1. Overview

On 28 July 2026, the Egyptian Minister of Labour issued decree no. 162 of 2026 (the “Internal Regulation Decree”) setting out the general rules governing the internal work regulations (the “Regulation”) that every employer with ten (10) or more employees must adopt under the new Labour Law No. 14 of 2025. The Internal Regulation Decree was published on 13 August 2026 and took effect the following day, 14 August 2026.

The Internal Regulation Decree fixes strict internal deadlines for the ratification of the statutory Regulation process and imposes mandatory content requirements. It also embeds a strong non-regression principle, also described as preferential treatment, protecting benefits employees already enjoy and sets out a specific set of definitions in Article 1 that recur throughout the substantive provisions. Employers should prepare or update the Regulation as a priority and submit it to the competent Labour Directorate.

2. Key Provisions

Definitions

Article 1 of the Internal Regulation Decree defines the terms used throughout the Internal Regulation Decree. Below are the main definitions likely to affect day-to-day HR administration and dispute handling:

Mandatory Content

The following is a non-exhaustive list of the matters that must be addressed:

1. organising procedures for announcing job vacancies and for the selection and recruitment process;
2. organising training activities, identifying training needs, and developing and enhancing employees’ skills;
3. governing the conclusion of employment contracts;
4. establishing and maintaining each employee’s service file;
5. establishing mechanisms for evaluating employee performance;
6. setting out the promotion system, including its conditions and controls;
7. establishing rules governing transfer, secondment and assignment (task allocation);
8. protecting wages and safeguarding the fulfilment of employees’ entitlements;
9. determining working hours, rest periods and overtime, and the wages payable for overtime;
10. defining work patterns and promoting digital transformation within the establishment;
11. establishing mechanisms for obtaining all types of leave;
12. providing a healthy and safe work environment that accounts for the rights of persons with disabilities;
13. defining the grounds and circumstances for termination of the employment relationship;
14. defining employees’ duties and establishing procedures for investigating alleged breaches of them; and
15. defining the violations that constitute a breach of job duty and the disciplinary penalties prescribed for each.

Article 3 of the Internal Regulation Decree requires all existing benefits to be included in the Regulation: the Regulation must include all benefits actually granted to, and enjoyed by, employees before its preparation. Any benefit that has already been granted to employees shall not be excluded when the new Regulation is drafted. In accordance with the approach protecting employees’ benefits, Article 14 provides that wherever legislation conflicts in respect of an employee’s benefit, the provision most favourable to the employee shall prevail.

Practical implication: employers cannot use the Internal Regulation Decree as an opportunity to “reset” or dilute existing employee entitlements. A benefits audit prior to filing is essential to ensure nothing currently enjoyed by the workforce is inadvertently omitted or narrowed.

The Internal Regulation Decree further reiterates the prohibition of forced labour through direct or indirect practice, or practices that compel employees to work under threat or coercion. The Internal Regulation Decree lists a number of acts that are expressly prohibited. These include withholding an employee’s national ID card or passport, and deducting amounts from wages to repay a loan or debt in violation of the law.

Ratification Process

With respect to ratification, the Internal Regulation Decree introduces a structured certification procedure with fixed time limits administered by the competent Labour Directorate, summarised below.

Salary Requirements

• The wage system must link pay to job grade, skill level and competence, guarantee equal pay for men and women for work of equal value, and provide a periodic increment no lower than the statutory minimum, all without prejudice to the national minimum wage, as stipulated under Article 35.
• The Regulation must include guarantees protecting wages, in particular a prohibition on deduction, seizure, waiver or discount from wages except within legally prescribed limits and cases. The Regulation must also set objective, general criteria for in-kind or cash benefits, allowances, incentives, compensation and grants.
• Wages and other amounts due must be paid on one of the working days, at the workplace, in legal tender, into the employee’s bank account, or via any electronic payment method permitted by law.
• Disciplinary deduction caps apply on top of the above: no more than five (5) days’ basic wage may be deducted for a single violation, and no more than five (5) days’ basic wage may be deducted in total in one month to satisfy penalties, as stipulated by Article 46.

Working Hours and Leaves

• The Regulation must organise working hours, rest breaks and any shift or rotation system in line with the establishment’s activity, publish work and rest schedules and meal times, and organise overtime and the compensation payable for it, at no less than the statutory minimum.
• It must also set controls for flexible working and remote or distance work where used, with particular attention to persons with disabilities and to mothers caring for children with disabilities or special needs.
• The Regulation must also set out entitlement rules, procedures and durations, which must be no less than the statutory minimums, for annual leave, official holidays, casual leave, paternity and childbirth leave, sick leave, study leave and pilgrimage leave.

New Work Patterns

• Where the employer applies flexible work, remote work, or any other non-traditional work pattern, the Regulation must include dedicated rules organising that pattern of work, consistent with the nature of the activity and work conditions, covering working hours, duties, performance evaluation mechanisms and follow-up, without prejudicing the employee’s statutory rights.
• This is one of the Internal Regulation Decree’s most consequential provisions for modern workforce models: it obliges employers to formally document how hours, KPIs and monitoring work for remote, hybrid and flexible staff, rather than leaving these arrangements informal. It is also the principal provision linking non-standard work arrangements to the Regulation.

KPIs, Promotions and Transfers

• Performance evaluation must be based on objective, fair, measurable criteria (KPIs) tied to the role and the establishment’s objectives, with employees entitled to notice of their results and a grievance mechanism.
• Promotion must follow a published system proportionate to the establishment’s structure and workforce, granting access to higher roles based on objective criteria, namely efficiency, merit, performance and disciplinary record.
• Transfer and assignment must be governed by standards that preserve the employee’s wage, grade and promotion eligibility, and that generally require the employee’s consent, or compensating benefits where consent is not obtained.

Discipline and Termination

• The Internal Regulation Decree reiterates the statutory firm procedural deadlines on workplace investigations and discipline.
• Article 51 gives employers flexibility to design their own graduated schedule of disciplinary penalties, for example verbal or written warnings, wage deductions within the statutory caps, suspension, demotion, or other lesser sanctions, tailored to the establishment’s activity and violations, provided the schedule proceeds from lighter to more severe sanctions.
• However, Article 51 expressly confirms that dismissal from service may not be imposed except in cases of gross misconduct “according to the provisions of the law”. In other words, while an employer may freely define the intermediate disciplinary penalties available under its own Regulation, it cannot use the Regulation to create new or broader grounds for dismissal, or to treat a lesser violation as a dismissible “gross misconduct”. The categories of gross misconduct justifying dismissal remain fixed by the Labour Law itself, not by the employer’s Regulation.
• With respect to termination, the Regulation must separately address each ground for terminating the employment relationship listed in Article 60, including: contract expiry; completion of specified work; termination on notice; mutual written agreement; death or incapacity; Constructive (Deemed) Resignation for unexcused absence; voluntary resignation; dismissal by court ruling; statutory retirement age; and final conviction for a felony or a crime involving breach of honour or trust, unless execution is suspended.

3. Recommended Next Steps

• Map current HR policies, employment contracts and any existing Regulation against the full fifteen (15) item Article 2 checklist and identify gaps.
• Confirm headcount to determine whether the ten (10) employee threshold under Article 2 is met, including across branches and worksites, as per Article 11.
• Run a benefits audit to ensure no currently enjoyed right or benefit is omitted or narrowed in the new Regulation.
• Formalise KPI, promotion, transfer and secondment frameworks consistent with Articles 30 to 34.
• Document flexible and remote work arrangements as required by Article 39.
• Audit contractor and freelancer arrangements for subordination risk before finalising the Regulation and associated HR frameworks.

The contributors to this article are Alia Monieb, Partner – Head of Employment and Khaled Omar, Associate.