Implications of an Undocumented Employment Contract
Evidence of an employer-employee relationship is of paramount importance particularly in cases when it is terminated. A court judgment issued by North Cairo Court of First Instance No. 1278 of 2019 (“Court Judgment”) is pivotal in the way it addresses aspects of proving the existence of an employment relationship.
EVIDENCE OF EMPLOYMENT RELATION
In Egypt, it is a statutory requirement for employment contracts to be in writing. This requirement furthermore extends to the execution of the contract in three counterparts: one copy is provided to the employer, another to the employee, and the third is deposited at the competent Social Insurance Authority.
Notwithstanding the aforementioned statutory requirement, the Egyptian Labor Law No. 12 of 2003 (“Labor Law”) provides that employees have a wide range of ways to prove their employment relationship. Hence, employees – unlike employers – enjoy alternative means to establish an employment relationship in case a written contract is not available, noting that such means of establishing an employment relationship should be supported by sufficient evidence and subject to the court’s discretion of accepting such evidence. According to the Court Judgment, sufficient evidence includes, for example, transfer of employee’s salary via bank transfer and the mutual correspondences between the employee and the employer, whereby subordination is clearly established.
The implications arising out of the lack of a written contract may adversely affect both the employer and the employee. While assessing the implication, a distinction should be drawn between those implications affecting the employees and those affecting the employer, noting an interesting common implication on both the employee and employer which is evidencing the actual salary, in particular in a claim of unjustified termination.
To further elaborate, by way of example, if the employee’s variable salary constitutes a more prominent part than the fixed one, evidencing the actual salary would be a challenging task, where employers would claim that it is as per the (verbal) contract and employees would claim that it is as per the bank transfers (which differ on monthly basis). Accordingly, it would be challenging to calculate the compensation for unjustified termination and in such case, the court may potentially calculate the same on the highest salary figure received by the employee.
ARE GCC COUNTRIES SIMILAR TO EGYPT?
In GCC countries, like the UAE, KSA and Kuwait, a similar statutory requirement for employment contracts to be in writing exists, noting that such requirement only limits the ability of the employer to establish an employment relationship. In other words, the employee may establish an employment relationship even though no written contract has ever been concluded.
A notable practice in particular to the GCC countries, particularly in the UAE, KSA and Kuwait is to conclude “several” employment contracts. In this respect several employment contracts entail the use of the unified template dictated by the regulatory body along with a full-fledged template for internal organizational purposes and executing both templates in several counterparts. This way, the employers are able to deposit the template provided by the authorities for procedural purposes (e.g., obtaining the work permit for foreigners) and the other longer form to govern the employment relationship with the employees.
From a strict legal standpoint, if the letter of the law was followed, in case the employers in GCC countries concluded more than one contract with the employees, the court would ultimately use the most favorable to the employees and disregard any other contract. Accordingly, it may be sensible if the employers unify the employment template to ensure that there are not any discrepancies which may prejudice their rights before courts.
In light of the foregoing, the Court Judgment serves as a valuable reference for employers, offering insights when assessing and mitigating the implications following the termination of employment relationships.
 AlWaseet in social legislation by the Counselor/ Ahmed Shawqi Al-Meligy – second edition – year 1983 – page 154.
Civil Cassation for the JY 38 – session 16/11/1973 – JY 22, page 228
 Cassation No. 8817 – JY 63 – session 18/3/2001.
 Cassation No. 788 – JY 59 – session 9/5/1993 – technical office 44.
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