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Egypt: Private Sector – Minimum Wage and Minimum Annual Increase Are Now Set

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In brief

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.

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Author

Ghada El Ehwany heads the Firm's corporate and commercial practice in Egypt. She has nearly 20 years’ experience in the Middle East, particularly in Egypt, Saudi Arabia and the UAE. Ghada practices in corporate, commercial and labor matters with a specific focus on mergers and acquisitions, healthcare regulatory, insolvency, compliance, investigations, TMT and dispute resolution matters.

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Joanna Matthews-Taylor is a partner in the Dubai office of Baker McKenzie and head of the employment practice. Joanna advises clients based in the UAE and wider Middle East region, on the full spectrum of employment law issues, including recruitment, employment contracts, benefits and termination. She has also advised clients on the employment aspects of corporate transactions, cross-border secondments and the mobility of employees in the Middle East. Joanna has worked with international clients in a variety of sectors including technology, life sciences, hospitality and insurance.

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Noor El-Gohary is an associate in Baker McKenzie's Banking & Finance and Capital Markets Practice Groups based in Cairo. She assists and advises multinational companies on project development and financing as well as regulatory and corporate matters.

Author

Peryhane Gawish joined as an associate in Baker McKenzie's Cairo office in December 2020. She practices in corporate and commercial matters with a specific focus on mergers and acquisitions.

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