another factor that determines granting of a license is the new company's contribution to increasing total retention in the market by introducing new covers or developing already existing covers.
- All insurance companies are required to publish annual financial positions approved by accredited financial auditors.
USAID has established several programs with the Ministry of Foreign Trade to provide technical assistance regarding insurance regulations and supervision. The programs were mainly designed to encourage the government in liberalizing the sector. The programs also focused on developing social insurance services such as health care and pensions.*
The CBE, Banking sector, and currency are governed by Law No. 88/2003, regulating the banking system in Egypt.
Capital Adequacy Requirements
Pursuant to the above Law, the issued and paid in full capital of banks should not be less than LE 500,000,000 (Five Hundred Million Egyptian Pounds).
The CBE retains significant powers to undertake remedial measures and impose penalties when the provisions of the above Law are violated. For example, the CBE retains the right to cancel the registration of a bank by virtue of a resolution issued by the CBE's Board of Directors in case of violating the provisions of the said Law, its executive regulations, any of its executive decrees, and not remedy such violaton within the period and according to the conditions fixed by the CBE.
The Board of Directors of the CBE, may grant banks or branchs of foreign banks, which deal only in foreign currency, the approval to deal in local currency.
Foreign Ownership of Banks
Egyptians and non-Egyptians have the right to acquire shares in banks; however, such should be without prejudice to the provisions of the above Law. However, individual or entity's ownership of over 10% of the bank's issued capital or any other percentage resulting in the actual control of the bank is not permitted without the approval of the CBE.
Bank Secrecy Law
The above Law governs the obligation of banks not to disclose information relating to their customers' accounts, deposits, safe deposit boxes and transactions, in the absence of either the written permission of the customer, his legal representative, a delegated agent, or a decision rendered by a competent judicial or arbitration tribunal.
Astrongny party legally authorized to strongview information relating to a customer's account, deposits or safe deposit box is also prohibited from disclosing such information unless either of the above mentioned criteria have been met.
The Central Bank of Egypt (CBE) Law
The aforementioned Law (No. 88/2003) regulates the activities of the Central Bank of Egypt. The law addresses the independence of the Central Bank of Egypt (CBE) and its supervisory authorities regarding inter-banks activities. According to the law, the CBE's paid in capital is LE 1 billion and the bank is a public legal entity reporting to the President of Egypt. The law identifies the CBE's responsibilities in several areas including supervision of payment systems, management of international reserves and management of external debt.
Capital Market Legislation
- The Capital Markets Law No. 95/1992 regulates the operations of the capital market in Egypt. Under the Capital Market Law, any company intending to issue securities must notify the Capital Market Authority (CMA), which then has 3 weeks in which to review the proposed securities issuance.
- For a public issuance of securities, a company must prepare a prospectus approved by the CMA and must provide the CMA with periodic reports and information relating to such a public issuance.
- A company offering part of its shares in a public offering, or trading a minimum of 30% of its shares on the stock exchange, must inform all shareholders owning at least 1% of the company's capital of any other shareholder wishing to increase its shareholding above 10%. Any Board member or employee of the Company wishing to increase his/her shareholding above 5% must also comply with the foregoing requirement.
- The Capital Market Law also allows the issuing company to set a return on securities that exceeds the limit established in other laws (i.e. 7% ceiling in the Civil Code).
- The Capital Market Law provides that trading of securities may only be undertaken by companies licensed by the CMA. Board members of such companies must have a minimum of 5 years experience in the field of securities or must have 4 years experience and have participated in a training course set up by the CMA.
The Capital Market Law regulates both companies that offer their shares to the public and those that deal in securities. In particular, it regulates the actions of companies engaging in the following types of securities related activities:
- Promoting and underwriting investments in securities
- Participation in the formation of companies that issue securities or in the increase of their capital (Egyptian equivalent to the holding company)
- Securities clearing and settlement activities
- The creation of securities portfolios and investment funds portfolio and investment fund management
- Securities brokerage activities
- Other securities activities specified by a decree of the competent Minister following approval of the CMA
Any other activities relating to the field of securities may be added to this list by a ministerial decree after obtaining the approval of the CMA.
Joint stock companies must register with the Stock Exchange in either Cairo or Alexandria. A joint stock company's securities can be listed in either the official or the unofficial register. The following securities may be listed in the official register:
- Public issuance of securities that represents no less than 30% of the joint stock company's nominal shares and that is subscribed to by no fewer than 150 persons.
- Public issuance of securities by the government or a public sector company.
Securities that do not meet the criteria for listing in the official register (including foreign securities) could be listed in the unofficial register. Investors dealing in securities listed in the official register are exempt both from stamp duties ordinarily due at the time the securities are issued and from annual stamp duties and from capital gains tax on profits realized from trading of such securities.
Issuance of Securities
The Capital of Joint stock companies and the shares of dormant partners in companies with a limited number of shares shall be divided into nominal shares of equal value. However, the company may issue bearer shares within certain limits and according to specific terms and conditions. (Article 1)
- The company's articles of association shall determine the value of the nominal shares, but the nominal share cannot be valued less than LE5.00 and shall not exceed LE1,000.
- A share should be indivisible. New shares may be issued, upon increasing the capital of the company with a different value from that of shares from previous issues.
- For issuing shares against a real share, or on the occasion of merger, the value of these shares should conform to the value of the real share or the merged rights, as determined by the concerned evaluation committee. However, the party submitting the real share may pay the difference in cash or decline the deal.
- No stocks/securities of any company, including public business sector companies, and public sector companies shall be floated for public subscription, except by virtue of a subscription prospectus, approved by the Authority to be published in two prominent daily newspapers, at least one shall be in Arabic.
Obligations of Listed Companies
In order to secure the rights of investors and the users of financial statements, listed companies must provide the following information about their financial and business results:
- The balance sheet and other financial returns and statements of the company shall be prepared according to the accounting criteria and auditing standards to be determined or referred to in the executive regulations of the Capital Market Law.
- All listed companies should submit to the CMA a copy of their financial statements, reports of the Board of Directors, and the auditors' report, one month prior to the date scheduled for convening the general assembly meeting.
- All listed companies shall publish an adequate summary of the semi-annual reports and annual financial statements, in two leading daily newspapers one of which to be in Arabic.
A new Law on Central Registration and Depository, Law 93/2000, was adopted. This law provides for the creation of a licensed Central Depository that is to issue deeds that will be able to be used instead of material shares. For the first time, the law introduces a concept of beneficial ownership of shares. Banks and other licensed securities companies are required to enter into agreements with the Central Depository that include certain mandatory provisions. They are required to participate in a special fund that will guarantee settlement of securities transactions.
The Central Depository is owned by its members. Transactions are to be based on cash against delivery with a settlement time to be specified by the CMA.
The Capital Markets Law stipulates that an investment fund must take the legal form of a joint stock company. The CMA has the authority to review and object to the members of an investment fund company's Board of Directors as well as the fund managers. An investment fund must be managed by a specialized investment management company.
The Capital Market Law provides that an investment fund must maintain a certain ratio between its paid-in capital and its financial resources. Only banks that have been authorized by the Minister of Foreign Trade may deal in the subscription of investment fund shares.
Banks and insurance companies may establish investment funds without having to create a separate joint stock company, if they have received authorization to do so from the CMA and, either the CBE (in the case of banks) or the General Organization for Insurance Supervision (in the case of insurance companies).
Employee Shareholders' Association (ESA)
The Capital Markets Law also introduced the concept of Employee Shareholders Associations, whereby employees of a joint stock company may form an association that owns shares in the joint stock company's capital on behalf of the employees.
Brokers' Obligations and Restrictions
The obligations of and restrictions on brokerage companies are set out by the Executive Regulations of the Capital Market Law, Decree 39/1998.
Brokerage companies are bound by fiduciary duties of honesty and integrity. Therefore, brokerage companies are required to disclose any conflict of interest that may exist. Also included in their fiduciary duty is the obligation not to disclose any information regarding their clients. Insider trading rules, Article 244 of Decree 39/1998, have been established which stipulate that brokerage companies, their directors and employees are expressly prohibited from engaging in insider trading by using non-public information in accordance with, among other things, these rules:
- Brokerage companies may not execute transactions on behalf of their clients, without sufficient evidence justifying their advice and the resulting transactions.
- Brokerage companies are prohibited from "churning" (i.e. entering into transactions for clients participating in excessive trading, with the aim of increasing commissions, expenses or other fees).
- Brokerage companies may only deal on behalf of their clients in transactions for which they have been granted specific instructions. These instructions should be recorded by the brokers.
- The client must be informed of the completion of a transaction within 24 hours.
- Transactions on behalf of the brokerage companies' directors, employees or relatives are permitted only with the explicit written consent of the Board of Directors of the brokerage company.
Money Laundering Law
The People's Assembly approved the Money Laundering Law with all its 20 articles on May 22nd , 2002. The Law was proposed due to the government's rising concern of the danger of this phenomenon and its detrimental effect on Egypt's economy; as well as, concerns expressed by the OECD Financial Action Task Force (FATF) on Money Laundering regarding the lack of a comprehensive legal regime in Egypt to counter this globally recognized illegal activity. The law provides for setting up a unit by the Central Bank of Egypt (CBE) to monitor reports from the financial institutions on the suspected money laundering deals.
The law stipulates that financial institutions should hold books, which record their domestic and international money dealings coupled with full information that shed lights on these dealings. According to the law, the institution should keep the books for five years at least as of the date when the dealings were concluded. The institution is held responsible for putting such books and records at the disposal of judicial authorities concerned with the enactment of the law whenever they are requested.
The law also provides that any citizen has the right to take out and bring in whatever amount of hard currency, provided that the sum should be written down on the entry visa, in case it exceeds $20,000 or its equivalent.
The law also determines a maximum 7-year imprisonment anyone convicted of money laundering, or attempted to launder money, in addition to fining the culprit twice the amount of money he/she laundered. However, it absolves from any criminal charges any body that reports, in good faith, on any suspected money deal that turns out to be illegal.
(Last Updated November 10, 2005)
A new mortgage law No. 148 of 2001 was passed in 2001 to regulate real estate bank financing. The law, which is geared towards encouraging housing of low and middle-income groups, allows banks to offer subsidized loans for the purchase of houses as well as administrative and commercial units and renovating existing ones. However, it is believed that middle-income families who can afford to pay a monthly installment not less than LE400 will benefit most from the new law. Borrowers will be able to make a 20% down payment and pay off the remainder in installments over 20-30 years. Under the new law, banks will be able to foreclose on loan defaulters in case they default on payments for between six and nine months. However, for protection of borrowers the idea of a mortgage guarantee fund is applied by the law. (Article 35)
As to its effect on the real estate sector, the law is expected to eliminate the gap between demand and supply that was created after the rush of many investors to construct new residential units, shopping malls and tourist villages on the outskirts of Cairo and the Mediterranean without being matched with an equal rise in demand due to a lack of real estate financing for the low and middle class groups. However, the law is expected to improve liquidity to the market, which will reflect on the country's overall economic welfare.
Around 96% of the 73 million Egyptians live in the Nile Valley and Delta, with 16 million residing in Cairo and 6 million in Alexandria. Approximately one-third of the workforce is employed in agriculture. An estimated 47% of Egypt's economic and social establishments are in the Cairo and Alexandria governorates, which host 25% of the labor force.
The number of non-Egyptian employees in any establishment must not exceed 10 percent of the total work force for unskilled or semiskilled workers. For skilled workers the limit of Egyptian labor is 25 percent. Also total compensation of foreign employees must not exceed 35 percent of the total payroll of the establishment.
The Egyptian labor market is regulated by the new unified Labor Law No. 12 for 2003. The new Law comprises 257 articles that address all the legal aspects regulating the Egyptian labor market. The new law aims at increasing the private sector involvement and at the same time achieving a balance between employees' and employers' rights. Amongst the most important issues that the new law addresses is the right of an employer to fire an employee and the conditions pertaining to this as well as granting employees the right to carry out a peaceful strike according to controls and procedures prescribed in the new law.
An employee is entitled to a minimum annual paid leave of 21 days every one full year of service and proportionally if his period of service is less than one year. This annual leave is increased to one month after the employee has worked for 10 consecutive years or is over 50 years old. In addition, every employee is entitled to full pay for official holidays designated by the Ministry of Manpower and Immigration, not to exceed 13 days a year.
If employees are required to work during official holidays, the employees are entitled to overtime (paid at twice their normal rate). The weekly days off and the official holidays shall not be counted as part of the annual leaves.
Accidental leave is the leave taken by an employee, as a result of unexpected circumstances, in which he has no choice except desisting from work, after that he should inform the employer with the reasons of desisting.
Article No. 51 of the Labor Law states that desisting from work with accidental reason should not exceed six days per year with a maximum of two days each time, and this leave will be counted from the annual leave of the employee.
The Labor Law provides that an employee whose sickness is established and determined by the concerned medical responsible is entitled to sick leave, and shall be compensated according to the Social Insurance Law (up to six months of paid sick leave annually at between 75% and 100% of the employee's normal wage).
A worker shall be entitled to benefit from his accumulated annual leaves in addition to leaves of sickness and he shall also have the right to request his leaves of sickness to be transferred to the annual leave balance.
An employer shall not terminate the employee's service due to sickness unless the employee has utilized the above-mentioned period.
Official Leaves (Public Holidays)
According to ministerial decree No. 112/2003 regarding identification of the official leaves, which are fully paid, are as follows:
- The 1st day of Moharam (Islamic new year)
- The 12th day of Rabie the first (Prophet Mohamed's birthday)
- The 1st and 2nd days of Shawal (1st Bairum)
- The 9th, 10th, and 11th days of Zoelhega (2nd Bairum)
- The seventh day of January (Eastern Christmas)
- Spring day (Sham El Nessim)
- The 25th of April (Sinai Liberation Day)
- The 1st of May (Labor Day)
- The 23rd of July (Revolution Day)
- The 6th of October (Armed Forces Day)
Performing Pilgrimage or Visiting Jerusalem
Regarding religious respects, Article No. 53 of the new Labor Law stated that an employee who has spent five consecutive years in the service have the right to full paid leave for a period not exceeding one month for performing pilgrimage or to visit Jerusalem and such a leave shall be enjoyed only once during the period of service.
Maternity and Child Care Leave
A female having spent 10 months in the service of an employer shall be entitled to a maternity leave of 90 days with full wage payment including the period preceding giving birth. The female employee is not entitled to this maternity leave for more than twice during her working period.
During the 24 months following the date of childbirth, she has the right to two period of rest daily (30 minute each) for breast-feeding her child, with the option to combine both periods in one.
Employment contracts are required to be in writing, in triplicate and in Arabic language. The employer, employee and social insurance office each keep one copy of the employment contract, which must include certain information as specified in the Labor Law.
A typical labor contract would include:
- Name of the employer and the address of the work place.
- Name, qualifications, occupation and address of the employee and the documents required to prove his identity, and his social insurance number.
- Nature and kind of work subject to the contract.
- The wage agreed upon and method and time of payment.
If an employee is hired on probation, the employment contract should indicate the probationary period, which cannot exceed three months.
An employment contract may be drawn up for a fixed-term or indefinite period of time. In case the employee and the employer continue in implementing a fixed-term contract after its term, such shall be considered as a renew of the contract for an indefinite term.
It is necessary that both the employer and employee agree on essential matters in the law concerning wages, job description, and contract period.
It is also important to state the kind of work, which the employee is obliged to do, and the entity to which he/she is questionable if work is not performed.
The legislator regulates a maximum of five years for a fixed contract. If the employer and employee agree on a longer employment duration, then the latter has the right to terminate the contract after the initial five years, without receiving compensation; however, the employer must be notified within an agreed upon time period, which is a three-month prior notice.
The probation period shall be specified in the labor contract and no employee shall be appointed under probation for a period exceeding three months, neither shall an employee be appointed under probation more than once with the same employer.
Employees should not work more than eight hours a day or 48 hours over a six days working week.
Most private sector employees work 5 days a week, usually Sunday to Thursday. The number of working hours may be increased to 9 hours a day in certain circumstances.
Employees are entitled to one whole working day off each week. Certain exceptions apply when work is intended to prevent a serious accident or to cope with a heavy workload. In such situations, the employee must be paid overtime.
The Social Security System and Public Health Insurance
Social security is a public program designed to protect individuals and their families from income losses due to unemployment, old age, sickness, or death and to improve their welfare through public services (e.g. Medical Care).
For Egyptian employees, who must constitute a significant part of a company's workforce, there is a social security system under which the employer pays contributions equivalent to approximately one-fourth of the salary earned, up to a certain limit of salary.
Contributions in the private sector under social security regulations are levied only on Egyptian nationals who are in full-time employment. Contributions are required at the following rates:
On the monthly basic salary up to LE 700, at 26% and 14% for employer and employee, respectively; and on any amount in excess of the basic salary (LE 700), or other allowances or overtime, up to LE500 monthly, at 24% and 11% for employer and employee, respectively.
For seasonal and temporary workers employed by construction contractors, a different system applies, Social Security contributions by the contractor amount to 18% of the percentage that labor costs bear to total contract costs. This levy may significantly increase labor costs on projects.
Benefits provided under the social security scheme are pensions, disability payments, sickness payments, maternity and death allowances, and unemployment insurance. These benefits are not given to non-Egyptians.
All private sector companies in Egypt are required to provide free health care for their Egyptian employees either through the Medical Insurance Plan of the Ministry of Social Insurance or privately. They are also required to contribute to the Pension Insurance Fund of the Ministry of Social Affairs and Insurance.
1. Annual Increment
Employees are entitled to a periodical annual increment of not be less than (7%) of the basic salary on which the social insurance subscriptions are calculated. Thus until the National Council for Wages issues the decisions regulating the payment of that increment.
2. Overtime Pay
The minimum overtime premiums are 35 per/cent of normal pay for overtime worked during daylight, 70 per/cent for that worked at night, and 100 per/cent on rest days and 200 percent on official holidays. Production incentive bonuses are tax-free.
3. Minimum Wage
Not yet determined by the National Council for Wages.
4. Profit Sharing
Employees of a Joint Stock Company, Limited Liability Company, or Foreign Branch are entitled to a share in the distributable profits. The share is fixed at an amount not less than 10% of distributable profits and not more than the total annual salaries of the employees. However, Limited Liability Companies with capital less than LE 250,000 are not subject to this distribution of profit share.
There is no obligation to pay annual bonuses.
Article 77 of the Law No. 12/2003 states that the employer should establish a file for each of his/her employees where he/she shall detail the employee's name, occupation, level of skills, educational degree, his address, military status, social status, date of appointment, wage and changes in wage, penalties imposed, leaves obtained, and finally the date of service termination and the reasons for it.
The employer should also deposit any investigation reports, any reports by the employee's supervisor concerning performance, and any other document related to the employee's service.
Moreover, the employee should keep the above-mentioned file for at least one year after the termination of the labor relationship. Reasons behind this commitment is to prevent any dispute that may take place on wages, leaves, firing or dismissal reasons and to facilitate the employer's administration regarding accomplishing the Labor Law requirements.
The previously referred to data in Article No. 77 represent the least amount of data that should be provided in the employee's file. There are no restrictions to adding any more data such as: the employee's age, sex (male, female), qualifications acquired and certificates of experience.
Special Requirements for Foreign Resident
Tourists and visitors are generally permitted to enter the country with a minimum of immigration formalities. Except for nationals from certain countries who must obtain visa from the Egyptian Consulate in the country where they live, most visitors require temporary visas to enter Egypt. These are issued at ports.
1. Tourist Visas
Tourist visas are issued to foreign nationals visiting Egypt for recreational purposes or to foreign nationals whose stay in Egypt will not exceed three months. It is possible to renew this visa for similar durations.
2. Temporary Visas
Temporary visas are issued to foreign nationals who are entering Egypt for reasons other than recreational purposes and whose stay will exceed three months but will not exceed one year.
All Egyptian workers, except part-time or temporary staff, must obtain work certificates.
Foreigners interested in employment in Egypt have to obtain work permits and follow the corresponding regulations issued by the Ministry of Manpower and Migration in this regard. After a work permit is obtained, the foreign national's visa (whether tourist or temporary) is converted into a work visa, with the same duration as the work permit.
Work permits are easier to obtain for technical staff than for unskilled or semi-skilled workers. Work permits are usually granted to foreigners for a period of one or less than one year. It may also be issued for a period exceeding one year after settling the relative fee for the requested period.
Documents Necessary for Obtaining Work And Residence Permits for Foreigners in Egypt:
- Letter from the Work License of Foreigners Department to issue the visa approving his work in Egypt to be addressed to the Passport Authority, and to the competent Manpower Department, the Companies Department, or the General Authority for Investment & Free Zone (GAFI).
- Filling the applications forms for work permits of foreigners willing to work in Egypt. These application forms may be obtained from the work permit department at the Manpower and Training Directorate-Tahrir Complex.
- Passport for perusal. It is important to apply while residence is valid.
- Copies of passport size photographs of the foreigner.
- Copies of the company incorporation contract.
- Copies of the Tax ID Card.
- A copy of the commercial register.
- Copies of the certificates of academic degrees and experience of the foreigner.
- The license for exercising the profession in the cases where such license is required.
- A memorandum justifying the recruitment of the foreigner for that job, stating the reasons for not recruiting an Egyptian as well as the tasks assigned to the foreigner together with the name of the Egyptian assistant whose qualifications and experience are consistent with the foreigner.
- Approval of the related Authority (e.g. Investment Authority, Egyptian General Petroleum Corporation … etc.).
- A delegation from the company to the person who is going to apply for the work permit on behalf of the foreigner.
- A certificate from a public hospital or a recognized laboratory such as the vaccination laboratory of the Ministry of Health, confirming that the foreigner is free of HIV.
- The approval of the concerned security authorities. This can be arranged through the department of work permits at the Manpower and Training Directorate at Tahrir complex.
- Evidence of settlement of the work permit fees.
Fees for issuing the permit are set as follows:
- Issuing the permit for the first time or on its renewal for both Aliens and nationals of Arab countries is approximately L.E. 1,000.
- The fee should be due in full for the whole year or its fractions.
Records Stated in Labor Law
The Labor Law obliges the employer to present the following records to the Ministry of Manpower and Migration:
Regarding the employment of disabled individuals according to Law No. 39 of 1975, which entails qualifications and employment of the disabled, this law obliges private sector employers, whose number of workers equals to or exceeds fifty employees, to employ 5% of the total number of workers from the disabled as recommended by the Manpower Offices.
The employer also has the right to appoint disabled individuals he chooses provided they are holding the registry certificate which proves their disability.
Any employer who hires a disabled worker should send a registered mail letter with receipt confirmation to the manpower office in charge during the first fifteen days of the employment of the disabled worker/employee.
In an attempt to enforce control on employing foreigners, the ministry obliges organizations employing foreigners to make a record including the following:
- The foreigners name, surname, nationality and religion
- Birth date
- Job title and exact job description
- Date and number of his employment permit.
- The wage (Article 13 of MD 136 of 2003)
Financial Penalties Record
An employer shall make entry of the financial penalties imposed on employees in a special register, detailing the reasons why such penalties were imposed, the name of the employee and his/her salary. According to Article 2 of the Ministerial Decree 123 of 2003, all financial penalties imposed on the employees should be spent over the social, cultural, and sports activities for the employees.
The Unemployment Insurance Law
The unemployment insurance law, officially known as the Emergency Subsidy Fund Law No. 156 of 2002, establishes a fund to compensate workers/employees whose wages are suspended due to firm closure or downsizing. The Fund’s resources will come from a 1 percent deduction from the base salaries of the government sector, public enterprises and private sector employees in firms with over 30 workers, a government contribution, and other donations.
Termination of Employment
Duration of Probation
The probation labor contract should not exceed three months neither shall an employee be appointed under probation more than once for the same employer.
A probation contract is a conditional labor contract, in case the employee proves unsuitable for the job during the allotted period; thus, allowing the employer to cancel the contract.
Dismissal & Termination
Article 69 of the Labor Law, lists the grounds under which an employee may be dismissed. An employee may not be dismissed until the matter is brought before a committee with judicial powers at the Ministry of Manpower and Migration. The committee shall decide the request for dismissal brought to it within (15) days from the date of the first session and its decision shall be final. However, the employer may thereafter dismiss an employee and the employee retains the right to challenge the dismissal in court.
Egyptian Labor Courts retain discretion in reviewing an employment dismissal. Compensation awards may be granted to employees for wrongful dismissal on the basis of a review of the facts and circumstances of each case.
An employee is entitled to 60 days notice for dismissal if his period of service does not exceed 10 years and 90 days if that period exceeds 10 years. (Should the employer desire to dismiss the employee without giving him the relative notice period, the employee shall receive two or three months salary payment instead of such notice).
Article 122 Labor Law states that the compensation shall not be less than the wage of two months' salary for each year of employment for wrongful dismissal. Throughout the notification period the labor contract shall remain ruling.
Grounds for legal termination without notice include the expiry of a fixed-term employment contract, retirement, resignation, death or a court ruling.
Social Insurance Contributions
Employers must pay social insurance contributions to the Ministry of Social Insurance and Social Affairs with respect to their Egyptian employees. Egyptian employees also are liable for contributions. Employees' contributions are withheld by the employer from the employees' salaries and wages each month and paid to the ministry; together with the employer's own contributions, within the first two weeks of the following month.
Social Insurance Contribution Rates
|On basic monthly salary up to L.E. 700/month
|On variable pay (such as production incentive bonuses)-up to L.E. 500/month
(Last Updated November 10, 2005)