Labor Law: Radical Change in Labor
Labor Law: Radical Change in Labor Dispute Resolution
Egypt’s current Labor Law was issued in 2003 as Law Number 12. Although it encompassed at the time significant departures from the previous legislation, it failed on the whole to meet the expectations of both the employers and employees.
One of the key criticisms to the Law has been the fact that it failed to provide for a system that would lead to a relatively speedy and final resolution of labor disputes. That part of the Law was again amended in 2005, but to no avail.
Now a new amendment to Articles (70), (71) and (72) of the Labor Law introduces what could be a radical change. Prior to the amendment, any dispute between employer and employee pertaining to the application of the Labor Law was referred to the Ministry of Labor for initial conciliation. Failure of conciliation was followed by referral to a Judicial Committee composed of five members – two judges, and a representative from each of the Ministry of Labor, the General Labor Union, and the Sector Association of the employer – which decided on the matter. The decision of the Committee was taken by majority and was applicable as if it were a first instance judicial decision.
The system described above was severely criticized because it failed to provide sufficient incentives for conciliation, which most of the time became a mere formality. More importantly, it meant that final decisions on issues of grave importance were decided by a committee composed of a majority of non-judicial members and its decisions were often criticized for being politically driven.
The new amendment replaces the Committee with proper judicial review. According to the new rules, a labor dispute may first be referred to a committee composed of a representative from each of the Ministry, the Labor Union and the Sector Association for conciliation.
If no settlement is reached within twenty one days, then either of the disputing parties may refer the matter to the Ministry for submission to the court, or submit it directly to the court after forty five days. This means that:
(i) referral to the tripartite committee is not obligatory;
(ii) any party can refer the matter to the court directly.
As regards the competent court, this is a new specialized labor court, which shall be established at each of Egypt’s Primary Courts. Representatives of the Labor Union and the Sector Association will be notified and may attend the court proceedings, but they will no longer be members of the judicial committee, and will have no voice in determining the outcome. The new court will have fast-track procedures, for example it has to determine whether an employer has the right to terminate an employment contract within fifteen days from the submission of the case.
The above amendment is a significant step forward. It brings back to the judicial competence a matter which should not have gone outside and determined by judicial committees. The mere fact that such judicial competence is restored will contribute to better dispute resolution. On the other hand, the administrative intervention by representatives of the Ministry of Labor and the Labor Union in what is ultimately a judicial dispute will probably improve the outcome as well by ensuring that no political intervention is exerted.
This is a welcome change in the Law and follow up will further be provided on how it is being implemented.
Egypt’s current Labor Law was issued in 2003 as Law Number 12. Although it encompassed at the time significant departures from the previous legislation, it failed on the whole to meet the expectations of both the employers and employees.
One of the key criticisms to the Law has been the fact that it failed to provide for a system that would lead to a relatively speedy and final resolution of labor disputes. That part of the Law was again amended in 2005, but to no avail.
Now a new amendment to Articles (70), (71) and (72) of the Labor Law introduces what could be a radical change. Prior to the amendment, any dispute between employer and employee pertaining to the application of the Labor Law was referred to the Ministry of Labor for initial conciliation. Failure of conciliation was followed by referral to a Judicial Committee composed of five members – two judges, and a representative from each of the Ministry of Labor, the General Labor Union, and the Sector Association of the employer – which decided on the matter. The decision of the Committee was taken by majority and was applicable as if it were a first instance judicial decision.
The system described above was severely criticized because it failed to provide sufficient incentives for conciliation, which most of the time became a mere formality. More importantly, it meant that final decisions on issues of grave importance were decided by a committee composed of a majority of non-judicial members and its decisions were often criticized for being politically driven.
The new amendment replaces the Committee with proper judicial review. According to the new rules, a labor dispute may first be referred to a committee composed of a representative from each of the Ministry, the Labor Union and the Sector Association for conciliation.
If no settlement is reached within twenty one days, then either of the disputing parties may refer the matter to the Ministry for submission to the court, or submit it directly to the court after forty five days. This means that:
(i) referral to the tripartite committee is not obligatory;
(ii) any party can refer the matter to the court directly.
As regards the competent court, this is a new specialized labor court, which shall be established at each of Egypt’s Primary Courts. Representatives of the Labor Union and the Sector Association will be notified and may attend the court proceedings, but they will no longer be members of the judicial committee, and will have no voice in determining the outcome. The new court will have fast-track procedures, for example it has to determine whether an employer has the right to terminate an employment contract within fifteen days from the submission of the case.
The above amendment is a significant step forward. It brings back to the judicial competence a matter which should not have gone outside and determined by judicial committees. The mere fact that such judicial competence is restored will contribute to better dispute resolution. On the other hand, the administrative intervention by representatives of the Ministry of Labor and the Labor Union in what is ultimately a judicial dispute will probably improve the outcome as well by ensuring that no political intervention is exerted.
This is a welcome change in the Law and follow up will further be provided on how it is being implemented.