I. Introduction
At the outset, it is worth underscoring that the Egyptian employment legal framework occupies a uniquely sensitive position within the country’s broader legal landscape. Not only does it govern the employer – employee relationship; it also directly influences workplace stability, business productivity, and broader societal cohesion.
Moreover, labor laws, in both their former and current forms, aim to align with Egypt’s international commitments and respond to evolving workplace practices, as they have been enacted in accordance with the international employment standards, and conventions to which Egypt is a party.
Considering the primary purpose of the employment legal framework is to safeguard employees’ rights, the legislature has consistently treated labor protections as matters of public order, embedding mandatory provisions from which the parties may not derogate, except where any modification benefits the employee, irrespective of the parties’ sophistication or contractual freedom.
At the same time, there has been a significant shift in commercial practice toward arbitration as the preferred mechanism for resolving disputes. Arbitration’s flexibility, speed, and confidentiality make it an attractive option for many businesses. As multinational companies expand into Egypt and domestic businesses professionalize their dispute-resolution strategies, arbitration clauses have increasingly appeared in a wide range of contractual arrangements, including, individual employment contracts.
In this regard, it is imperative to highlight that the Egyptian Court of Cassation (the “ECC”) has delivered a decisive clarification. In its judgment in Case No. 1832/83 JY, the ECC reaffirmed that arbitration clauses included in individual employment contracts are absolutely null and void (the “ECC Ruling”).
Furthermore, the ECC Ruling underscores that labor law provisions and employee rights constitute matters of public order and cannot be overridden by private agreements. It also offers authoritative guidance for employers, HR departments, and legal practitioners navigating the increasingly interface between statutory labor protections and alternative dispute resolution mechanisms.
II. Case Background
At the inception of the dispute, the case arose from a dispute between an employee (the “Employee”) and his employer (the “Employer”). According to the ECC Ruling, the Employee entered into an employment agreement with the Employer, holding the position of in-house counsel.
The Employer restructured its internal departments and placed the legal department under the supervision of a manager who was not a licensed lawyer. The Employee viewed this administrative change as one that affected the nature of his work, resigned, and subsequently filed labor case before the Labor Court (the “Labor Court”).
With respect to his claims, the Employee sought compensation for years of service, notice-period entitlements, and compensation for moral damages. In response to these claims, the Employer raised a jurisdictional objection, invoking on a written arbitration agreement executed by the Employee. This agreement required to oblige both parties to resolve any disputes through arbitration.
Consequently, the Labor Court of first instance upheld the Employer’s jurisdictional objection, holding that it lacked subject-matter jurisdiction to adjudicate the dispute, as the arbitration clause effectively divested the court of authority to adjudicate the matter. The Employee appealed to the Court of Appeal, and the appellate court affirmed the first-instance judgment.
Ultimately, the Employee appealed to the ECC, contending that the arbitration clause was null and void pursuant to Article (5) of Former Labor Law No. 12 of 2003,which had been recently repealed and replaced by New Labor Law No. 14 of 2025. The Employee further asserted that his claims, compensation, notice-period entitlements, and accrued leave, constituted core labor disputes that fall within the exclusive jurisdiction of Labor Courts.
III. The Court’s Judicial Reasoning
The ECC overturned the rulings of the lower courts and delivered a comprehensive analysis of the legal framework governing individual labor disputes. The ECC reaffirmed the long-standing principle that the provisions of the Labor Law constitute matters of public order, as Article (5) of the Former Labor Law expressly prohibits any agreement that would diminish an employee’s statutory rights.
Furthermore, the ECC considered that the amendments in articles (70), (71), and (72) of the Former Labor Law, vested the Labor Courts with exclusive jurisdiction over all individual employment disputes, thereby underscoring the non-arbitrable nature of such disputes as a matter of public order. On a related note, this mandate has been expressly reaffirmed and consolidated under corresponding provisions [1] of the New Labor Law.
The ECC held that the arbitration undertaking signed by the Employee could not deprive him of his right to litigate before the Labor Courts. The court concluded that the arbitration clause was void as it conflicted with mandatory statutory provisions of a public-policy nature, from which the parties cannot derogate by private agreement.
Based on this analysis, The ECC emphasized that the Employee’s claims in this case clearly fell within the category of individual labor disputes, and held that the Labor Court should have adjudicated the case on the merits rather than dismissing it for lack of jurisdiction. Consequently, the ECC set aside the prior judgments and remanded the case to the Labor Court for adjudication.
IV. Validity of Arbitration Clauses Under the New Labor Law:
Articles (6, 148, 149, and 150) of the New Labor Law uphold the principles established by the ECC ruling under the Former Labor Law by prohibiting recourse to arbitration in employment disputes, thereby reinforcing the exclusive jurisdiction of the labor courts over such matters.
Effective 1st of October 2025, the New Labor Law reaffirms these principles by establishing specialized labor courts with exclusive jurisdiction over employment-related disputes pursuant to Articles (176) through (187) and Articles (9) on enactment of the Law. These courts are required to render judgments within three months from the first hearing, thereby ensuring an expeditious, efficient, and legally predictable dispute-resolution process.
Conversely, both the Former and the New Labor Law expressly authorize arbitration in collective labor disputes, provided that the statutory procedural and substantive requirements governing such arbitration are duly fulfilled.
This dual approach reflects a deliberate legislative balance. It safeguards statutory individual labor rights as matters of public order that cannot be waived, while also allowing regulated flexibility for employers and employees to resolve collective disputes through alternative dispute-resolution mechanisms within a statutory framework.
[1] Articles 149, 150 and 176 -187 of the New Labor Law.