By: Lamiaa Youssef and Menna Abouzekry

Keywords: Employment, Commercial

A new Social Insurance Law no. 148/2019 (the “Law”) was issued on 19/08/2019. The (“Law”) will enter into force on 01/01/2020, except with regard to certain articles related to the obligations of the state treasury, which have entered into force on 20/08/2019. This means that employers will need to start applying the Law this January. The Prime Minister will issue the executive regulation within six months from the date of issuance of the Law. The current regulations and decrees will still apply until the executive regulation of the Law is issued, to the extent that they do not conflict with the Law.

What’s new in the Law?

1. The Law unified the dispersed social insurance laws under one umbrella and made all categories of persons subject to the same legislation.

• The Law replaced Law 179/1975 on Social Insurance (the “Old Social Insurance Law”), Law 108/1976 on Social Insurance for Employers and the like, Law 50/1978 on Social Insurance for Egyptians working abroad, as well as various other regulations and decrees. This means that all categories of insured persons will be subject to the new Law instead of these old scattered laws.

2. The Law extended social insurance protection to new groups of employees

• These are primarily non-regular and seasonal employees or further categories of employers. Examples include fishermen, overland transportation employees, domestic workers, owners of small shares of real estate and owners of environmental, rural, and familial industries, as well as owners of sole- person companies. These new categories would not affect most corporations.

3. Subscription amounts have changed:

• The contribution rates/percentages to be deducted from the salaries of the insured persons (employers and employees) have changed. The amounts of income on which the rates are assessed have not been addressed by the Law but will be subject to the executive regulation to be issued soon. These may change then. Accordingly, the effect as to the increase or decrease of social insurance obligations on the concerned parties cannot be entirely assessed at this stage.

Category	Who pays the subscription?	Old Rate	New Rate
Employees working in the private sector and the public sector	Employers on behalf of each employee	26% on basic monthly salary 24% on additional or variable elements per month	18.25%([1])([2])([3]) on total monthly salary (incl. basic and variable)
	An employee on behalf himself/herself	14% on basic monthly salary 11% on additional or variable elements per month	11% on total monthly salary (incl. Basic and variable)
Employers and Entrepreneurs (including shareholders)	The Employer or entrepreneur on behalf of himself/herself	15% from the monthly subscription income that the insured chooses (a maximum of EGP1,000).	25% from the monthly subscription income that the insured chooses (the maximum is not defined yet).
Egyptian employees working abroad	Each employee on behalf of himself/herself	22.5% of the monthly subscription income	21% of the monthly subscription income
Employees that fall under non-regular category (example domestic workers)	Each worker on behalf of himself/herself	Didn’t exist	13% from the minimum limit of the monthly subscription salary.

[1] The subscription amount will increase by 1% each seven years up to 26% for insurance on aging, disability, and life insurance. The increase will be divided equally between the employer and the employee for regular employees. This increase is applicable on all categories.

[2] The subscription paid by the employer for employees who are not yet subject to the Universal Health Insurance Law will be 0.5% more until the application extends to the employee’s governorate. Universal Health Insurance is currently applied only in Port Said and will soon be applied in four other governorates. These are Suez, Ismalia, South Sinai, and North Sinai. In all cases, the 0.5% subscription amount will increase up to 1% depending on the dangers that the employee is subject to and as per the forthcoming executive regulation of the Law.

[3] Administrative bodies, such as ministries, will deduct 17% only. Public sectors employers, such as, public sector companies will deduct 18%.

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4. Retirement age under the Law:

• Similar to what has been applicable in the past, the Law set the retirement age for employees and Egyptians working abroad at sixty years old. The Law also set the retirement age for employers and non-regular employees at sixty-five years old. However, by 2040, the Law stipulates that the retirement age for all categories will be sixty-five and shall increase gradually until then. The Prime Minister will issue decrees stipulating the gradual increases.

5. Funding the social insurance system:

• A unified retirement fund will be established for all categories and all types of insurance. A separate account will be made for each type of insurance. Under the Old Social Insurance Law, there were two separate funds for civil servants and employees in the private sector. They will now be transferred to the new fund.

6. Penalties under the Law:

Generally speaking,

1. all the penalties are greater than those in the Old Social Insurance Law for all violations. All the penalties are now fines that range from EGP20,000 to EGP10,000; and

2. the penalty of imprisonment has mostly been removed from the Law and is reserved to cases of violations to the obligations toward injured employees and in case of some of the violations by the social insurance officials.