Explanatory Memorandum: Absence of Insurance Coverage for Platform Economy Workers


The labor market has witnessed profound transformations in recent decades due to technological advancements. This has led to changes in the nature of work and the emergence of new work patterns, such as freelancing and independent work through digital service platforms. These workers offer their services via platforms that provide online applications to facilitate communication between consumers and service providers.

These platforms encompass a diverse range of services such as ride-hailing, delivery, home services, and others that quickly and efficiently meet the needs of individuals and businesses. However, workers on such platforms do not fit the traditional worker definition for an employer, nor can they be classified as irregular workers in the legal sense.

This explanatory memorandum addresses the legal issue of the absence of insurance coverage for platform economy workers in light of the new Social Insurance and Pensions Law. It provides an overview of the general legal context and analyzes the reasons why many freelancers are not subject to the law’s provisions, with a focus on workers in digital service platforms.

The memorandum also reviews proposed legislative amendments put forward by certain legislators to expand the scope of the law to include new categories of irregular workers. It also discusses the adequacy of these amendments in addressing the issue of workers in digital service platforms.

In conclusion, the memorandum recommends legislative amendments to the Social Insurance and Pensions Law or the issuance of interim regulatory decisions to extend social insurance coverage to workers in digital service platforms and freelancers. This is proposed, pending a comprehensive legislative review, to address this issue effectively.

Social Insurance and Pensions Law

The new Social Insurance and Pensions Law was issued in August 2019, with most of its provisions scheduled to come into effect on January 1, 2020. The law was enacted as Law No. 148 of 2019, and it was followed a year later by its executive regulations. This law replaces the Comprehensive Social Insurance Law, No. 112 of 1980, which has been repealed.

The law consists of twelve chapters, allocated as follows:

  • Chapter One: Definitions
  • Chapter Two: Administration and Financing of the Social Insurance and Pensions System
  • Chapters Three to Six: Insurance for Old Age, Death, Illness, Disability, Work Injuries, and Unemployment
  • Chapter Seven: Healthcare for Pensioners
  • Chapter Eight: Pension Beneficiaries
  • Chapter Nine: Public Treasury
  • Chapters Ten and Eleven: General and Miscellaneous Provisions, Transitional and Temporary
  • Chapter Twelve: Penalties

In some of its articles, the law authorized the Chairman of the Board of Directors of the National Organization for Social Insurance to issue supplementary decisions to complement the provisions of the law, including adding other categories of irregular workers subject to the provisions of this law.

Parliamentary Proposals to Amend the Law

Several members of parliament have submitted requests to amend certain provisions of the Social Insurance Law. In early 2022, the Manpower Committee of the parliament discussed a draft law proposed by MP Diaa Eddin Dawood, co-signed by sixty other MPs. The MP had previously submitted the same draft in November 2021, but it did not make any progress at that time.

The draft law includes amending eight articles, adding one article, and repealing two articles, in addition to canceling Schedule (5) attached to the law. These amendments were proposed in response to the law’s exclusion of certain categories of irregular workers in the sectors of tourism, construction, fishing, mining and quarries, retail businesses, fuel stations, cafes and clubs, and technicians in the cinema, drama, and theater sectors.

This wasn’t the only demand in parliament to amend the Social Insurance Law. In December 2021, MP Solaf Darwish, deputy head of the Manpower Committee, submitted another draft law to amend the law. The draft law was referred to the Manpower Committee after being signed by sixty MPs; however, the outcome of these proposals remains undecided.

Despite efforts to expand social insurance coverage, it has not kept pace with the developments in the labor market, including the increasing prevalence of freelance and independent work. Digital service platforms play a crucial role in this evolution by facilitating coordination between workers across various categories and platform users seeking services.

Among the prominent examples are workers on digital transportation apps like Uber and Careem, as well as home service platforms like Taskety and Filkhedma. However, these workers cannot be considered employees of the platform itself, nor can they be classified as irregular workers for legal reasons that will be clarified later in the memorandum.

The role of digital service platforms expanded significantly during the COVID-19 pandemic. Social distancing measures and movement restrictions led to increased reliance on online services to meet daily needs. This reliance persisted and grew even after the pandemic-related restrictions were lifted. Additionally, many individuals turned to these platforms for flexible work opportunities, particularly amidst rising unemployment rates.

This transformation calls for updating laws and regulations concerning employment, with a primary focus on the Social Insurance and Pensions Law. Legislation should ensure that workers engaged through these platforms receive adequate insurance protection. It involves redefining the definitions of “worker” and “employer” in light of these emerging work models, outlining the rights and responsibilities of each party, and establishing mechanisms to safeguard workers from exploitation while securing their fundamental entitlements such as healthcare coverage and retirement benefits.

The Exclusion of Platform Economy Workers from the Coverage of the Social Insurance Law

The Social Insurance and Pensions Law classified the categories to which its provisions apply into four categories:

  • Employees working for others
  • Employers and those in similar positions
  • Egyptian workers abroad
  • Irregular labor

The law establishes criteria and conditions for each category to include specific individuals. Consequently, those who do not meet these conditions are not subject to this law and are not covered under the social insurance umbrella. This issue becomes particularly apparent with freelancers and independent workers, as categorizing them within the law’s defined categories is challenging due to their non-compliance with its criteria and requirements.

The category of “employees working for others” requires a regular employment relationship that binds the insured person to the employer. The executive regulations further define regularity as the work performed by the employee inherently falling within the activities conducted by the employer or lasting for a minimum of six months.

These criteria do not apply to freelancers and independent workers due to the absence of a regular and continuous employment relationship as defined previously. Freelance work is characterized by flexibility and independence, often involving short-term tasks typically lasting less than six months. 

Additionally, freelance tasks often fall outside the scope of the employer’s regular activities. Furthermore, digital service platforms cannot be classified as employers in the legal sense because they operate as intermediaries between workers and users.

The law explicitly exempts certain groups from these conditions and criteria, such as construction workers, fishing workers, land transport workers, and cargo handlers, among others. However, the law has yet to keep pace with the evolving nature of new professions, especially those operating through digital service platforms. Freelancers and independent workers have not been included in these exempted categories despite their growing presence in the modern workforce landscape.

Freelancers also cannot be classified within the category of “employers.” The law stipulates that one of two conditions must be met for an employer to be included in this category and, therefore, under the coverage of social insurance. These conditions are:

  • Operates under specific laws regulating its activities.
  • Requires obtaining a license from the relevant administrative authority to conduct its operations.

Neither of these conditions apply to most freelancers. The legislator has not defined many of the activities performed by freelancers, and there are currently no laws regulating them.

The same applies to the category of “irregular workers,” which is closest to freelancers and independent workers. The labor law specifically and exclusively mentions workers in this category without allowing for the inclusion of other categories under it.

Some freelancers can be classified as self-employed individuals, similar to street vendors, artisans, and those categorized as irregular workers. Some of them may meet the conditions specified in the executive regulations of the law, such as “not employing workers,” “not operating from a fixed place of business with a commercial registration,” and “not subjecting their activities to licensing by administrative authorities.” However, the National Organization for Social Insurance refuses to classify some freelancers under this category.

The category of irregular workers also does not apply to workers through digital service platforms. They often work for platform-owning companies, use technology as a tool for work, and may have virtual or even fixed workplaces at times.

Furthermore, the relationship between workers on platforms and the owning companies is often non-traditional contractual. These workers do not enjoy the same rights and protections as traditional employees, leading to a loss of their rights between the platform-owning companies they work through and the law, which does not provide them with social insurance coverage.

Recommendation and Conclusion

The Social Insurance and Pensions Law needs a comprehensive legislative review, especially following the enactment of the new labor law, to align more closely with the amendments introduced to the labor law. These amendments will alter the financial and legal obligations of both employees and employers. However, the legislative review process may take a considerable amount of time, leaving a significant number of workers outside the scope of social insurance in the interim.

To address this situation, the Chairman of the Board of the National Organization for Social Insurance can utilize the powers granted to them under the Social Insurance and Pensions Law by issuing regulatory decisions. This includes categorizing self-employed individuals under the category of irregular workers and specifying conditions for their inclusion.

These measures remain temporary solutions. Legislative intervention is required to redefine the concept of freelancers and self-employed individuals in a way that suits their work nature and specific circumstances. This legislative amendment should establish general and comprehensive standards for enjoying social insurance protection rather than relying on specific lists of categories and professions. This would ensure the inclusion of all workers, regardless of the nature of their work, under the framework of social protection, thereby contributing to achieving social justice and economic security for all.

Additionally, the legislative amendment could include the establishment of a new category of insured persons specifically for workers of digital service platforms, taking into account the unique nature of this type of work and setting specific conditions and regulations for their inclusion in the social insurance system.