Effortless Hiring in Egypt

Employment Laws and Protections

The Egyptian Labor Law of 2003 (Law No. 12/2003) establishes robust protections for employees, promoting a fair work environment for Egypt's workforce of approximately 29 million. Key protections include:

• Prohibitions against discrimination based on age, religion, gender, and race.
• Guaranteed rights for fair treatment and equitable workplace practices.
• Employment contracts must be written in Arabic and include essential details such as job description, wages, and duration.

Minimum Wage

The minimum salary for private sector employees in Egypt is currently set at EGP 3,500. However, it is important to note that the minimum wage has been subject to change, and employers should verify the latest rates as they may be adjusted periodically.

Payroll Cycle

• Payroll is processed on a monthly basis, with payments made in arrears by the last working day of each calendar month.
• The payroll cut-off date is typically the 10th of the month, unless otherwise specified.

Onboarding Process

• Employees can be onboarded in 10 working days, assuming all required information is submitted.
• For non-nationals, a Right to Work assessment may add an additional three days to the onboarding timeline.
• Delays may occur due to local authority registrations or missing information, which could impact the first day of employment.

How Cadana Simplifies Employment in Egypt

Cadana streamlines the hiring process by ensuring employees in Egypt are:

• Onboarded quickly and efficiently while adhering to local labor laws.
• Provided with competitive and compliant benefits packages.
• Paid accurately and on time, aligning with Egyptian labor regulations.

By acting as your Employer of Record (EOR), Cadana enables businesses to hire confidently in Egypt while maintaining compliance with all employment laws.

Payroll Frequency

In Egypt, the standard payroll frequency is monthly. Employers are required to pay employees at least once a month, with payments typically made on the 5th day of the following month for work performed in the previous month. This aligns with the Egyptian Labour Law, which mandates regular wage payments to employees.

Minimum Wage

As of January 1, 2024, the minimum wage in Egypt has been set at:

• Private Sector Employees: EGP 3,500 per month.
• Public Sector Employees: EGP 4,000 per month.

These rates are established by the government and are subject to periodic reviews and adjustments.

Payroll Deductions

Employers in Egypt must account for several mandatory deductions from employees' salaries, including:

• Income Tax: Egypt employs a progressive income tax system. As of 2024, the tax brackets are:
• Up to EGP 15,000: 0%
• EGP 15,001 to EGP 30,000: 2.5%
• EGP 30,001 to EGP 45,000: 10%
• EGP 45,001 to EGP 60,000: 15%
• EGP 60,001 to EGP 200,000: 20%
• EGP 200,001 to EGP 400,000: 22.5%
• Over EGP 400,000: 25%

Employers are responsible for withholding the appropriate income tax from employees' salaries and remitting it to the tax authorities.

Cadana's Role in Simplifying Payroll Management in Egypt

Cadana offers comprehensive payroll solutions that ensure compliance with Egypt’s labor laws, accurate calculation of salaries and deductions, and timely remittance of statutory contributions. This streamlines the payroll process for businesses operating in Egypt.

Employee Income Tax in Egypt

Egypt employs a progressive income tax system for individuals. As of 2024, the tax brackets are structured as follows:

• Up to EGP 15,000: 0% (tax-exempt)
• EGP 15,001 to EGP 30,000: 2.5%
• EGP 30,001 to EGP 45,000: 10%
• EGP 45,001 to EGP 60,000: 15%
• EGP 60,001 to EGP 200,000: 20%
• EGP 200,001 to EGP 400,000: 22.5%
• Over EGP 400,000: 25%

Employers are responsible for withholding the appropriate income tax from employees' salaries and remitting it to the Egyptian Tax Authority.

Employer Contributions

In addition to income tax, employers in Egypt are required to make contributions to the social insurance system. As of 2024, the contribution rates are:

• Employer Contribution: 18.75% of the employee's gross salary.
• Employee Contribution: 11% of the employee's gross salary.

These contributions fund various social security benefits, including pensions, disability insurance, and unemployment benefits.

Corporate Income Tax

For businesses operating in Egypt, the corporate income tax (CIT) rate is set at 22.5% on net taxable profits. However, certain industries are subject to different rates:

• Oil Exploration Companies: 40.55%
• Suez Canal Authority, Egyptian Petroleum Authority, and the Central Bank of Egypt: 40%

It's important for companies to determine their applicable tax rate based on their specific industry and operations.

Value-Added Tax (VAT)

Egypt imposes a Value-Added Tax (VAT) on goods and services. The standard VAT rate is 14%, though certain goods and services may be exempt or subject to a reduced rate. Businesses must assess their VAT obligations accurately.

Tax Compliance and Deadlines

Employers and businesses must adhere to the following tax compliance requirements:

• Monthly Payroll Tax Returns: Due by the 15th of the following month.
• Quarterly Corporate Tax Payments: Due by the end of the month following each quarter.
• Annual Corporate Tax Return: Due within four months after the end of the fiscal year.

Timely and accurate tax filings are essential to avoid penalties and ensure compliance with Egyptian tax laws.

Additional Considerations

1. Withholding Tax: There is a withholding tax on various payments made in Egypt, including dividends and interest. The standard withholding tax rate is typically around 10%, but it can vary based on specific circumstances or treaties.

2. Tax Treaties: Egypt has entered into several double taxation treaties with other countries that may affect how taxes are applied for non-residents or foreign investors.

3. Penalties for Non-compliance: Failure to comply with tax regulations can result in significant penalties, including fines and interest on unpaid taxes.

By handling these responsibilities, Cadana allows businesses to focus on growth while staying compliant with Egypt’s tax regulations.

Types of Leave in Egypt

1. Parental Leave

• Maternity Leave: Pregnant employees who have worked at their company for at least 10 months are entitled to:

• 90 days (approximately 3 months) of paid maternity leave at 75% of their salary. It is common for employers to cover the full salary during this period.

• Employees are required to provide a 45-day notice before taking maternity leave.

• After maternity leave, employees are entitled to two fully paid nursing breaks of 30 minutes each per day for up to two years.

• Employers with more than 50 employees may grant up to 2 years of unpaid leave for childcare.

• Paternity Leave: Currently, there are no legal provisions for paternity leave in Egypt. It is at the employer's discretion whether or not to grant it.

2. Sick Leave

• Employees are entitled to a total of 180 days of sick leave per year, with pay structured as follows:
• 75% of regular salary for the first 90 days.
• 85% of regular salary for the next 90 days.
• A medical certificate from a competent authority is required to qualify for sick leave.

3. Paid Leave

• Public Holidays: Egypt recognizes 14 public holidays annually, which do not count against annual leave entitlements.

• Annual Leave:

• Employees with at least 6 months of service are entitled to 21 days of paid annual leave each year.

• Employees aged 50 or older, or those who have worked for at least 10 years, are entitled to 30 days of paid annual leave.

• Employees working in dangerous or unhealthy environments may receive an additional 7 days of paid leave.

• Casual Leave:

• Employees are entitled to up to 6 days of casual leave per year, which counts as part of their annual leave. A maximum of 2 days can be taken at a time, and no reason needs to be provided.

4. Special Leave

• Employees may qualify for various types of special leave, including:

• Adoption leave

• Casual leave

• Pilgrimage leave (granted once in a career)

• Additionally, employees can take up to 3 days of paid bereavement leave in the event of the death of an immediate family member.

Mandatory Benefits

Employees in Egypt are entitled to several statutory benefits provided under local labor laws and regulations:

1. Social Insurance:

• Contributions are made by both employees (11% of salary) and employers (18.75% of salary).
• This system covers pensions, disability, unemployment insurance, and workplace injuries.

2. Health Insurance:

• Egypt’s public health system provides access to subsidized medical care.
• Employers contribute to social health insurance as part of the social security system, which includes basic medical coverage.

3. Paid Leave:

• Employees are entitled to 21 days of paid annual leave after completing six months of service.
• Sick leave allows for up to 180 days per year, with pay structured as follows:
• 75% of regular salary for the first 90 days.
• 85% of regular salary for the next 90 days.
• Maternity leave is set at 90 days (approximately 3 months) of paid leave at 75% of salary, with the possibility of extending unpaid leave for up to 2 years for childcare.
• Employees are entitled to 14 public holidays annually, which do not count against annual leave entitlements.

Supplemental Benefits

Many employers in Egypt provide additional benefits to enhance the standard compensation package and attract top talent. Examples include:

1. Private Health Insurance:

• Supplementary health plans offer access to private hospitals and clinics, providing higher quality care than public facilities.

2. Retirement Contributions:

• Employers may offer enhanced retirement benefits by matching employee contributions to private pension plans or providing additional retirement savings options.

3. Flexible Work Arrangements:

• Some employers provide remote or hybrid work options and flexible schedules to improve work-life balance.

4. Additional Paid Leave:

• Beyond statutory requirements, employers may offer additional leave such as casual leave, family care leave, or extended maternity/paternity leave.

5. Education and Training:

• Professional development programs, tuition reimbursements, or certifications may be offered to support employee growth.

6. Transportation Allowances:

• Some companies provide allowances or reimbursements for commuting costs.

7. Meal Allowances:

• Employers may offer meal vouchers or allowances for employees during work hours.

8. Performance Bonuses and Profit Sharing:

• Many companies implement performance-based bonuses or profit-sharing schemes as incentives for employees.

Process

• Contract Expiry: Employment contracts can be terminated upon reaching the end of the contract term. For fixed-term contracts, termination occurs automatically at the end of the specified period unless renewed.
• Dismissal with Just Cause: Termination is allowed for reasons such as misconduct, negligence, fraud, or other work-related offenses as defined under Egyptian Labor Law (Law No. 12 of 2003). Employers must follow a disciplinary process that includes issuing warnings and conducting investigations before termination.
• Unfair Termination: If an employee is terminated without just cause, they are entitled to severance pay as stipulated by law.

Notice Periods

The required notice period depends on the employee's tenure:

• 2 months: For employees with less than 10 years of service.
• 3 months: For employees who have been with the company for 10 or more years.
• No notice is required during the probation period.

Severance Pay

Terminations Without Just Cause

Employees are entitled to severance pay calculated as:

• 2 months of pay for every year of service.
• For those with more than five years of service, the calculation may include one-half month’s salary for each of the first five years and one full month’s salary for each subsequent year.
• Definite-Term Contracts: If terminated unfairly before contract expiration, employees are entitled to receive the remaining pay stipulated in the contract.