Labor funds
Funds are any system in any governmental authority, association, union, organization, or individuals linked by one profession or one work or any other social relationship formed without capital and the purpose of which, according to its bylaws, is to provide its members or beneficiaries with compensation, financial benefits, periodic salaries or specific pensions.
Funds are considered tools by which insurance is achieved against the risks of a decrease in income values due to the termination of A contractual relationship, or economic reasons. They are also a tool for achieving economic and social goals by being a main channel for collecting national savings represented by the value of subscriptions deducted from members and using those savings to finance national investments, not forgetting to provide new employment opportunities and reduce the severity of inflation.
Types of labor funds in Egypt and its resources
1- Emergency Aid Fund:
Law No. 156 of 2002 and its executive regulations regulated the establishment of the Emergency Aid Fund for workers, which was organized to provide aid to workers whose wages are stopped from being paid by the companies working in it and who are closed completely or partially or whose number of workers registered in their records who are insured with social insurance is reduced.
Calculation method:
The subscription amount of the Emergency Aid Fund is calculated based of 1% from the basic wages of the insured workers for the entity which has thirty (30) or more than thirty (30) employees and the company shall bear such deduction.
Payment method:
The Company shall pay a (1%) of the basic wages of their insured workers – the subscription amount of the Emergency Aid Fund – monthly by means of checks in the name of the “Emergency Relief Fund for Workers” or by bank transfer during the first half of each month, attached by a form showing the number of insured employees in the company and their basic wages.
The abovementioned percentage shall be paid retroactively.
Violation fines:
Any company that fails to pay the percentage referred to above shall be subject to a fine equal to half of the unpaid amounts, and the fine shall be doubled in the event of recurrence.
2- Training and Rehabilitation Fund:
Law No. 12 of 2003, as well as related decrees and amendments, regulated the formation and work system of the Board of Directors of the Training and Rehabilitation Fund, as the Fund is responsible for financing the establishment, development, and modernization of training centers and programs that aim to harmonize the needs of the local and foreign labor market.
Calculation method:
The company that has more than ten (10) employees shall pay (1%) of the annual net profits proven in the approved financial statement or tax declaration.
Payment method:
Payments shall be made by checks in the name of the “Training and Rehabilitation Fund” during the month following the approval of the annual financial statement, accompanied by a copy of the approved financial statement or a copy of the tax declaration submitted to the Tax Authority during the month following the date of submitting the declaration.
3- Health, Cultural, and Social Services Fund:
Law No. 12 of 2003, as well as related decisions and amendments, regulated the formation and work system of the board of directors of the Health, Cultural, and Social Services Fund.
Calculation method:
The company that has twenty (20) employees or more shall pay for each employee annually Five Egyptian Pounds (5 EGP).
Payment method:
The payments shall be by checks in the name of the “Health, Cultural, and Social Services Fund”.
According to the relevant laws and decrees, payments of the amounts shall be paid in quarterly installments at the end of every three months, with a form attached showing the number of workers, and that payment is made during the month following the end of each quarter. In practice and according to the established practice, the payments are paid in semi-annual installments.
Violation fines:
The fine for each Company that did not pay the Fund dues shall be fined not less than One Thousand Egyptian Pounds (1,000 EGP) and not more than Ten Thousand Egyptian Pounds (10,000 EGP).
4- Penalties Fund:
According to the decree of the Minister of Manpower No. 127 of 2014 regarding the disposal of the proceeds of financial penalties imposed on workers in each company that hire ten (10) or more employees, a committee shall be formed consisting of:
- As a chairman the Employer or any of his representatives.
- Two employees from the company’s employee chosen by the union committee. If there is not a committee, in this case, the employees shall choose them (as members). Based on the request of the committee chairman or one of the members, for a representative from the competent manpower and immigration directorate may attend the committee meetings and have the presidency.
It is not permissible to pay these amounts to fulfill the obligations stipulated in Article No. 222 of the Egyptian Labor Law as a reward or to purchase living necessities such as food and clothing. It is also not permissible to invest them in any work that may result in profit or loss, except for contributing to consumer cooperatives.
The company is obligated to send the committee’s resolution to the competent office within a maximum period of fifteen (15) days from the date of issuance of the committee’s resolution for approval. If the competent office does not object to it within thirty (30) days from the date of its receipt, it shall be considered effective and approved by the Minister of Manpower and Immigration.
If the company has one or more branches, a register shall be prepared in each branch to record the financial penalties imposed on its employees. The benefit from the collected funds shall be limited to this branch unless the committee sees the possibility of achieving a general project that will benefit all the company’s workers. In this case, the project must be approved by a committee that includes the company’s representatives in the various branches.
Calculation method:
The Company shall provide one-third of the penalties imposed on its employees every six months, as follows:
- 70% for the Workers’ Cultural Foundation.
- 30% for the Worker’s Social Foundation.
- Two-thirds of the penalties imposed on employees are allocated to social, cultural, and sports activities for employees not stipulated in the law.
5- Honor the Martyrs, Victims, missing persons, and the injured of war, terrorist, and security operations, and their families Fund:
The Fund aims to honor martyrs and those in their position, victims, missing persons, and those injured in war, terrorist, and security operations and their families, and to support and care for them in all social, health, educational, and other aspects, and to pay the compensation due to them, in accordance with the provisions of this law.
Calculation method:
A percentage equivalent to five ten thousandths of the salary of employees of the private sector who are subject to the provisions of the Labor Law and shall be deducted monthly, except for irregular or daily workers, provided that the competent authority disburses the salary after deducting this percentage, and the Ministry of Finance shall collect this percentage and deposit it into the Fund’s account.
A quarterly report is prepared, including the number of employees and their wages, and is submitted to the Central Auditing Organization.
A copy of the abovementioned report shall be delivered to the Fund for Martyrs, Victims, Missing Persons, and Injured Persons of War, Terrorism, and Security Operations and their Families, attached by evidence of the transfer of the abovementioned amounts, and evidence of the report being delivered to the Central Auditing Organization.
Payment method:
The payments shall be in cash or by any electronic payment method.