Fixed-term and indefinite employment contracts in Egypt: what differs

Executive summary

• An individual employment contract is concluded for an indefinite period, or for a fixed period "if the nature of the work requires it", and the parties may agree to renew it for further similar periods (article 87 of Labour Law 14 of 2025).
• A contract is deemed indefinite from the date it was concluded if it is not in writing, does not state its term, or was concluded for a fixed term and the parties went on performing it after the term ended without a written agreement between them (article 88).
• A fixed-term contract ends when its term expires (article 154). An indefinite contract may be ended only for a legitimate and sufficient reason, with written notice three months before termination (articles 156 and 157).
• Where a fixed-term contract is concluded or renewed for more than five years, the employee may end it without compensation once five years have passed, after giving the employer three months' notice (article 154).
• Pay in lieu of notice, and compensation of at least two months' wage per year of service for termination for an illegitimate reason, are worded for indefinite contracts (articles 164 and 165). Article 154 grants a gratuity of one month's wage per year of service "if the termination is by the employer", and its scope can be read in two ways.

The particulars, language and copies of the contract are covered in Employment contracts in Egypt, and probation in probation in employment contracts in Egypt. Of the termination procedure and the end-of-service gratuity, this piece gives only what turns on the type of contract; both are covered in detail in later bulletins.

Two kinds of contract, and the contract for a specific task

The Labour Law issued by Law 14 of 2025 has applied since 1 September 2025, the first day of the month after ninety days from its publication on 3 May 2025 (article 13 of the issuing law). The rule reads:

"An individual employment contract is concluded for an indefinite period, or for a fixed period if the nature of the work requires it, and the two parties may also agree to renew the contract for further similar periods" (article 87, our translation).

A fixed term therefore depends on the nature of the work, not on the parties' agreement alone. Article 87 refers to no definition, but article 1 of the law defines three kinds of work: "temporary work", which by its nature falls within the employer's activity "and whose performance by its nature requires a fixed period, or which concerns a particular task and ends when it ends"; "casual work", which by its nature falls outside that activity "and whose performance takes no more than six months"; and "seasonal work", which "takes place in recognised recurring seasons" (items 6 to 8). Read together, the two texts make these three the clearest cases of work whose nature requires a fixed term.

Article 88 does not list, among its cases, a fixed term given to work whose nature does not require one. There are two readings. One treats the condition in article 87 as a condition of a valid term, so that without it the contract is indefinite. The other holds that article 88 lists its cases and this is not one of them, so the written term stands. In our view, the contract should state why the work is for a fixed period, such as a project, a season or a temporary need, and a fixed-term contract should not be used for a permanent post. For a foreign employee, how their time-limited work permit bears on the term of the contract is set out, with both readings and our view, in Foreign employees' contracts in Egypt.

Besides the two kinds, the law recognises a contract concluded "to perform a specific task", which article 174 names separately from the fixed-term contract. It ends when the task is completed, and the parties may renew it by express agreement for one or more similar tasks (article 155).

When a contract becomes indefinite

"An employment contract is deemed to be of indefinite duration from the date it was concluded in the following cases: 1- if it is not in writing; 2- if the contract does not state its duration; 3- if it was concluded for a fixed period and the two parties continued to perform it after that period ended without a written agreement between them" (article 88, our translation).

A mistake that recurs in practice is to let the term run out while the employee carries on working until the renewal is signed days or weeks later. Under the text the effect runs "from the date it was concluded", not from the date the term ended. Reading article 88 with articles 156, 157, 164 and 165, ending the contract after that point follows the rules for indefinite contracts on notice, justification, pay in lieu of notice and compensation.

Article 87 sets no number of renewals and no maximum term, and does not say what makes a period "similar". In our view, a renewal should be signed in writing before the current term ends, for the same length as the original term where possible.

The contract for a specific task works differently: "if the contract concluded to perform a specific task ends and its two parties continue to perform it, this is deemed a renewal by them of that contract, or for other similar tasks" (article 155, our translation). Read together, the two articles mean that continued performance without a written agreement makes a fixed-term contract indefinite from the date it was concluded, but renews a specific-task contract without changing its kind.

The term also matters at age sixty. The employer may end the contract when the employee reaches sixty "unless the contract is for a fixed term and its term extends beyond that age, in which case the contract ends only when its term expires" (article 171, our translation). Retirement age is covered in Retirement age and early pension in Egypt.

How each contract ends

"Without prejudice to articles 87, 88 and 95 of this law, a fixed-term employment contract ends when its term expires" (article 154, our translation).

Articles 87 and 88 are the renewal and conversion rules above. Article 95 requires an employee trained at the employer's expense to stay for the agreed period; one who leaves before it ends must repay the training costs, without prejudice to the employer's right to compensation, unless the employment contract provides otherwise.

Article 154 goes on: "if the contract is concluded or renewed for a period of more than five years, the employee may end it without compensation when five years have passed, after notifying the employer three months before termination", and the same applies "to cases where the employee ends the contract after that period has passed" (our translation). The rule for a specific task is the opposite: where completing the original task, or the tasks for which it was renewed, takes more than five years, "the employee may not end the contract before those tasks are completed" (article 155).

Either party may end an indefinite contract "provided that it notifies the other party in writing three months before termination" (article 156), and "employers and employees may not end an indefinite employment contract except for a legitimate and sufficient reason" (article 157).

Some rules on ending a contract do not distinguish between the two kinds. The employer may end the contract "even if it is for a fixed term, or concluded to perform a specific task" where the employee is finally sentenced to a felony penalty, or to a custodial penalty for an offence against honour or trust, unless the court suspends the sentence (article 174). Dismissal is a penalty that only the competent labour court may impose, and "in all cases, the employee may not be dismissed unless they have committed a serious fault" (article 148); the detail is in Egypt's work and disciplinary regulation. Notice, resignation and termination without a legitimate reason are covered in our bulletin on ending the employment relationship.

Compensation and gratuity by type of contract

Article 154 closes with this paragraph:

"If the termination is by the employer, the employee is entitled to a gratuity equal to one month's wage for each year of service" (article 154, our translation).

It can be read in two ways. The first confines it to the two paragraphs before it: in a contract concluded or renewed for more than five years, the employee who ends it after five years owes no compensation, and if the employer ends it the employee is entitled to the gratuity. The second makes it a rule for every fixed-term contract the employer ends; on that reading it remains open whether a decision not to renew counts as "termination by the employer", since the first paragraph says the contract "ends when its term expires". In our view, a business should not choose a fixed-term contract on the footing that its end will cost nothing, and should count this gratuity in the cost of any termination on its side before the term expires, until the text is settled. The wage it is based on and how it relates to social insurance entitlements are covered in our bulletin on the end-of-service gratuity.

What this requires

• Review every fixed-term contract: whether the nature of the work requires a term, with the reason stated in the contract.
• A diary of expiry dates for fixed-term contracts, and a written decision before each date to renew or to end.
• A written renewal signed before the current term ends, for a similar period; no employee working on after expiry before it is signed.
• A contract that is unwritten, states no term, or ran on after expiry without a written agreement treated as indefinite from the date it was concluded.
• Allowance for the employee's right to end a contract concluded or renewed for more than five years, without compensation and on three months' notice.
• A clause on the period an employee must stay after training at the business's expense.
• Before ending a fixed-term contract early: a check of the legal ground for ending it, and of the cost of the article 154 gratuity.

The firm's Social Insurance & Labour Department reviews fixed-term and indefinite employment contracts and their renewals against the Labour Law, and tracks their expiry dates, as part of its social insurance and labour compliance services.

Mahmoud Nassef, Founder Partner
Chartered Accountant, Ministry of Finance, Egypt

Member, Egyptian Society of Accountants & Auditors
Member, Egyptian Tax Society
Member, Egyptian Society for Public Finance and Taxation

Partner profile · Book a consultation

Disclaimer: This bulletin is prepared for general information on the legislation in force at the date of its publication. It does not constitute a professional opinion or tax or legal advice on any particular matter, and it should not be relied upon in place of advice based on an examination of the circumstances of each case. Nassef & Partners International accepts no responsibility for any action taken, or refrained from, in reliance on its contents. The positions stated remain subject to subsequent legislation and decisions.