After years of legislative uncertainty, Egypt’s new Labor Act has finally crossed the parliamentary finish line, offering a sweeping rewrite of employment law that’s either a milestone for workers’ rights or a bureaucratic migraine for startups — depending on whom you ask. In a country eager to brand itself as a startup haven, the new law may be a case of reform that gives with one hand and grabs the payroll ledger with the other.

The law, which replaces the 2003 Labor Code, passed through the House of Representatives with more than a few caveats and raised eyebrows. While the official line hails it as a balanced, modernized framework, reactions from Egypt’s entrepreneurial class range from politely concerned to privately alarmed.

The law won’t take effect immediately. Businesses have a 90-day grace period following its publication in the Official Gazette, with Egypt’s new labor courts expected to go live in October 2025 — just in time for the next judicial year. Until then, entrepreneurs are left parsing executive regulations that are still in the works.

All Employment Contracts Now Open-ended

Startups, whose hiring models often thrive on agility and short-term commitments, will find little comfort in one of the law’s boldest features: all employment contracts are presumed indefinite — unless stated otherwise, in writing, in Arabic, and in quadruple.

Yes, four copies must be produced: one for the employer, one for the employee, and two for the state. And if your developer is from Belarus or Bangalore? You’ll need a version in their native language too — but in the event of a dispute, only the Arabic text counts. 

A Raise in Name Only?

The law resets the formula for annual raises, setting a minimum increase of 3% of an employee’s insured wage. That’s down from 7% of base salary in the previous legislation. The math, we’re told, may work out better for some workers, since insured wages can be higher than base salaries. But employers struggling with cash flow may feel the pinch — and they’ll need to appeal to the National Wages Council for exemptions.

And don’t think of hiring someone just to see how things go: probation periods are capped at three months, with no option to restart the clock. If you invest in training a new hire, you can at least ask them to stick around — or repay the training cost if they leave prematurely. A small win for startup CFOs.

The “Modern Work” Clause

In what seems like an olive branch to the flexible economy, the law now formally recognizes remote work, part-time roles, and job-sharing arrangements. Employees can even work for multiple employers — so long as they don’t spill trade secrets or moonlight as freelance rivals. For startups relying on hybrid teams and gig-based talent, this nod to modernity may offer some breathing room.

But don’t get too cozy. The labor minister will wield new powers to restrict foreign labor and impose sector-specific bans. A tiered permit system for expat investors, with fees ranging from EGP 5,000 to EGP 150,000, could make hiring global talent less of a dream and more of a licensing nightmare.

A Rights-Based Revolution

Employees will now enjoy increased leave allowances, capped work hours (eight per day, 48 per week), and mandated overtime pay ranging from 35% to 100% depending on timing. New parental benefits — four months of maternity leave, one day of paternity leave (up to three times!) — are clear gains for working families, though businesses with over 100 women on staff will need to factor in the cost of childcare support.

Labor disputes will now fall under specialized courts, complete with expedited enforcement mechanisms. It’s a promising development for timely justice — unless you’re a startup too small to keep legal counsel on retainer.

Meanwhile, employers are now expected to contribute 0.25% of the minimum insurable wage per worker to a training fund, unless they conduct training themselves. On the surface, it’s a smart incentive for internal capacity building. In practice, it might just become another line item for founders already balancing payroll and product-market fit.

New Rules Around Strikes

Unions must now provide ten days’ notice before initiating a strike — assuming they’re registered and the strike doesn’t affect essential services. Employers can legally withhold pay during strikes, a win for fiscal discipline. Still, startups should prepare for the paperwork war if disputes escalate. At least labor inspectors, now blessed with judicial powers, are required to carry ID cards. Small mercies.

Everyone Is a Bit Unhappy, So Maybe It’s Working?

Unsurprisingly, the new act has not pleased everyone. Abdel Moneim El Gamal of the Trade Union Federation claims some provisions weaken workers’ protections, while MP Abdel Moneim Imam of the Justice Party says the law is tilted against private businesses. The labor minister, caught in the middle, described the bill as “one of the most important pieces of legislation in recent years” — a diplomatic way of saying everyone will have to live with it.

For startups, the bigger headache may be the law’s mismatch with the realities of fast-scaling tech firms: fluid teams, foreign developers, flexible contracts. The law might protect workers better and establish order in labor relations, but it also risks pushing early-stage founders to incorporate elsewhere or continue operating in the grey.

Still, there are glimmers of progress. House Manpower Committee’s Solaf Darwish hailed the elimination of “Form #6” — the notorious pre-signed resignation forms that employers used to dodge notice periods and severance. Resignations must now be authenticated by an administrative authority, making summary dismissals a relic of the past.

As Deputy Chair Ihab Mansour noted, the law is a “step forward” — just not the leap that either side had hoped for.

The Bottom Line

Egypt’s new Labor Act is ambitious, modernizing, and maddening in equal measure. It aims to usher in a new era of labor justice while clinging to a bureaucratic style that startups hoped the country was outgrowing. Whether it builds a fairer workforce or a taller pile of paperwork remains to be seen.

For now, Egyptian founders may want to dust off their legal dictionaries and invest in a few extra filing cabinets. And maybe, just maybe, start writing those contracts — in Arabic, four times over.