Termination of Employment Contracts in Egypt

Egypt does not recognize the principle of employment at will. Termination of an employment contract — whether fixed-term or permanent — requires a legitimate legal basis. Under the new Labor Law No. 14/2025 (the “Labour Law”, lawful grounds for employer-initiated termination include gross misconduct, inefficiency following internal procedures, economic downsizing subject to statutory approval, and retirement upon reaching the age of 60. Unjustified dismissal of an employee on a permanent contract entitles the latter to compensation of no less than two months' salary per year of service (Art. 165). Furthermore, the law now requires that disciplinary dismissals be authorized by a judicial ruling, reinforcing the legislative intent to eliminate arbitrary terminations.

Egyptian law provides general protection against unjustified dismissal irrespective of company size or length of service — there is no statutory minimum threshold (such as a headcount or seniority requirement) for dismissal protection to apply. All employees, from their first day of employment, benefit from the prohibition on arbitrary dismissal.

Certain categories of employees enjoy enhanced or special protection regardless of tenure, including pregnant women, employees on maternity leave, trade union representatives, candidates for employee representative roles, and employees with disabilities. Dismissals targeting any of these groups are expressly prohibited.

Additionally, probationary contracts (capped at three months) may be terminated by either party without notice or grounds during the probationary period.

In practice, compensation is the primary remedy for unlawful dismissal in Egypt. While reinstatement is theoretically available as a judicial remedy, Egyptian labor courts have historically tended to award monetary compensation rather than order reinstatement. Under Law No. 14/2025, the establishment of Specialized Labor Courts (effective 1 October 2025) — equipped with enforcement offices and judges authorized to issue urgent orders — is expected to make the enforcement of compensation awards more efficient and expeditious. These courts are required to render a judgment within three months from the first hearing in dismissal cases.

The compensation framework varies depending on contract type and the grounds for termination:

• Permanent contracts — unlawful dismissal: The employee is entitled to a minimum of two months' salary per year of service (Art. 165). This floor is mandatory; parties may agree on higher amounts.
• Permanent contracts — lawful termination for economic reasons: Severance is calculated at one month's salary per year of service for the first five years, and one and a half months' salary per year for each subsequent year (Art. 241). The same entitlement applies where an employee resigns because of materially changed working conditions imposed by the employer.
• Fixed-term contracts — premature termination without cause by the employer: The employee is entitled to one month's salary per year of service (Art. 154) plus compensation for the remaining term of the contract.

There is no statutory maximum cap on compensation. Amounts exceeding the minimums above are subject to negotiation or judicial determination.

There is no explicit statutory deadline requiring an employer to exercise the right to terminate for cause immediately upon becoming aware of the relevant facts. However, the Labor Law establishes a statutory deadline related to disciplinary action.

Specifically, pursuant to Articles 138 and 139 of the Labor Law, an employer must impose any disciplinary sanction (including termination) within thirty (30) days from the completion of the investigation into the alleged violation. Accordingly, while there is no statutory forfeiture period tied to the employer’s knowledge of the misconduct, the employer must act within the 30-day period following the conclusion of the investigation; otherwise, the right to impose disciplinary sanctions may lapse.

What can be stated with confidence is that the right of an employee to revoke a submitted resignation is limited to ten days from the date of submission (within the same period the employer has to respond). Beyond that, the resignation becomes effective. Whether a comparable forfeiture rule applies to the employer's right to terminate for cause has not yet been authoritatively clarified under the new law.

A written form is mandatory. Under the Labour Law, notice must be delivered in writing; verbal, email, or fax terminations are not sufficient. For resignations submitted by employees, an additional formal step is required: the written resignation must be certified (ratified) by the competent Labor Office, and only becomes effective once accepted by the employer or upon the lapse of the ten-day response window. Pre-signed resignation forms (the previously widespread "Form 6" practice) are now expressly prohibited and rendered invalid. For employer-initiated terminations, written notice must clearly state the reason for termination and comply with statutory notice periods.

Yes, an employee may successfully challenge a termination notice if it was not issued or signed by a duly authorized representative of the employer (Art. 139).

Under the Labour Law, there is no universal obligation to conduct a prior meeting with the employee before issuing a termination notice. However, two important procedural requirements apply in specific situations:

• Disciplinary dismissals: The new law requires that dismissal for disciplinary reasons be authorized by a judicial ruling from the Specialized Labor Courts. Employers may no longer unilaterally dismiss employees for misconduct without court involvement, which implies the employee will have an opportunity to be heard in the judicial process.
• Economic dismissals: Before implementing workforce reductions, the employer must submit an application to a governmental committee, which is required to notify both employees and the relevant labor union (Art. 238). This institutionalized procedure effectively functions as a substitute for a bilateral pre-termination meeting.

Yes, in two distinct scenarios:

• Economic dismissals (restructuring, downsizing, or closure): The employer must submit a formal application to a specially established governmental committee, including the economic rationale, proposed measures, and affected employees (Art. 237). The committee must issue its decision within 45 days. If no decision is made within that period, the application is deemed tacitly approved. Appeals have a suspensive effect. Implementation may only begin on the date specified in the committee's decision. The precise company-size threshold at which this procedure becomes mandatory has not yet been defined by the implementing decree.
• Employee resignations: Written resignations must be certified by the competent Labor Office before they become effective. This is not an approval process per se, but rather an authentication requirement designed to prevent coerced resignations.

Trade union involvement is mandatory in the context of collective or economic dismissals. Where an employer proceeds with workforce reductions and no collective agreement exists setting out criteria for the selection of affected employees, the employer must consult with the relevant labor union. Selection criteria should take into account factors such as length of service, family responsibilities, age, and professional qualifications (Art. 239). The competent minister is responsible for defining binding selection criteria by implementing a decree, which had not yet been issued at the time of this publication.

For individual dismissals on disciplinary grounds, there is no mandatory prior consultation with a trade union or works council. However, under the Labour Law, employers are now expressly required to recognize and engage with unions in respect of collective agreements, strengthening the institutional role of organized labor more broadly.