Employers may need to terminate an employment relationship for a myriad of reasons from downsizing the company, to reprimanding an employee who has not been performing well, despite a number of warnings. We will discuss the former scenario further on in the book, since there are a particular set of rules governing the execution of downsizing, however here we will be looking at the general criteria for terminating an employment relationship.
As previously stated, a contract will generally terminate with the expiry of its period, or the accomplishment of the work it has been concluded for. If the term of the contract is not defined by an agreement or by the type or work or its purpose, either party may put an end to this relationship by providing written notice (2 months prior to termination if the worker's uninterrupted length of service does not exceed ten years, and three months prior to the contract termination if that period exceeds ten years) to the other party. In all cases, the notification period cannot be reduced, however it can be increased if both parties agree to this.
Likewise, if the contract is indefinite, and one of the parties revokes the agreement prior to the end of the term or without giving appropriate notice, then they must compensate the other party for the remaining term or the notice period. It should also be noted that an employment contract shall remain valid throughout the notification period, meaning that both parties are still bound by their duties and obligations during this time.
The law states that if the worker terminates the employment of his own accord then the employer must pay him his wage and all other amounts due to him within a period not exceeding seven days from the date the worker claims these dues. Additionally, if the employer terminates the labour contract without notification or prior to the end of the notification period, he must pay the worker an amount equivalent to his wage for that period or the part remaining thereof. For the purposes of Egyptian Labour Law, 'all amounts due' means the employee's wage, plus any other additions to that wage as specified by the law, namely bonuses, commission, performance based percentages, increments, bonuses, allowances, workers profit share and tips.
In all cases an employer's obligation for paying the wage will not be discharged except after the worker signs for the wage, in the register provided for that purpose or in the payrolls, and if the work relationship expires before the worker uses up all his vacation days, he will be entitled to the wage computed in lieu of that balance.
Upon termination, the employer should give the worker a certificate, free of charge, indicating the date he joined the employer's services, the end of the service date, the type of work he has performed and the benefits he obtained. The employee may also request a certificate specifying his experience and indicating his level of efficiency. The employer must also return any papers, certificates or articles the worker has deposited with him immediately upon his request.
Termination due to Death
In Egypt a labour contract terminates upon the death of an employee, however it does not terminate upon the death of the employer, unless the nature of the work stipulated in the contract would be disrupted by his death. If the employee dies whilst providing the agreed upon services, the employer shall pay the family the equivalent of two complete months' wages for funeral expenses, the combined total of which cannot be less than 250 LE. In addition to the above, the employer must also pay the family three months wages to cover any remaining costs. If the employee deceases at the place of work, there is an additional duty on the employer to transport the body from the place of work to a place of his family's choosing.
There are often scenarios which necessitate that an employer terminate an employment contract, even though the employee has not carried out any of the aforementioned serious breaches; for example he has not been sufficiently productive or has not been producing the desired results. Naturally, it is within the employer's rights to terminate so long as the termination does not breach article 120 which states that "race, sex, social status, family obligations, pregnancy, religion or political views are insufficient grounds for termination", however, compensation will have to be paid for the harm caused as a result of this termination.
The labour court will decide how much compensation is appropriate, but the law stipulates that it will not be less than two months of the comprehensive wage for each year of service, in addition to any other legally prescribed dues for indefinite contracts. An employer may also claim compensation through the labour court for harm caused by the termination of an employment contract by the employee without cause. For the termination of definite contracts usually an employer will not terminate the contract arbitrarily since they can wait for the natural expiration of the contract and therefore avoid paying compensation. Alternatively, if an employer still wishes to terminate a definite contract early, he may pay the employee his wages for the remainder of the contract period; however this is usually decided on a case by case basis by a judge.
Transferring an employee to a position with fewer privileges than the one he is currently in without any fault shall not be considered a direct arbitrary act if the employer can show that this move was necessary for the work. If however it is proven that the employer only did this to irritate the employee then it will be considered an arbitrary termination and compensation will be due.
Egyptian law stipulates that an employee cannot terminate an agreement for retirement if he is less than 65. Furthermore, an employer cannot terminate a contract for retirement if the contract is for a definite period and the period goes over the employees 65th birthday, in which case the contract will only terminate upon the completion of its period.
After the age of 65, the worker will be entitled to an indemnity at the rate of a half months wage for each of the first five years, and a full months wage for the years thereafter, if he is not covered according to the old age, incapacity, and death insurance provisions prescribed in the Social Insurance Law.
The same rules for indemnity apply to the years of service before the employee reaches 18 years and to the trainee and the worker upon reaching 18. In all cases, indemnity will be calculated on the basis of the last wage paid to him.
Finally, it is important to highlight what happens if an unresolved dispute as to the application of the Labour Law arises between the employer and an employee, since it may often be the case with labour agreements, particularly with regards to termination. In such cases, a committee may be formed to resolve this dispute, comprised of the following:
- A representative of the competent administrative authority (usually someone from the Ministry of Manpower)
- A representative of the trade union organization
- A representative of the Employers' organization
The law states that if the settlement is not reached within 21 days from the date of submitting the request, either party can request that the dispute be submitted to the labour court or to resort to it within a period of 45 days, at most, from the date of expiry of the period specified for settlement, otherwise the right is forfeited.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.