News

From Egypt: New Social Insurance and Pensions Law, Unprecedented Support for Unemployed Citizens

20 September, 2019

The new Social Insurance and Pensions Law (published in the Official Gazette on 19 August 2019 as Law No. 148 of 2019) aims to grant employees of the private and public sector greater benefits and stability. Similar to other laws recently drafted, the law aims to act as a flexible and adaptive mechanism to changing times.

For example, Article 35 states that pensions will increase proportional to inflation rates (with a maximum of 15% increase per year).

Similarly, the minimum pension is now 65% of the minimum social insurance cost (an increase from the set EGP 900).

Moreover, in order to encourage the use of bank accounts as well as award retired persons, a 2% bonus is placed in the bank account of retired employees.

The new law also clarifies (in Chapter 4) how it applies to groups of workers to whom the rest of this law does not apply such as private employees under the age of 18, apprentices, students with summer jobs or employees over the retirement age. It clarifies what is expected of their employer in case of a work-place incident, which includes paying costs up to the minimum pension allowance (an increase from EGP 10 previously).

However, one of the key aspects of the law is the introduction of a new type of insurance, whereas unemployed persons moving from one job to another can earn a pension.

They can earn this pension for three months if they worked (with social insurance) for 36 months, or for seven months if they worked for more than 36 months. The amount they may benefit is as follows:
• 75% of their previous insurance subscription for the first four weeks
• 65% of their previous insurance subscription for the second four weeks
• 55% of their previous insurance subscription for the third four weeks
• 45% of their previous insurance subscription for the rest of the weeks

This unprecedented support for unemployed persons shows the well-roundedness of the law as well as positive progress in terms of support for employees between jobs.

Finally, in order to ensure that the provisions of this law are followed, Chapter 12 lays out that non-compliant employers will be subject to a fine of up to EGP 100,000. Notably, the law will not be enacted in full until 2020.  For now, the articles that will be enacted are Articles 111-114, which concern the Public Treasury and its obligations under the new law.

In summary, the new law does not only amend aspects found in its older counterpart, but it also adds in new schemes – namely that for the unemployed. This support for citizens, whether employed or unemployed, is essential at a time of unprecedented changes and progress.

Source: Marina Iskander – Andersen Tax & Legal in Egypt, a member firm of Andersen Global