Egypt — Termination of Employment Contracts under New Labour Law

With the new Labour Law (Law No. 14/2025), the Egyptian legislature has enacted provisions that affect, among other things, the termination of employment relationships. With this reform, the Egyptian government aims to strengthen the enforceability of employee rights. To this end, it is relying on more precise legal definitions, new formal requirements, institutionalized termination of employment relationships, and more accessible legal protection. These new regulations are explained in more detail below.

Distinction between fixed-term and permanent employment relationships

The New Labour Law continues to distinguish between fixed-term and permanent employment relationships. An employment relationship is considered permanent if

• no written contract has been concluded,
• neither the term nor the end date is specified in the written contract, or
• the employee continues to work one day after the contractually agreed end date without a new (written and fixed term) contract being concluded.

A fixed-term employment relationship exists if the written employment contract contains a specific end date.

New: Foreign employees can now also be hired permanently – previously, they could only be hired on a fixed-term basis.

New formal requirements for written employment contracts

In the future, employers must draw up four original copies of each employment contract, sign them, and distribute them as follows:

• to the employee,
• to the social security institution,
• to the responsible employment office, and
• one copy that remains with the employer.

Contracts may be drafted in two languages; however, only the Arabic version is legally binding and authoritative in the event of disputes over interpretation.

Termination of employment (dismissal)

Fixed-term contracts

• The employment relationship generally ends upon expiry of the agreed term.
• Employees may now terminate their employment after five years of service with three months’ notice without having to give reasons or pay compensation.
• Employers may continue to terminate employment without notice for good cause (Art. 148). However, if the employer terminates the contract prematurely without just cause, they owe

o    a severance payment of one month’s salary per year of employment, as well as

o    compensation for the remaining term of the contract.

This provision protects employees with multiple fixed-term contracts and creates incentives not to terminate contracts lightly.

Permanent contracts

Ordinary termination: Notice period now three months (instead of two previously) if the employee has been with the company for less than ten years.

Termination without notice is permissible if the employer, among other things

• fails to pay wages,
• physically attacks or threatens the employee, or
• tolerates obviously unsafe working conditions.

In this case, the termination is considered unlawful dismissal by the employer (Art. 168), resulting in all compensation claims.

Formal requirements and right of revocation

The termination must be made in writing and must now also be certified by the responsible employment office.

If the employer does not respond within ten days, the termination is deemed to have been accepted.

Within the same ten-day period, the employee may revoke the termination in writing (also certified by the responsible employment office).

Employer’s right of termination

Dismissals for economic reasons are only permissible if a state committee has reviewed and approved the reasons (restructuring, downsizing, closure).

Severance pay in the event of termination by the employer

Dismissed employees receive:

• 1 month’s salary per year of service for the first five years,
• 1.5 months’ salary per year of service from the sixth year onwards.

If the employee resigns because they would have to work under significantly changed conditions following restructuring, they are entitled to the same compensation.

The New Labour Law promises more effective enforcement of these employee rights, as it provides for the establishment of a specialized labour court. In the future, employees will be able to obtain compensation more quickly before this court.

Rights during the notice period

Employees are entitled to take one day per week (or up to eight hours) off during the notice period to look for new jobs.

If the employer terminates the employment relationship prematurely and waives the employment until the end of the notice period, they must pay the full wage for the remaining period.

If the employee resigns, the employment relationship ends with the actual departure; continued payment of wages does not apply.

Prohibition of discrimination

Terminations are not permitted on the grounds of

• race, gender, marital status, pregnancy, religion, or political opinion,
• trade union membership or activity,
• Exercising the office of employee representative or candidacy for such office,
• filing complaints or lawsuits against the employer.

Conclusion

The New Labour Law No. 14/2025 comes into force on 1 September 2025. It tightens the formal and documentation requirements for dismissals, reduces discretionary leeway, and clearly strengthens employee protection. For multinational companies, the reform also creates a clearer and more predictable legal situation for personnel management, dispute resolution, and staff reductions. Those who adapt their contract templates, HR processes, and budgets now will minimize both legal risks and costs in the future.