How to Terminate an Employee in Egypt: 2025 Labour Law Guide

How to Terminate an Employee in Egypt Under the New Labour Law

Terminating an employee in Egypt is not simply a matter of giving notice or paying three months' salary. Under Labour Law No. 14 of 2025, an employer ending an indefinite — or open-ended — employment contract must have a legitimate and sufficient reason, use the correct legal route, comply with the notice rules, and maintain evidence capable of withstanding review by the Labour Court.

The consequences of getting the process wrong can be significant. An employee whose indefinite contract is terminated for an unlawful reason may claim compensation of not less than two months' wages for each year of service, in addition to notice pay and other statutory or contractual entitlements.

For employers, the safest approach is to treat termination as a documented legal process rather than a single HR decision.

The First Question: Termination or Disciplinary Dismissal?

The new law distinguishes between ending an indefinite contract in the ordinary course and dismissing an employee as a disciplinary sanction. Choosing the wrong route may invalidate the employer's process.

Ordinary termination: Articles 156 and 157 permit either party to terminate an indefinite employment contract where there is a legitimate and sufficient reason and the other party receives three months' written notice. This route may be relevant where the employer can establish a genuine, non-discriminatory and properly documented reason, such as sustained inability to meet objective performance requirements. Whether a reason is legitimate and sufficient will depend on the facts and the evidence available.

Disciplinary dismissal: Where the employer seeks dismissal as a penalty for misconduct, Article 148 gives the competent Labour Court exclusive authority to impose the dismissal. The employer should not purport to impose disciplinary dismissal unilaterally.

The distinction is important. A company should not use an ordinary termination letter to bypass the court process where the true basis of the decision is alleged misconduct.

• Using a false identity or forged documents
• Causing serious damage to the employer, subject to the statutory reporting requirement
• Repeatedly breaching written and displayed safety instructions after a written warning
• Disclosing trade secrets in a manner causing serious damage
• Competing with the employer in the same activity
• Being visibly intoxicated or affected by narcotics during working hours
• Assaulting the employer or general manager, or seriously assaulting a supervisor at or because of work

Economic Termination

Closure, downsizing or workforce reduction for economic reasons follows a separate process under Articles 236 to 241. It requires an application to the statutory committee, disclosure of the reasons and affected employee categories, notification requirements, and objective selection criteria.

An employer planning a redundancy programme should not rely only on the ordinary three-month notice process.

A Lawful Termination Process: Step by Step

The correct process starts before a termination letter is prepared. The employer should confirm the contract, identify the real reason, screen for protected grounds, investigate where conduct is involved, issue compliant notice, manage the notice period, settle all entitlements and preserve the exit record.

1. Confirm the Contract and the Applicable Rules

First confirm that the contract is genuinely indefinite. Review the Arabic employment contract, amendments, collective agreement, approved internal work regulations, job description, remuneration records and social insurance documents.

Employers with ten or more workers must also maintain internal work regulations addressing workplace rules, violations and disciplinary sanctions. The regulations should be approved and applied consistently. In August 2026, the Ministry of Labour issued new general rules for internal work regulations in private-sector establishments, reinforcing the requirements for a fair investigation and the Labour Court's role in disciplinary dismissal.

2. Identify and Document the Real Reason

The termination file should state the actual reason for the proposed decision and connect it to reliable evidence. A vague statement such as “management decision,” “loss of confidence” or “company policy” may not establish a legitimate and sufficient reason.

For a performance-based termination, the record should ordinarily include:

• The employee's agreed role and responsibilities
• Measurable and reasonable performance standards
• Dated examples of deficiencies
• Appraisals, complaints or operational impact
• Written feedback and warnings
• Reasonable support or training offered
• A proportionate performance improvement period
• The employee's response and the result of the review

The law does not prescribe one universal performance improvement plan for every role. However, a fair and contemporaneous process helps demonstrate that the reason was genuine and that termination was not arbitrary or predetermined.

3. Screen for Prohibited or Protected Reasons

Article 165 expressly treats certain grounds as unlawful. Before issuing notice, the employer should check whether the timing or surrounding communications could support an allegation of retaliation, discrimination or interference with a protected right.

• Belonging to or participating in a trade union
• Acting, previously acting or seeking to act as a workers' representative
• Making or joining a complaint or legal claim concerning the employer's breach of law, regulations or the employment contract
• Having wages or entitlements subject to attachment
• Exercising a statutory right to leave
• Being targeted because of colour, sex, marital status, family responsibilities, pregnancy, religion or political opinion

Additional protection applies during maternity and sick leave. Termination during maternity leave is prohibited. Illness cannot be used as a ground for termination until the employee has exhausted the applicable sick leave and remaining accrued annual leave, and the special statutory notice requirements have been followed.

4. Follow a Fair Investigation Where Conduct Is Involved

Where the proposed action concerns misconduct or a disciplinary violation, Articles 138 to 148 establish specific safeguards. The employer must notify the employee in writing of the allegations, hear the employee's explanation, investigate the defence and record the process in minutes placed in the personnel file.

The investigation must begin within seven days of discovering the violation. It generally must be completed within three months, subject to a further three-month extension if new facts or documents emerge. Any disciplinary penalty must be imposed within thirty days after the investigation is completed and the decision must give reasons.

The investigation should be conducted by the establishment's legal department or, if none exists, by a suitably experienced person whose job level is not below that of the employee. The relevant trade union may appoint a representative to attend.

An employer may suspend the employee temporarily in the statutory circumstances for up to sixty days on full pay. If the employer seeks disciplinary dismissal, it must present the case to the competent Labour Court.

5. Prepare a Clear Written Notice

For an ordinary termination of an indefinite contract, the employee must receive at least three months' written notice. A contract may provide a longer period, but the statutory period cannot be reduced or waived in advance.

The notice should clearly state:

• The employee and contract details
• The legitimate and sufficient reason for termination
• The evidence or process supporting the decision, stated accurately and proportionately
• The date on which notice is received
• The effective termination date
• Whether the employee will work during the notice period or be released from duties on full pay
• Arrangements for the employee's statutory job-search time
• The proposed calculation of final entitlements
• Handover and return-of-property requirements

Notice takes effect from receipt, so the employer should preserve reliable proof of delivery. It cannot be conditional. It also cannot be given while the employee is on leave. If the employee takes sick leave during the notice period, the notice period is suspended until the day after that sick leave ends.

6. Manage the Notice Period Correctly

The employment relationship and all related obligations continue throughout the notice period.

If the employer gives notice, the employee is entitled to one full day per week, or eight hours during the week, on full pay to search for another job. The employee selects the timing and must notify the employer at least one day in advance.

The employer may release the employee from performing work during the notice period, but service continues and wages and benefits remain payable. If the employer ends the relationship without notice or before the notice period expires, it must pay the employee an amount equal to the wages for the full notice period or the unserved balance, while observing the statutory consequences for continuity of service.

7. Calculate and Pay All Final Entitlements

The final calculation should address, as applicable:

• Salary and other wage components through the termination date
• Wages and benefits for the notice period or its unserved balance
• Payment for accrued but unused annual leave
• Earned commissions, bonuses or allowances under the contract or established policy
• Contractual benefits and approved expenses
• Any agreed settlement payment or statutory compensation

Under Article 108, wages and all other amounts due must be paid within seven days of the employee's demand following termination. Employers should prepare the calculation before notice expires and avoid delaying undisputed amounts. If an ordinary termination is later found to lack a legitimate and sufficient reason, Article 165 provides compensation of not less than two months' wages for each year of service, without prejudice to the employee's other rights. In a dismissal dispute, the Labour Court may also make an early wage order covering the period from dismissal, capped at six months, subject to adjustment against the final award.

8. Complete and Preserve the Exit Record

At the end of employment, the employer should:

• Provide the required employment certificate within fifteen days of the employee's request
• Return the employee's deposited documents, certificates and tools
• Provide evidence of clearance when requested
• Complete the required social insurance and payroll updates
• Retain the employee's file for at least five years, and longer if litigation remains pending

The personnel file should contain the contract, job description, appraisals, warnings, correspondence, investigation records, notice, proof of receipt, final calculation, payment evidence, handover documents and any settlement.

Do Not Disguise a Termination as a Resignation

Employers should not pressure an employee to sign an undated or pre-signed resignation. Under Article 167, a resignation must be written, signed by the employee or a specially authorised agent, and authenticated by the competent administrative authority. The employee also has a statutory period in which to withdraw it after being notified of acceptance.

A genuine mutual separation may be commercially preferable in some cases, but it should be voluntary, accurately documented and structured as a settlement rather than a fictitious resignation. Where appropriate, the settlement can be recorded through the competent Labour Directorate or Labour Court to strengthen enforceability.

Common Employer Mistakes

The most common termination errors in Egypt include:

• Assuming that three months' pay automatically makes any termination lawful
• Giving no specific or documented reason
• Characterising misconduct as an ordinary termination to avoid the Labour Court
• Conducting an investigation after the decision has already been made
• Failing to give the employee written allegations and a real opportunity to respond
• Issuing notice while the employee is on leave
• Ignoring the suspension of notice during sick leave
• Treating economic redundancy as an individual performance termination
• Relying on inconsistent payroll, contract and social insurance records
• Withholding final salary or documents to force a release

Frequently Asked Questions

Can an employer terminate an indefinite employment contract in Egypt? Yes. Under Articles 156 and 157, an indefinite contract may be terminated for a legitimate and sufficient reason with at least three months' written notice, subject to the other protections and procedures in the law.

Is paying three months' salary enough? No. Notice pay deals with the notice obligation; it does not cure an unlawful reason. If the reason is not legitimate and sufficient, the employee may still claim compensation of at least two months' wages for each year of service, plus other entitlements.

Can an employer dismiss an employee immediately for gross misconduct? The employer should not impose disciplinary dismissal on its own. Article 148 assigns disciplinary dismissal to the competent Labour Court. The employer must investigate properly, preserve the evidence and bring the dismissal request through the statutory process.

Is a performance improvement plan mandatory? The law does not impose one standard performance improvement plan in every case. However, objective expectations, warnings, support, a reasonable opportunity to improve and documented review are important evidence that a performance-based reason is genuine and sufficient.

Can the employer place the employee on garden leave? The employer may release the employee from working during the notice period, provided the employment relationship continues and the employee receives the wages and benefits due for that period.

The Practical Rule for Employers

Before terminating an employee in Egypt, decide which legal route actually applies. Then build the evidence, follow the required procedure, issue a compliant notice and settle all entitlements accurately.

A termination letter should be the final document in the process, not the first.

For foreign companies operating in Egypt, local review is particularly important where the reason involves misconduct, poor performance, sick or maternity leave, a complaint against management, or a proposed workforce reduction. These cases can move quickly before the specialised Labour Court, and the employer's contemporaneous records will often determine the result.

MEASA advises international and Egyptian businesses on employment contracts, workplace investigations, performance management, disciplinary proceedings, negotiated exits and Labour Court disputes. Contact our team before implementing a termination decision to ensure that the chosen process is lawful, commercially proportionate and properly documented.