Hire in Egypt
Here’s where you get started with human resources best practices and hiring in Egypt.
Key Country Facts
Egypt, officially the Arab Republic of Egypt, is a transcontinental country located in the northeastern corner of Africa.
Egypt is bordered by the Mediterranean Sea to the north, the Gaza Strip (Palestine) and Israel to the northeast, the Red Sea to the east, Sudan to the south and Libya to the west. The Gulf of Aqaba in Egypt’s northeast region separates the country from Jordan and Saudi Arabia.
Egypt has a hot desert climate. It is extremely dry, except for a mild winter season with rain along the northern Mediterranean coast. Daytime temperatures are milder along the northern coast and it gets warmer towards the south. The Sinai Peninsula on the east is the only area that gets cold in the winter.
Egypt has one of the longest histories of any nation. Because of its location, the country is simultaneously Mediterranean, Middle Eastern and North African.
Islam is the state religion of Egypt, with the majority of the population being Sunni Muslim. The country has the largest Muslim population in the Arab world, with an estimated 85% to 90% of the population identifying as Muslim. Another 10% to 15% of the population identify as Coptic Christians.
The official language of Egypt is Literary Arabic. The majority of spoken languages are Egyptian Arabic (spoken by 68% of the population) and Sa’idi Arabic (spoken by 29% of the population). Other minority languages include Eastern Egyptian Arabic, Sudanese Arabic, Domari, Nobiin and Beja.
Egypt HR at a Glance
The main statutes and regulations governing employment in Egypt are:
- The Labor Law (Law No. 12/2003) (including amendments and executive regulations)
- The Social Insurance Law (Law No. 148/2019), as amended
- The Civil Law
The main government agencies and other entities responsible for the enforcement of employment laws and issues are:
- The Ministry of Manpower and Immigration
- Unions’ associations
- The Social Security Organization
- The Labor office
There must be a written employment contract, including the following terms:
- Term 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 insurance 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 (if any of the parties wish to terminate the contract)
- Non-disclosure agreement section (if applicable)
The 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 insurance authority. Three copies should be furnished: one for the employer, employee and the Social Security Authority.
Recruitment Documents: Employees must provide these documents at the time of recruitment, which can include:
- Birth certificate
- University certificate
- Copy of a valid national ID for Egyptians and a passport copy for non-Egyptians.
- Two photos
- Work heel
- Form 6 (for previously employed staff)
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.
Foreign employees may not enter into indefinite term contracts and may not enter contracts exceeding three years. There are limitations for the number of foreign staff an organization can employ. For every 10 Egyptian employees, an organization may recruit one foreigner with certain conditions (not as a manager).
There are generally no restrictions against background checks. A prospective employer may obtain experience certificates directly from an applicants’ former employers.
An employer will need to double check the recruitment documents against the employee’s CV for validation. For previously employed staff, they will need to be sure to deregister them from the social insurance authority.
An employer has the right to require workers to undergo medical examinations for jobs requiring extra care (e.g. working with machinery or engines), as well as tests for drugs or alcohol. These may occur before or during employment.
The maximum probation period is three months from the employment starting date, regardless of the date the contract was signed. This period is not extendable. During the probation period, either party may terminate the employment relationship without liability or compensation.
Registration with Social Insurance Authority
The employer will need to register the employee within the first three months of his employment (and not after). Registration will happen by submitting the employee’s file to the authority with all recruitment documents and one copy of his or her employment contract (Form 1) signed by the employee and the employer.
The Labor Law restricts and limits working hours to eight hours per day (with a one hour rest) and 48 hours per week.
It is common practice that private sector employees work five days a week, usually Sunday to Thursday. The number of working hours may be increased to nine hours a day, including a one-hour break. Working hours will also be decided upon the work conditions in the employment contract and the work terms and conditions.
All categories of workers are entitled to overtime, calculated as an additional hourly rate.
For work performed on off days, the rate is twice the daily wage and the employer must give the employee another day off during the following week. This must be mutually agreed upon prior to working on off days.
There is no obligation to pay annual bonuses. Bonus can be decided based on key performance indicators (KPIs). The employees of a joint stock company, a limited liability company or a foreign branch are entitled to the distributable profits. This share is not less than 10% of distributable profits and not more than the total annual salaries of all employees. However, companies with capital of less than EGP 250,000 are not subject to this profit share and the amount of profit share can be determined by the management.
In cases where a company applies end-of-year bonuses, a KPI assessment process must be agreed upon with the staff from the beginning of the year.
Employees are also entitled to an annual increment of no less than 7% of the basic social insurance salary.
The notice of termination is:
- 2 months for employees whose service period is not more than 10 years
- 3 months for employees whose service period is more than 10 years
An employer is allowed to pay in lieu of notice if they wish to terminate the contract immediately. An employee with remaining holidays may receive cash value for those days.
An employer may terminate an employment contract only if the employee has committed a specific offense (Article 69 of the Labor Law):
- Submission of forged documents
- Violation of safety instructions despite warnings given
- Absence from work for more than 20 non-consecutive or 10 consecutive days in a year, after certain complaint documents that are filled in the labor office
- Disclosure of the employer’s confidential information
- Direct competition with the employer (same trade/business)
- Being intoxicated during working hours
- Assaulting others in the workplace
- Professional incompetence
If the termination is not due to the reasons above (including termination due to misconduct, performance not meeting expectations and redundancy), it can only be finalized with the permission of the Labor Office committee and with certain process to ensure that the staff does not file any case against the company with the labor office.
Post-termination non-compete and non-solicitation covenants are contractual terms to protect employers’ confidential trade assets and information. The restrictive covenants are valid for three years after termination of the contract. The employer does not have an obligation to pay the former employee while he or she is subject to post-employment restrictive covenants.
If an employee is dismissed without grounds, he or she is eligible for compensation. The compensation must be at least two months’ full wages for each year of service. For fixed-term contracts, the salary for the remainder of the contract period must be paid out. The dismissal must be filed with the Labor Bureau. An employer will need to acquire attested regulation from the labor office.
An employee who reaches the age of 60 is entitled to severance pay (pension monthly pay) from the Social Insurance Authority (Social Insurance Law No. 148/2019)
An employee who has exceeded the age of 60 but continues working for the employer shall be compensated (with severance pay) after the termination of employment for every working year after age 60 as follows (calculated based on the last salary paid):
- 50% of monthly salary for every year of service for the first five years
- 100% of monthly salary for every year after the first five years
In order for the above rates to be treated the way it is stated, it must be accompanied with attested regulation from the labor bureau.
If an employee is still working after termination, the severance will be subject to tax. Otherwise, it will not be taxed and will be treated as “end of service” according to the labor bureau regulations.
A fixed-term contract can be terminated on its expiry. A severance equal to the salary of the remaining duration of the contract is payable for terminations earlier than its expiration date. If the employer does not plan to renew the fixed-term contract, it will need to inform the staff at least three months earlier than the expiry.
Tax and Social Security
Gross salaries paid to employees are subject to payroll tax in Egypt, regardless of whether the employee is a resident or non-resident. This tax must be paid by the employer by the 15th day of the following pay month.
The salary tax rate is determined based on income brackets in an escalating manner, ranging from 0% (for annual income from EGP 0 to EGP 15,000) up to 25% (for annual income of more than EGP 400,000).
The employer is duty bound to withhold the salary tax and pay it to the relevant tax authorities on a monthly basis, within 15 days following the month of the salary payment.
Personal Income Tax
All earnings due to the taxpayer resulting from work with third parties with or without a contract, whether for works performed in Egypt or abroad and paid by a source in Egypt (including wages, remunerations, incentives, commissions, grants, overtime, allowances, shares and portions in profits, as well as monetary privileges and allowances) are subject to tax.
The employer is responsible for withholding the payroll tax and paying the withheld amount to the tax authority on a monthly basis by the 15th day of the following pay month.
The following items are exempt from Personal Income Tax:
- Annual personal exemption of EGP 9,000 for taxpayers, provided that the first bracket exemption is EGP 15,000. The total exemption will be EGP 24,000 annually.
- Social insurance contributions deducted
- Employees’ contribution to private insurance funds
- Life and health insurance premiums; insurance premiums for pension entitlement
In-kind benefits not subject to tax include:
- Meals provided to workers (supported with documents)
- Group transportation of workers (supported with documents) or equivalent transportation cost subject to tax
- Healthcare (supported with contract)
- Tools, equipment and uniforms necessary for performing work
Benefits subject to tax include:
- Workers’ share of profits
- Cars for personal use
- Mobile phones
- Loans and advances offered by employer
- An ‘in lieu of leave’ compensation allowance is subject to tax
- Company stock that is granted below the market value
|Salary Range (EGP)||1-600,000||600,001-700,000||700,001-800,000||800,001-900,000||900,001-1,000,000||>1,000,001|
|10%||30,001 – 45,000||30,001 – 45,000||1 – 45,000||–||–||–|
|15%||45,001 – 60,000||45,001 – 60,000||45,001 – 60,000||1 – 60,000||–||–|
|20%||60,001 – 200,000||60,001 – 200,000||60,001 – 200,000||60,001 – 200,000||1 – 200,000||–|
|22.5%||200,001 – 400,000||200,001 – 400,000||200,001 – 400,000||200,001 – 400,000||200,001 – 400,000||1 – 400,000|
*For taxable income between EGP 1 and 600,000, the income is taxed according to the amounts in the first column (e.g. the first 15k are taxed at 0%, 15k-30k at 2.5%, 30k-45k at 10%)
Social insurance is paid only to Egyptian nationals, except for foreigners who serve on the board of directors or whose name appears on the commercial registration of the company.
The Social Security System includes the following:
- Old Age, Disability and Death Insurance
- Occupational Accidents Insurance
- Sickness Insurance
- Unemployment Insurance
- Social Care for Pensioners
Employers and employees are required to contribute 18.75% and 11% respectively, calculated on the employee’s total salary excluding exempted allowances. The social security contributions are subject to a contribution base minimum/floor amount of EGP 1,400 and maximum/ceiling of EGP 9,400 per month (effective Jan 2022).
Directors (whose names are included in the commercial register of the company) will have an employer contribution rate of 21% to be calculated on the maximum threshold (EGP 9,400).
Monthly contributions for social security payments should be made within 15 days of the following month by the company directly to the social insurance authority office.
Salaries are generally paid on a monthly basis by the end of the month or, at the latest, by the fifth day of the following month. Salary for the first month will be calculated based on the effective date. So, if the first of the month comes over the weekend, the effective date should be the first day of the month. Otherwise, the salary will be pro-rata calculated.
Employers should provide a payslip showing the monthly salary, deductions and benefits. Online payslips are acceptable.
Timesheets & Record Keeping
Payroll reports must be kept on file for at least five years.
The annual entitlement is 21 days for employees who have worked at least a full year with their current employer. The annual leave is 30 days for employees who have worked for 10 consecutive years (regardless of change of employer or not) and for employees aged over 50 years old.
Employees who have worked more than six months but less than a year are entitled to pro-rated annual leave for the period of service. No annual leave is offered prior to completing the six months of working.
Annual leave can accumulate and be carried forward for a maximum of three years. To avoid financial risks, most employers ensure employees do not carry over yearly.
In accordance with the Labor Law, the amount of holiday allowance should be equivalent to 50% of the employee’s basic salary. The same applies to the Christmas allowance. The employer may grant the employee a percentage higher than the one quoted in the law.
Every employee is entitled to paid days off on official holidays of no more than 14 days a year.
Employees are entitled to a maximum of 180 days sick leave per year but this leave must be certified by a medical professional. For the first three months, employees will receive 75% of their monthly social insurance salary and 85% for the second three months.
The employee needs to inform their manager of his or her sick leave. Otherwise, it is treated as absence without notification. In cases where the leave exceeds three days, he or she must bring in a medical report.
When an employee has utilized all his or her sick leave, a government medical committee will evaluate the employee’s ability to work. The employer has a right to terminate the employee’s service due to sickness, if he or she has been absent for more than 180 days in a year.
Maternity, Paternity, Parental Leave
A female employee who has served 10 months for an employer is entitled to a maternity leave of four months of full wage paid by the employer, including the period before delivery (if maternity leave is taken before the due date). The female employee is entitled to this maternity leave for a maximum of two times for the entirety of her working life.
Female employees are not allowed to work for 45 days after birth.
Some companies allow unpaid leave for the maternity leave. However, this has to be part of the company policy.
Female employees working in establishments with more than 50 employees are entitled to up to two years of unpaid childbearing leave per child.
There are no requirements for paternity leave in Egypt.
Nursing care leave
During the 24 months from date of delivery, a female employee has the right to be excused from work for one hour per day to feed her child.
Compassionate and bereavement leave are not specified by law. However, employees are entitled to use their accident or emergency leave for this purpose.
Employees who have been in continuous service for five years are entitled to full paid leave for up to one month for performing pilgrimage or visiting Jerusalem. This pilgrimage leave can be given once only during the entire period of service.
Workers may take emergency leave not exceeding six days during the year, with a maximum limit of two days each time. This leave is deducted from the annual leave of the worker.
Benefits to the Employee in Egypt
For Egyptian employees, social insurance provides compensation for disability, retirement (pension), unemployment and work-related injuries.
Unemployment Insurance is offered for Egypt nationals who have contributed to the social insurance system for at least one year. It is equivalent to 12 weeks for those who contributed less than 36 months and 28 weeks for those who have contributed for more than 36 months.
Pension benefits offer a basic pension for all workers of at least 65% of the monthly minimum wage and capped at 80%. This is subject to an employee having at least 15 years of insured employment.
Employees have the option of early retirement provided they contributed for at least 25 years.
All employees covered by social insurance in Egypt are eligible for the workplace injury benefit. There are no eligibility criteria in terms of contributions made.
- Bonus, performance pay or profit share
- Private medical insurance
- Training reimbursement
- Stock options
Visas and Foreign Workers
Egyptian law gives employers the right to recruit foreign employees with skills and experience not available in Egypt. With approval by the ministry, only 10% of the employees in a given company can be foreigners. Salaries of foreigners cannot exceed 20% of the total salaries.
Foreign employees are required to have Residency and Work Permits before commencing work in Egypt.
The Work Permit is a temporary document and it must be renewed every year or every six months depending on the term. After all the required documents are submitted, the Labor Office will issue a temporary slip attached to the employee’s passport. This grants permission to the employee to begin working in Egypt. The Work Permit and Residence Permit are issued when security clearance procedures are completed (usually two to three months).
Public Holidays in 2023
|1||Coptic Christmas Day||07.Jan.2023|
|2||Revolution Day January 25||25.Jan.2023|
|3||Day off for Revolution Day January 25||26.Jan.2023|
|5||Eid al Fitr (Tentative Date)||22-24.Apr.2023|
|6||Sinai Liberation Day||25.Apr.2023|
|8||Arafat Day (Tentative Date)||28.Jun.2023|
|9||Eid al-Adha (Tentative Date)||29.Jun.2023|
|10||June 30 Revolution||30.Jun.2023|
|11||Eid al-Adha Holiday (Tentative Date)||30.Jun.2023|
|12||Eid al-Adha Holiday (Tentative Date)||01.Jul.2023|
|13||Muharram (Tentative Date)||20.Jul.2023|
|14||Revolution Day July 23||23.Jul.2023|
|15||Day off for Revolution Day July 23||27.Jul.2023|
|16||Prophet Mohamed’s Birthday (Tentative Date)||28.Sep.2023|
|17||Armed Forces Day||06.Oct.2023|