[Egypt] Minimum wage and minimum annual increase set for private sector

The National Council for Wages has at last set the long-awaited salary thresholds applicable to the private sector, Lexology reports.

The thresholds are as follows:

* Minimum wage:  EGP 2400 per month

* Minimum annual salary increase: 3 per cent per year   

The changes were implemented by virtue of decree No. 57 of 2021 and will apply from January 1, 2022.

Changes and recommended actions

From January 2022:

* All companies must ensure that their employees receive no less than EGP 2400 per month.

* All companies must award employees a minimum salary increase of 3 per cent 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 1200 per month and capped at EGP 8,100 per month. However, Lexology expects an update to the social insurance thresholds in light of the new law.

While employers in Egypt are already familiar with the requirement to adhere to a mandatory yearly salary increase, this is reportedly 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 1200 in order to enrol 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 of and adequate standards of living for its citizens and residents.

Failure to comply with the new rules risks fines being issued by the labour office

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 October 31, 2021.

The National Council for Wages has at last set the long-awaited salary thresholds applicable to the private sector, Lexology reports.

The thresholds are as follows:

* Minimum wage:  EGP 2400 per month

* Minimum annual salary increase: 3 per cent per year   

The changes were implemented by virtue of decree No. 57 of 2021 and will apply from January 1, 2022.

Changes and recommended actions

From January 2022:

* All companies must ensure that their employees receive no less than EGP 2400 per month.

* All companies must award employees a minimum salary increase of 3 per cent 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 1200 per month and capped at EGP 8,100 per month. However, Lexology expects an update to the social insurance thresholds in light of the new law.

While employers in Egypt are already familiar with the requirement to adhere to a mandatory yearly salary increase, this is reportedly 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 1200 in order to enrol 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 of and adequate standards of living for its citizens and residents.

Failure to comply with the new rules risks fines being issued by the labour office

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 October 31, 2021.