Egypt, the most populous country in Africa and the Middle East, is in the midst of an ambitious, transformative plan to attract foreign direct investment (FDI) and rebuild its economy to be more modern, responsive and equitable. In recent years, the government has announced initiatives to focus on smart political reform, social justice, sustainability and targeted investment. Through these bold plans, Egypt is building a competitive, diversified economy and attracting the interest of multinational companies (MNCS) for expansion and hiring.
- The country’s sustainable development plan incentivizes investments in high-productivity, fast-growing sectors such as manufacturing, logistics, construction, the sciences, technology and the digital economy.
- International brands are increasingly interested in tapping into Egypt’s large consumer market and taking advantage of its geographic location at the crossroads of Mediterranean, Arab and African cultures.
- The country is considered the region’s main source of skilled labor in several key sectors such as information and communications technology (ICT), financial services, and tourism. This presence is increasing following the government’s adoption of national programs to train and prepare skilled labor.
- Egypt is home to a relatively young population, with about 60% of the population being under 30 years old, which will help to drive innovation in the future.
How are labor laws determined in Egypt?
The following are the main statutes and regulations relating to employment in Egypt:
- The Labor Law (Law No. 12/2003), as amended, and its executive regulations
- The Social Insurance Law (Law No. 148/2019), as amended
- The Civil Law
The following government entities are responsible for the enforcement of employment statutes and regulations are:
- The Ministry of Manpower and Immigration
- The Social Security Organization
- The Labor Office
- The Egyptian Trade Union Federation
What must be included in an employment contract in Egypt?
Labor contracts in Egypt must be in writing, with the following terms outlined:
- Duration of the contract (e.g.if it is a fixed term with a certain period or indefinite contract)
- Employer’s name and address
- Employee’s name, ID, address, education, work experience and social security number if he or she was previously employed
- Description of job
- Employment start date
- Gross salary and benefits including overtime pay (if any)
- Work credentials and terms
- Annual holidays period
- Confirmation of a three-month probationary period
- Time frame for which the staff must complete his or her recruitment documents
- Notification period (in case any of the parties wish to terminate the contract)
- Non-disclosure agreement section (if applicable)
What else do MNCs need to know about employment contracts in Egypt?
An employment contract can be bilingual as long as one language is in Arabic. It must be signed by both the employee and the manager who is authorized in the corporate bank or who is delegated to deal with the Social Security authority. Once concluded, three copies of the contract should be produced: one for each the employer, employee and the Social Security Authority.
Are fixed-term contracts allowed in Egypt?
The maximum duration of a fixed-term contract is five consecutive years with the same employer. The contract will automatically become an indefinite term employment contract after five years. Any renewal must be in writing. In the case of not renewing the contract, the employer must notify the employee at least three months prior to contract expiry date.
Do MNCs need to be aware of any special regulations when hiring expats in Egypt?
Egyptian law gives employers the right to recruit foreign employees with special skills and experience not available in Egypt. With approval by the ministry, 10% of the employees in a company can be foreigners. The salaries of foreigners must not exceed 20% of the total payroll. All foreign workers are required to have Residency and Work Permits before commencing work in Egypt. Foreign workers may not enter into indefinite term contracts and may not enter contracts exceeding three years.
What makes Egypt an attractive place for global expansion and hiring?
When it comes to global expansion and hiring, Egypt offers MNCs a myriad of competitive advantages: young population, skilled workforce, conducive investment environment, low operating costs and prime geography. Notably, wages in Egypt are very competitive and more stable than wage levels in many other neighboring countries.
Why are many MNCS turning to the Employer of Record (EOR) hiring model in Egypt?
Exciting things are happening in Egypt, especially as the country rebuilds a competitive, diversified, knowledge-based and private sector-led economy. While MNCS want to be part of the growth and tap into Egypt’s young, cost-effective talent pools, hiring in the country can be challenging. For starters, setting up a legal entity in Egypt takes time and entails costly fees. Moreover, failure to comply with the country’s unique labor laws can result in further fees, legal troubles and reputation damage.
MNCs often find that using the EOR hiring model, rather than setting up a legal entity and hiring directly, is a more secure, streamlined way of building a team in Egypt. By partnering with an effective EOR, like GoGlobal, the company can mitigate the risks, requirements and restrictions that typically come along with hiring in Egypt.
When building a team, the home country HR team does need to learn the specific requirements of the labor framework in Egypt. At the same time, by hiring through an EOR, the company is able to tap into the country’s large, talented workforce.
How does GoGlobal help MNCs thrive in Egypt?
At GoGlobal, we have a powerful track record in successfully building fully compliant workforces all around the world. Our innovative EOR solutions allow clients to focus on the core business development activities that help them scale opportunities in Egypt’s transforming, growing economy – without being bogged down by the paperwork and requirements of HR processes.
When an MNC partners with GoGlobal in Egypt, we assume the legal risks and take on the burdensome administrative tasks and HR tasks associated with managing a workforce, such as payroll processing, contributions, benefits and employee termination.
Before we onboard the worker, our local team in Egypt will meet one-on-one with him or her to go over how the EOR arrangement operates. That same dedicated team remains the point of contact for both the client and client-worker throughout the relationship. We’re ready to answer any questions that come up in payroll, taxation or benefits.