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Mercans CountryIntel ® Egypt Payroll And HR Insights

Mercans offers complete payroll, PEO and HR services in Egypt

With a strong economy and an environment suitable for investment, Egypt has embarked on an ambitious economic reform program that includes financial and monetary reforms. Its infrastructure projects have contributed to making it one of the most important countries in the Middle East, enhancing its global role. Egypt’s ranking in the Infrastructure Index in the Global Competitiveness Report improved, rising from 56th to 52nd, in 2019. Regarded as the most populous country in Africa and the Middle East, Egypt attracts many global brands thanks to its large consumer market and skilled workforce.

Doing Business in Egypt

To attract regular investment, locally and abroad, Egypt has various investment regimes such as an internal investment system, free zones and investment zones. Free zones enjoy privileges, incentives and guarantees. For example, there are no constraints on the nationality of shareholders except for investment projects in Sinai. Foreign investors are granted facilitations regarding residence and foreign workers are given residence permits based on the project needs. Leading economic sectors include agriculture, construction transport and logistics, communications and IT, education, healthcare and tourism.

Entity Registration and Incorporation Requirements

Setting up a new business or expanding an existing one in Egypt is straightforward. Choose how your company operates from a range of entity types which suit your individual circumstance.

Banking

Banking Hours: 8:30am to 2:00 pm from Sunday to Thursday

Working Week

The standard working week is from Sunday to Thursday from 8:30 am - 3:00 pm

Labor Law

Egypt’s low wages add to the country’s competitiveness in providing a skilled, trained workforce. The country is considered the main regional source of skilled labor in several sectors including financial services, ICT and tourism. There are four essential laws which govern employment relationships in Egypt: Law No. 47 for the year 1978, Law No. 48 for the year 1978, Law No. 203 for the year 1991 and Law No. 12 for the year 2003. These laws were drafted to favor and protect the employee.

Main Industries

Textiles, food processing, tourism, chemicals

GDP Growth

7.20%

Dates & Numbers

dd/mm/yyyy

Official State Name

The Arab Republic of Egypt

Population

102.3 million

Capital

Cairo

Major Languages

Arabic

Currency

Egyptian pound

Internet Domain

.eg

International Dialing Code

+20

Egypt
Cairo, EG
11:30 am, December 2, 2022
22°C
clear sky

Payroll

Generally, payment may be calculated as a fixed amount (hourly or daily rate or based on measurable quantity of work done). The minimum monthly salaries of all employees has been raised in recent years and where no wage is specified, the law states that the wage shall be estimated based on the common practices of that profession. Commissions, bonuses and gratuities are all considered part of a wage. Companies who operate multi-country payroll should take note that where an employer agrees with their employee to pay the salary based on output or commission, the total paid per month must still comply with minimum wage standards.

It is acceptable to provide employees with online payslips

Payslip

Five years

Reports

Employees are entitled to 21 days of paid annual leave for a single year

Annual Leave

Employees are entitled to six months of paid sick leave

Sick Leave

90 days of paid maternity leave are available but there is no provision for paternity leave

Maternity & Paternity Leave

Two months’ notice is required for employees who have worked less than 10 years

Employee Termination

A 13th month salary is not mandated by law

13th month salary

2,400 EGP per month

Minimum Wage

If an employee has worked for more than 40 hours a week, they must be compensated 135% of their base salary

Overtime

No provisions for severance pay

Severance Pay

Tax and Social Security

Individual income tax is imposed on the net income of an individual earned in Egypt and any income earned outside Egypt for resident individuals whose center of professional activities is in Egypt. Social security programs here are means-tested and paid to certain elderly persons, those with disability and survivors under Family Allowances. It also covers employed persons including foreign workers covered under bilateral agreements.

Tax

Tax is also imposed on income of non-resident individuals where earned in Egypt.

22.5%

Corporate Income Tax

25%

Personal Income Tax

14%

Sales Tax

14%

VAT

Social Security

These contributions are determined with minimum and maximum limits, which are increased in January each year, for a period of seven years, starting from January 2021.

40%

Social Security Rate

26%

Social Security Rate for Employers

14%

Social Security Rate for Employees

Employment Law

The primary government agencies and entities responsible for enforcing employment laws and regulations include the Ministry of Manpower and Immigration and the Social Security Organization.

Employment Agreement

Employment contracts are required to be in writing, in Arabic and in triplicate (for the employer, employee and social insurance office). Contracts can be drawn up for definite and indefinite timeframes or for the fulfillment of specific work. The difference between the two is that the former is terminated without formalities at the conclusion of the term while the latter is only terminated with express notice and payment of compensation.

Working condition

Most private sector employees work five days a week, usually Sunday to Thursday. Working hours may be increased to nine hours a day in certain circumstances with the approval of both parties.

Leaves

All private sector employees are entitled to a minimum of 21 days of annual paid leave. Employees who engage in hazardous activities for work are entitled to seven additional days for their annual paid leave. The general rule for sick leave is an employee is entitled to up to 180 days of paid sick leave at between 75%, 85% and 100% of their salary. The exception to the rule is that of the Social Insurance Law which stipulates that certain illnesses will result in 100% of the salary as compensation. An example is where the employee is diagnosed with mental illness. There are also other categories of leave for maternity, pilgrimage, study and national holidays.

Employment termination

Where the term of the employment contract is not defined, either party can end the employment relationship by providing written notice. Notification periods cannot generally be reduced but can be increased if both parties agree. Should there be an unresolved dispute between the parties about labor law applying, then a committee may be formed to help resolve the dispute. The members of the committee may comprise a representative of the administrative authority, a representative of the trade union organization and a representative of the employer’s organization.

2 months

Minimum notice period for terminating an employee

14 days

Total number of public holidays

40

Working hours per week

4 weeks

Total number of days for Compassionate & Bereavement Leave

Immigration

Every foreigner who stays in Egypt must have a valid residence permit except for foreign nationals of countries that do not require visas for Egyptians.

Residency permits

There are two types of residence visas. The ordinary visa is issued for a period of five years to foreign nationals who are married to Egyptians or who were born in Egypt or Palestine. The special visa is issued to foreign nationals for political reasons or to individuals who provide beneficial services. The latter is valid for 10 years and renewable. A foreign national may work in Egypt if they obtain a work permit. Work visas are issued after a work permit is obtained. On receiving a work permit, the foreign national’s visa is converted into a work visa. Such a permit must be renewed annually for up to three years.

Work Permit validity

One year

Work Permit validity Required Documents

Completed application from the Ministry of Manpower and Training Facilities at the Tahrir complex

Valid passport

Seven passport-size photos

Two copies of the company’s incorporation contract

Two copies of the employee’s tax ID card

Two copies of the individual’s academic degrees and certificates

Copy of the company’s commercial register

License for exercising the profession, if applicable

Memorandum justifying the company’s reason for hiring a foreigner

Approval from the related authority

Proof of a company representative acting on the employee’s behalf to apply for the work permit

A negative HIV test

Paid permit fees of 1,000 EGP

Compliant, reliable, error-free and touchless payroll in Egypt

Build the best team and hire top talent compliantly in Egypt. Get in touch with Egypt payroll outsourcing & PEO specialists for a free consultation!

This document was prepared for informational purposes only. As local laws & regulations keeps on changing. Please consult your tax & legal advisors as well.
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