COVID-19 and Employment contracts in Egypt

COVID-19 and Employment | Reopening the workplace (October 2020)

Update in September 2020

A new recovery package has been developed, in addition to other measures to strengthen the economy. It includes a protective shield to sustain company-based apprenticeship in times of crisis and reduction of business, particularly in the field of tourism, which was struck hard by Covid-19. Furthermore, different programs for loans have been set up in support of businesses of all sizes especially in the field of tourism and those working in this sector.

What is the current stage and what are the anticipated stages in re-opening the workplace in Egypt?

Egypt saw a modest lock-down, which means most people were able to go to work. Working from home was recommended but not made mandatory by law. Therefore, a lot of companies had assigned their employees to work from home. As of July of 2020, an overwhelming number of companies have resumed standard office work at their usual headquarters. Production plants that had been closed, due to lack of supplies, have continued their work in July.

Some businesses like restaurants, hotels, free time and sports facilities as well as cultural institutions that were closed completely, reopened on June 26th at 50% capacity but all necessary precautionary measures must be taken to prevent the spread of the virus. All businesses must close at 12 am. However, malls and shops must abide by the same measures and can work until 10 pm.

Health and safety measures at the workplace: What are the employer's obligations in Egypt?

The Egyptian government has imposed many safety measures on banks, shops, malls, restaurants and other entities. Business owners and commercial centers must provide means of disinfecting hands at their doors and must maintain a low capacity, while controlling visitor flows.

Employers must comply with the general safety measures as per the Employment Law No. 12 of 2003 (“Employment Law”). In this respect, Article 210 of the Employment Law provides the following:

“The establishment and its branches shall take all protection mean for its workers from the danger of infection with bacteria, viruses, fungi, parasites and the rest of biological risks, once the nature of work exposes the workers to the conditions of infection therewith, particularly the following:

(A) Dealing with infected animals, their products and their wastes; and

(B) Mixing with sick people and carrying out care services for them including medical analyses and examinations.”

The Health Measures to Prevent Contagious Diseases Law No. 137 of 1958 sheds light on the powers and responsibilities of the concerned entities should an infectious disease be detected. This Law was amended by virtue of Law No. 142 of 2020, which increased the penalties imposed on anyone violating the Minister of Health’s instructions regarding the pandemic.

Does the employer have to pay salaries if employees refuse to come to work due to covid-19?

No, he does not. If the employer has implemented all the safety measures required by the Ministry of Health, the employee has no excuse for a leave of absence. The employee can only excuse himself if he is infected by the virus. If the employee insisted on leaving work, he will be subject to Article 69 of the Employment Law which stipulates the following:

“A worker shall not be discharged unless he commits a serious error. The following cases shall be considered as a serious error:

If the worker absents himself without legitimate justification for more than twenty intermittent days during the same year, or more than ten consecutive days, providing a written warning to the worker by registered letter with acknowledgment of receipt, ten days after his absence in the first case, and five days after his absence in the second case, shall precede his discharge.”

What are the best measures for re-opening the workplace in Egypt?

The best measures for reopening the workplace are the same in most countries. Examples are re-opening step by step, keeping an eye on the legal dynamic and pandemic developments, taking care of communication and keeping the employees up to date.

How to deal with a reduction of business during the COVID -19 pandemic?

There are some businesses that allow working from home, if the work is not affected by the pandemic. There are, however, other businesses that cannot allow working from home. For that, the employers must resolve the problem by following a short time work and thus salary reduction is a way of facing the decrease of the activity or the complete closedown of business affected by the pandemic.

What if I had just hired someone? Can I take my employment offer back?

In case the employer’s offer was made and already accepted, this means that there is already a binding contract, “because the contract is an obligation for all the parties”. Therefore, the employer must adhere to the terms of the contract.

Nevertheless, the employer can terminate this agreement within the first 3 months, by considering the first period probationary.

Another option is to postpone the start of the employment, alternatively the employee may file a claim against the employer based on the arbitrary dismissal as stated in the Employment Law.

Can I take the remaining vacation days of my employees?

Article 48 of the Labor Law No. 12 of 2003 states:

“The employer shall determine the dates of the annual leave according to work exigencies and conditions. He shall not interrupt the leave except for strong reasons necessitated by work interest. The worker shall go on leave on the date and for the period determined by the employer.”

Therefore, the employer can obligate their employees to exhaust their remaining vacations.

May employers reduce employees' salaries due to Covid-19?

First, we must differentiate between the Force Majeure and the Hardship as followed:

What is Force Majeure according to the Egyptian Civil Code (ECC)?

While the Egyptian legislator respects the parties’ agreement and considers it as the Law of the parties, it has provided for exceptions such as the force majeure as per Article 373 of the ECC:

“An obligation is extinguished if the debtor establishes that its performance has become impossible by reason of cause beyond control.”

In addition, the legal precedents, of the Egyptian Court of Cassation, define the Force Majeure as Follows:

“To consider an event as a force majeure, there are 2 conditions. This event should be unpredictable and impossible to resist” (Challenge No. 979/47 J.Y.)

As mentioned above, for an event to be considered a Force Majeure as per the Egyptian Civil Law and the Court of Cassation’s precedents, the following conditions should be met:

  • Unforeseen/unpredictable.
  • Irresistible
  • Makes the obligation impossible to be fulfilled.

What is Hardship according to the Egyptian Civil Code (ECC)?

The Egyptian Civil Code defines the concept of “hardship” in Article 147, paragraph 2 as an exceptional and unforeseeable event of a general nature that occurred after the conclusion of a contract and “burdens” the performance of a contract.

An event is exceptional and unforeseeable if its occurrence is rare. The performance of the contractual obligations is further considered to be “onerous” if it would still be possible but would be so disadvantageous to the defaulting party that it would threaten him with serious losses. Paragraph 2 of Article 147 ECC provides for an exception for precisely these cases:

“When, however, as a result of exceptional and unpredictable events of a general character, the performance of the contractual obligation, without becoming impossible, becomes excessively onerous in such way as to threaten the debtor with exorbitant loss, the judge may according to the circumstances, and after taking into consideration the interests of both parties, reduce to reasonable limits, the obligation that has become excessive. Any agreement to the contrary is void.”

Based on that, and in order to consider a case as a hardship event, it must meet the following conditions:

  • The contract in question should be executed over a period
  • The hardship must be exceptional
  • The hardship must be of a general nature
  • The hardship must be unpredictable and unusual
  • The obligation execution must be onerous even though it will be still possible

Therefore, we considered Covid-19 makes a hardship but we can consider it as a force majeure in some fields like tourism, Aviation…, etc.

In all the way Article 41 of the Employment Law which states the following:

“If he [employee] attends and is barred from exercising his work by imperative reasons beyond the will of the employer, he shall be entitled to half his wage.”

Hence, the employer may reduce the salary of his inactive employees by 50% if the employer’s business met one of the concepts due to Covid-19 (i.e. Force majeure or hardship conditions).

How to deal with employees that cannot go to work/ provide work from home, because they must take care of their children? Are they allowed to stay at home? Is the employer obligated to continue payment?

There is a Chapter in the Egyptian Labor Law for the “Employment of Women Workers” that states the following:

Art 91:- ” A female worker having spent ten months in the service of an employer or more shall have the right to a maternity leave of ninety days with compensation equal to her comprehensive wage, comprising period before delivery and after parturition, providing she shall submit a medical certificate indicating the date on which delivery most likely took place. A female worker shall not be required to work during the forty-five days following childbirth. The maternity leave shall not be entitled more than twice throughout the female worker’s period of service.”

Art 93: -” A female worker nursing her child – in addition to the determined rest period – has the right during the twenty-four months following the date of childbirth to two other periods for breastfeeding each of not less than a half-hour. The female worker shall also have the right to add the two periods together. These two additional periods shall be counted as working hours and shall not result in any wage reduction.

Art 94:-” Subject to the provision of the second clause of article (72) of the Child Law as promulgated by Law No. 12 of the year 1996, a female worker in the establishment where fifty workers or more are employed shall have the right to obtain a leave without pay for a period not exceeding two years, to care for her child. This leave shall not be entitled more than twice throughout her service period.”

What should I do if there is still business to attend to? How can I anticipate the end of the lockdown?

The Egyptian government did not force the companies to close their shops but provided they create a safe work environment (safety distance, face shield and enough cleaning and hygiene facilities).

In addition, the government obligates the enterprises to close the facilities that have been infected with the Coronavirus for a minimum of two weeks.

Do I have the right to terminate contracts in this period?

Article No. 196 of the Employment Law states the following:

“The employer, for economic necessities, shall have the right to close down the establishment wholly or partially, or shrink its size or activity which might affect the size of labor therein, according to the conditions, terms and procedures prescribed herein in the present law.”

Article No. 197 of the above Law states the following:

“In applying the provisions of the previous article, the employer shall submit a request for closing the establishment or shrinking its size or activity, to a committee to be formed for that purpose.

The request shall comprise the reasons it is based on in doing that, as well as the numbers and categories of workers to be dispensed with. The committee shall issue its decision duly substantiated within at most thirty days from the date the request is submitted to it.

If the decision is issued accepting the request, it shall comprise an indication of the date of its execution.

The concerned party may complain against that decision before another committee to be formed for that purpose. The complaint against the decision accepting the request shall result in staying its execution…”

If the competent committee accepted the proposal of the employer, he shall notify the workers of such a decision as per Article 198 of the Employment Law. Moreover, the employer may replace the closure of another procedure and if he decides to terminate the contracts of his employees, he must pay compensation as per Article 201, which stipulates the following:

“Subject to the provision of article (198) of the present law, and in the cases where the employer has the right to terminate the labor contract for economic reasons, he may – instead of using that right – modify the conditions of the contract temporarily. He may charge the worker with performing a work not agreed upon, even if it differs and from his original work. He may also reduce the wage of the worker up to not less than the minimum wages.

If the employer modifies the conditions of the contract according to the previous clause, the worker may terminate the labor contract without being committed to send a notification. The termination of the Contract, in this case, shall be considered a substantiated termination on the part of the employer, and the worker shall be entitled to the compensation prescribed in the following clause.

By terminating the contract for economic reasons according to the procedures indicated in articles (196) to (200) of the present law, the employer shall pay the worker whose contract he terminated a compensation equivalent to the comprehensive wage of one month for each of the first five years of service as well as the first one and a half months following the first five years.”