Maximum Wage for Government Job
Maximum Wage for Government Job
New Law Issued
Just before the end of last year, the Supreme Council for the Armed Forces (“SCAF”), issued Decree / Law No. 242 of 2011, setting a maximum limit for wages paid by the Government and public agencies (Official Journal,Issue No. 52 bis, December 29th, 2011). This was in response to a widely requested demand by Egyptian public
opinion. The outcome, however, is far from clear and in practice may cause some further ambiguity. It is likely that additional legislation will be required in order to clarify this new Law and make it applicable.
What the New Law
The key provision of the new Decree / Law is that it sets a ceiling on wages for “public jobs” whereby the annual total income received by anyone may not exceed thirty five times that of the lowest income paid to a third degree employee in the same agency. Any amounts obtained in excess of this limit are deemed to be the right of the Public Treasury and must be paid back to the place of work within a
month, otherwise an additional fine ranging between 25 to 100% is imposed.
It is worth noting that the new Law does not apply to employees of State owned banks, insurance companies, or any other state owned companies, whether they are part of the Public Sector or the Public Business Sector. Moreover, the Law only applies to money that is deemed “public funds”, and accordingly any money obtained from private sector entities – including private companies – shall be deemed part of the payments limited by this Law.
Why the Law is Problematic
In spite of the intended purpose of the new Decree / Law, it is full of loopholes which will make it difficult to apply, for the following reasons:
1) The first difficulty is determining who is subject to the income ceiling. The Decree / Law states that it is applicable to “employees of the State subject to Civil Servants Law No. 47 of 1978 or to any special laws, employees of economic or service public authorities, employees of other public juristic persons, and special cadres, whether temporary, permanent, advisory, expert, or of any other nature. Although it sounds comprehensive, this wording seems to leave out employees of publicly owned companies (including public banks and state owned companies), and this should have been spelt out explicitly rather than be left to discretion and debate.
2) As the maximum ceiling is not an absolute figure but a function of a minimum, then it will depend on that minimum wage applied in every agency and public entity and could leave room for abuse.
February 2012 Un Clarity of New Law Ceiling of Wages Equal to 3 Times Lowest Pay Problems with Application
3) The maximum wage is set to include all incomes, including salary, bonus, incentive, supplementary income, remuneration for attendance or otherwise. It is a comprehensive definition, but one which will be difficult to apply.
4) Finally, the minimum wage - the function of which determines the maximum income - is not sufficiently defined and therefore will be assumed to mean the annual “take home” income of the lowest paid employee, a sum which could be difficult to compute till the end of the year on a actual basis.
Comment
In spite of the fact that the new Decree / Law seem demands, it is likely to prove quite difficult to app further clarification and amendments so that it is pro law may leave us with the worst outcome.
New Law Issued
Just before the end of last year, the Supreme Council for the Armed Forces (“SCAF”), issued Decree / Law No. 242 of 2011, setting a maximum limit for wages paid by the Government and public agencies (Official Journal,Issue No. 52 bis, December 29th, 2011). This was in response to a widely requested demand by Egyptian public
opinion. The outcome, however, is far from clear and in practice may cause some further ambiguity. It is likely that additional legislation will be required in order to clarify this new Law and make it applicable.
What the New Law
The key provision of the new Decree / Law is that it sets a ceiling on wages for “public jobs” whereby the annual total income received by anyone may not exceed thirty five times that of the lowest income paid to a third degree employee in the same agency. Any amounts obtained in excess of this limit are deemed to be the right of the Public Treasury and must be paid back to the place of work within a
month, otherwise an additional fine ranging between 25 to 100% is imposed.
It is worth noting that the new Law does not apply to employees of State owned banks, insurance companies, or any other state owned companies, whether they are part of the Public Sector or the Public Business Sector. Moreover, the Law only applies to money that is deemed “public funds”, and accordingly any money obtained from private sector entities – including private companies – shall be deemed part of the payments limited by this Law.
Why the Law is Problematic
In spite of the intended purpose of the new Decree / Law, it is full of loopholes which will make it difficult to apply, for the following reasons:
1) The first difficulty is determining who is subject to the income ceiling. The Decree / Law states that it is applicable to “employees of the State subject to Civil Servants Law No. 47 of 1978 or to any special laws, employees of economic or service public authorities, employees of other public juristic persons, and special cadres, whether temporary, permanent, advisory, expert, or of any other nature. Although it sounds comprehensive, this wording seems to leave out employees of publicly owned companies (including public banks and state owned companies), and this should have been spelt out explicitly rather than be left to discretion and debate.
2) As the maximum ceiling is not an absolute figure but a function of a minimum, then it will depend on that minimum wage applied in every agency and public entity and could leave room for abuse.
February 2012 Un Clarity of New Law Ceiling of Wages Equal to 3 Times Lowest Pay Problems with Application
3) The maximum wage is set to include all incomes, including salary, bonus, incentive, supplementary income, remuneration for attendance or otherwise. It is a comprehensive definition, but one which will be difficult to apply.
4) Finally, the minimum wage - the function of which determines the maximum income - is not sufficiently defined and therefore will be assumed to mean the annual “take home” income of the lowest paid employee, a sum which could be difficult to compute till the end of the year on a actual basis.
Comment
In spite of the fact that the new Decree / Law seem demands, it is likely to prove quite difficult to app further clarification and amendments so that it is pro law may leave us with the worst outcome.