Navigating the complex labour laws governing employment practices is essential when running Egypt payroll. However, building an in-house compliance team may not be the most efficient way to manage your remote team’s payroll in Egypt.

Regardless of size, global companies need help to secure in-country expertise for localised payroll service. This is where a partner like Workforce Africa provides significant value in supporting global firms to maintain compliance when handling payroll in Egypt, addressing every intricate detail, including;

• Salary computation requirements,
• Taxation legislation specifics (social security, employee income tax, corporate tax, VAT and other employee deductions.
• Benefits administration, and more (health insurance, pension, paid leaves, holiday compensation

Workforce Africa simplifies hiring and payroll compliance for offshore talent management in Egypt. No need for a subsidiary or entity setup. From contracts and onboarding to taxes, payroll, and admin tasks, partnering with us – a payroll firm in Egypt will help you focus on growth for greater levels of success.

Employment Contract Termination

In accordance with the laws of Egypt, employment contracts can be terminated by either party upon giving notice, usually at least two months, depending on the terms of the contract. The employer may also terminate an employee’s contract without notice if there is just cause, such as gross misconduct or breach of contract. Conversely, an employee may terminate their contract by resigning in writing, which must be acknowledged by the employer. It is essential to follow the proper procedures for terminating an employment contract to avoid any potential legal disputes or penalties.

Egypt Country Overview

The Arab Republic of Egypt lies in North Africa. It is predominantly an Arabic-speaking country. Two critical cities in Egypt are Cairo, the capital and the economic hub, and Alexandria. These urban centres act as transit points to ecotourism destinations and beach resorts. With a population exceeding 116.5 million people, Egypt boasts a significant demographic presence.

In recent years, key industries experiencing growth include petroleum production and tourism. Egypt boasts a market-based, diversified economy comprising petroleum imports, media, agriculture, natural gas, and services. Considerations such as the low labour cost and abundant natural resources make Egypt attractive for businesses seeking expansion opportunities.

Although Egypt possesses a highly skilled workforce, hiring and establishing a team can be time-consuming and challenging. However, partnering with an Employer of Record (EOR) or Professional Employer Organisation (PEO) in Egypt facilitates swift market entry. It manages all legal complexities associated with operations in the country.

Payroll Processing in Egypt

Local labour laws in Egypt govern payroll processing, with each employee’s salary potentially calculated differently. Due to compliance concerns, processing payroll at scale can become complex, cumbersome, and risky. Here are the phases of payroll processes global businesses should understand-:

Pre-payroll Phase

Your organisation’s unique approach to payroll compliance shapes its policies and processes, including payroll preparation. Global firms must prioritise essential business elements in the pre-payroll phase, such as accurate business profile documentation and tailored work location policies, which is crucial. Customise leave and work policies to align with local standards in Egypt to ensure compliance and transparency while collaborating closely with compliance teams or partners to help adhere to statutory requirements throughout the payroll management process for your remote team. In this phase also, standardising compensation packages to conform with local payment norms, such as payment cycles, which enhance compliance and meet employee expectations, is necessary.

Payroll Calculation Phase

Streamlining input collection and validation processes ensures accurate wage calculations in this phase of payroll processing. This phase involves the actual calculation of wages, with a primary focus on this task. Utilising software automation and digital document submission tools makes payroll calculations efficient and reduces the risk of human error in this process.

Post-payroll Phase

The post-payroll phase in Egypt refers to the period after payroll processing, where employers review and settle any outstanding issues related to employee compensation, benefits, and taxes. This phase typically includes: salary payment, compliance reporting, benefit administration, audit and reconciliation. The post-payroll phase is crucial in Egypt as it ensures that employers comply with regulatory requirements, maintain a good employer-employee relationship, and reduce the risk of penalties or fines associated with non-compliance.

Payroll Components in Egypt

Here are some aspects comprehensively needed to navigate Egypt’s payroll compliance:

• Salary/Wages
• Overtime benefits
• Social security contribution
• Paid leaves
• Paid holidays
• Payroll taxes
• Other laws

Navigating Egypt Payroll Compliance

Egypt’s employment regulation primarily revolves around Law No.12 of 2003 along with pertinent sections of other laws and acts. The Labor Law outlines critical aspects of payroll processing and compliance with crucial employment practices-:

• Salary/ Minimum Wage: The current minimum wage set on May 1, 2024 is EGP 6,000 per month.
• Working hours: Regular hours and overtime pay rates are set in the employment contracts or collective bargaining agreements. Stipulated work hours are 40-45 hours per week (5 days) excluding 1 hour break.
• Social Security Contribution: The Employer contributes between 18.75%- 20.75% overall, while the Employee pays social security contributions of 11% National Health Insurance Scheme.
• Health Insurance Scheme: Egypt introduced the Universal Health Insurance (USI) scheme, which aims to provide comprehensive health coverage for Egyptian citizens and residents across the country. Provision of health insurance for employees is a common practice, but it is not mandatory.
• Pension Contributions: Pension contributions are governed by the National Social Insurance Law (Law No. 148 of 2019). Contributions to private pension schemes are voluntary and require the employee’s consent.

Payroll Taxes

Paid Leaves

• Annual Leave: Employees are entitled to 21 paid leave days per annum while an employee who is insured for 10 years, is entitled to 30 days annual leave. The employee is eligible to proceed on leave three (3) months following the hiring date.
• Sick Leave: Employees are entitled to up to six (6) months of paid sick leave provided that they provide a professional medical certificate confirming ill health. During the first 90 days of the sick leave, the employee is entitled to 75% of the regular wage rate, this increases to 85% of the normal wage rate following the first 90 days.
• Maternity Leave: According to the law, a female worker who has worked for at least 10 months for the same employer shall have the right to a maternity leave of 90 days with a compensation equal to her comprehensive wage; and shall submit a medical certificate including the date on which delivery took place. However, for an employee that has worked less than 10months shall only be eligible for a maternity leave of 45days.

In Egypt, employees may be granted compassionate/ special leaves on some family events. Such leave shall be paid within the limits and deadlines specified. Public holidays are not fixed days and they can be changed according to the government decision.

Paid Public Holidays

In Egypt, the paid holidays are as follows:

• January 7 – Orthodox Christmas Day
• January 25 – Revolution Day
• Sham Ennessim (Easter) – Based on the Coptic Calendar
• Sinai Liberation Day – April 25
• May 1 – Workers’ day
• Eid Al Fatr – 3-4 days Based on the Islamic Calendar
• June 30 – Uprising in Egypt
• July 23 – Revolution Day
• Eid Al Ahda – 4-5 days Based on the Islamic Calendar
• Islamic New Year – Based on the Islamic Calendar
• Armed Forces Day – October 6
• Prophet Mohammed’s birthday – Based on the Islamic Calendar

Payroll Outsourcing in Egypt

Payroll in Egypt also encompasses termination and probationary periods law. Employees are not generally eligible for severance pay, except the termination is unjustified, or the employer voluntarily decides to make severance payment. Collaborate with an Africa employer of record and payroll solutions provider such as Workforce Africa to strategically outsource your payroll operations while ensuring compliance with local labour regulations. Additionally, leverage our flexible service offerings to expand your international teams as needed.