In a significant development, the National Council for Wages has finally set the long awaited salary thresholds applicable to the private sector:
- Minimum wage: EGP 2400 per month
- Minimum annual salary increase: 3% per year
These changes which are implemented by virtue of decree No. 57 of 2021 will apply as of 1 January 2022.
What has changed?
Effective January 2022:
- All companies must ensure that their employees receive no less than EGP 2,400 per month.
- All companies must award employees a minimum salary increase of 3% per financial year. It is important to note that the increase does not apply to the entire salary as set out in an employee’s contract. It is only applicable to the portion of the employee’s salary used for social insurance purposes. Currently, the minimum salary for social insurance purposes is set at a minimum of EGP 1,200 per month and capped at EGP 8,100 month. However, we are expecting an update to the social insurance thresholds in light of the new law.
While employers in Egypt will be already familiar with the requirement to adhere to a mandatory yearly salary increase, this is the first time that the Egyptian Government has expressly set a minimum wage applicable to the private sector. (Previously, a de facto minimum wage was in place by virtue of the Social Insurance Law which required a minimum salary of EGP 1,200 in order to enroll employees in the social security system).
The move to set the minimum wage and uplift the current minimum mandatory salary increase level thresholds is indicative of the Government’s intention to ensure the welfare/adequate standards of living for its citizens and residents.
Failure to comply with the new rules risks fines to be issued by the Labor office.
Are there any exemptions?
Exemptions are limited. Only those employers facing economic difficulties and who are unable to meet the minimum wage requirements may submit a reasoned exemption request to the National Council for wages by 31 October 2021.
For further information and to discuss what this development might mean for you, please get in touch with one of the team members below or your usual Baker McKenzie contact.