Wage Deductions Egypt | Labour Law 14 of 2025 Rules

Legal Provisions Governing Deductions from Wages Under Labour Law 14 of 2025

Wages are a fundamental right guaranteed by law to workers. They represent the direct reward for work and are a key source of worker economic and social stability. Given the importance of this right, the lawmaker sought to provide it with special legislative protection under Labour Law 14 of 2025 (“Law”), stipulating that it may not be infringed upon or curtailed except in specific cases, in a regulated manner, and as per precise legal safeguards.

The provisions on wage deductions have been formulated to achieve a balance between the operational requirements of the establishment and the employer’s right, on the one hand, to maintain discipline and ensure the smooth running of the business, and, on the other, the safeguards designed to protect the worker from any unjustified or arbitrary deductions that might affect their income.

In light of this, we outline below the most important legal provisions established by law regarding deductions from an employee’s wages and their limits.

1. Common Principles Governing Protection of Wages

The Labour Law establishes a fundamental principle that a worker’s wages may not be reduced except in cases expressly permitted by law, and only within the prescribed limits and percentages. The employer shall also ensure that any deductions are justified and supported by documentation, and shall not impose multiple penalties for the same violation.

2. Circumstances of Wage Deduction

1. Deduction as a disciplinary measure

A disciplinary sanction is a measure or penalty imposed by an employer on an employee for committing an offence that constitutes a breach of their duties or a violation of workplace rules and discipline. The aim is to correct the employee’s behaviour and to maintain the smooth running and order of the workplace.

The disciplinary actions that may be applied to an employee in accordance with the regulations governing labor and sanctions are as follows: 

1. Written warning.  
2. Deduction from base pay. 
3. Annual bonus payment date to be postponed for a period not exceeding three months.
4. Withholding part, but not more than half, of the annual bonus. 
5. Postponement of a promotion when it is due for a period not exceeding one year. 
6. Reduction of basic pay by no more than the amount of the allowance. 
7. Demotion to the next lower grade, without a reduction in pay.
8. Dismissal from service in accordance with the provisions of this Law. 

A deduction from wages is deemed a legal disciplinary measure provided for by law, subject to the statutory limits. For an act to be subject to disciplinary action, it must be work-related. Furthermore, a disciplinary measure may not be imposed on an employee more than thirty days after the investigation into the violation has been concluded.

The employer is entitled to impose a deduction from wages if an employee commits a disciplinary offence, in accordance with legal safeguards designed to ensure fairness, the most important of which are:

1. Disciplinary action may only be taken against an employee after they have been notified in writing of the alleged breaches, investigated, given the opportunity to be heard, and allowed to present their defence. This must be recorded in an official report to be filed in the employee’s personnel file.

The investigation must be conducted within 7 days of the date the breach is detected. It must not exceed three months from the date the investigation begins. The period may be extended by a further three months if new facts or documents come to light during the investigation. The decision imposing the action must be properly reasoned.

2. For violations for which the employee is penalised either by a warning or by a deduction from pay not exceeding one day's wages, a verbal investigation may be conducted. However, this investigation must be recorded in the decision on the penalty. The decision on the penalty must be reasoned.

3. The labor union to which the worker belongs may appoint a representative to attend the investigation.

4. An employer may not impose more than one penalty for a single breach. Nor may the employer combine a deduction from the worker’s wages with any other financial penalty if the amount to be deducted exceeds five days’ wages in a single month.

5. An employer may not impose a deduction on an employee for a single violation that exceeds five days’ basic pay. Nor may the employer deduct from such pay, in satisfaction of penalties imposed, an amount exceeding five days’ pay in a single month.

2. Deductions Offset Against Borrowings

An employer may deduct from an employee’s wages any sums lent to the employee during the term of the contract. The deduction, however, must not exceed 10% of the employee’s wages. Furthermore, the employer may not charge any interest on such borrowings.

3. Deduction for Damage or Loss

An employer may deduct from an employee’s wages any compensation for loss or damage to work-related tools, equipment, or products caused by the employee’s negligence, provided that:

1. An investigation should be conducted into the worker’s liability.

2. The compensation claimed shall not exceed a maximum of two months' wages.

3. The monthly deduction shall not exceed the equivalent of five days' pay per month.

4. The value of the damage must be proportionate to the value of the deduction.

An employee may file a grievance with the competent labour court against the employer’s decision, in accordance with the deadlines and procedures laid down by law. If the court does not award the employee the amount claimed for damage, or awards a lower amount, the employer must refund the sum wrongfully deducted within seven days of the judgment date.

4. Deduction pursuant to court orders and debts.

Lawmakers allow these provisions to be enforced directly by deduction from the worker’s wages, as debts or court orders are considered legally enforceable. This is to ensure that those entitled to such rights receive them; The legislator therefore set the deduction rate at a maximum of 25% of the wages for the repayment of any debt. The deduction rate may be increased to 50% for maintenance debts. In the event of multiple debts, maintenance debts are prioritized.

The deduction rate is calculated after income tax, social security contributions, legally due amounts, and outstanding loans to the employer have been deducted.

For reductions within these limits to be valid, the employee’s written consent is required.

3. Common Restrictions on Deductions.

• Compliance with the legally prescribed maximum limits for each type of deduction.
• Non-abusive exercise of the power of deduction.
• Disciplinary deductions must be kept separate from other deductions.
• Any deduction made in violation of the provisions of the Law is invalid.

4. Legal Consequences of Non-compliance with Deductions Regulations.

Should an employer violate legal regulations:

• The employee has the right to file a grievance regarding the deduction.
• The employee may claim a refund of amounts that were deducted without legal reasons.
• The employer may be held accountable before the relevant authorities and the employment tribunal.

In conclusion, the 2025 Labour Law established precise regulations governing deductions from workers’ wages, striking a balance between the employer’s right to manage their business and the protection of workers’ rights. Compliance with these regulations ensures a fair and stable work environment and helps minimize labor disputes.

In this context, Sadany & Partners Law Firm provides specialized legal support to employers and employees through consultancy services and the review of disciplinary policies and procedures. We ensure compliance with the law and the protection of the rights of all parties involved in the employment relationship.