Employer of Record Egypt
Egypt is a thriving business destination in Africa, attracting global companies looking to expand. However, navigating its complex employment and tax regulations can be challenging. Employer of Record Egypt simplifies the process, enabling businesses to operate without establishing a local entity.
Want to hire in Egypt but don’t have a local company? No problem. We’ll help you navigate the process while ensuring compliance with local regulations. Watch the video to see how our Egypt employer of record works.
Evaluating EOR vs PEO in Egypt
Expanding your business in Egypt requires selecting the appropriate workforce solution. Employer of Record (EOR) and Professional Employer Organization (PEO) are popular choices. Understanding the key differences between EOR and PEO is essential to deciding your growth strategy.
Key Differences Between EOR and PEO
| Feature | Employer of Record (EOR) | Professional Employer Organization (PEO) |
| Legal Structure | No need for a legal entity | Requires a registered business in Egypt |
| Employment Contracts | EOR legally employs employees | Co-employment model |
| Payroll & Taxes | Managed entirely by EOR | Business shares responsibility with PEO |
| Compliance | Full compliance ensured | Shared responsibility |
| Cost | Typically higher, but it offers a transparent pricing model | More cost-effective for established businesses |
Why Use an Employer of Record in Egypt?
An Employer of Record (EOR) can provide significant benefits when expanding your business into Egypt. Here are the key reasons why using an EOR in Egypt makes sense:
- Simplified Compliance: An EOR ensures your business adheres to Egypt’s complex labor laws, including tax regulations, employee benefits, and local employment contracts.
- Cost and Time Efficiency: Outsourcing legal and administrative tasks can save you time and resources, allowing you to focus on growing your business.
- Faster Market Entry: An EOR helps you quickly hire employees in Egypt without establishing a local legal entity, speeding up your expansion.
- Risk Mitigation: Reduce the risk of non-compliance with local laws, as the EOR is responsible for handling legal matters.
- Payroll and Benefits Management: The EOR manages payroll, taxes, and benefits, ensuring that your employees are paid accurately and on time while meeting all legal requirements.
- Local Expertise: Leverage the EOR’s local knowledge and expertise to effectively navigate the Egyptian job market and labor laws.
Understanding Employment Compliance in Egypt
Any employer in Egypt must adhere to the Egyptian Labor Law (Law No. 12 of 2003), which covers the following key areas:
1. Hiring in Egypt
Employers can request specific information from job applicants; however, discrimination based on age, religion, gender identity, or race is not permitted. Additionally, the employment contract must be offered in Arabic.
2. Working Hours and Rest Periods
- Standard Working Hours – Employees usually work up to 48 hours a week or 8 hours daily, not counting breaks for meals and rest.
- Overtime – Hours worked beyond 48 hours in a week or 8 hours in a day are classified as overtime. In these situations, employers must provide additional compensation to employees for hours worked beyond their regular schedule. The rates of overtime pay are as follows:
- Overtime during daytime shifts – 35% more than the standard hourly wage.
- Overtime during night shifts – 70% more than the regular hourly wage.
- Overtime on holidays – Double the employee’s daily salary.
- Rest Periods – Employees have the right to a lunch break and a weekly rest period.
- Night Shift – Employees working at night (typically from 10 PM to 6 AM) may be eligible for extra compensation.
3. Wages and Benefits
- Minimum Wage – The minimum hourly wage must be at least 7% of the basic salary.
- Salary Payments – Salaries should be paid directly to employees in Egyptian pounds or another currency specified in the employment contract.
- Social Insurance —Employers must offer social insurance coverage, a shared responsibility between the employer and employee. This coverage provides benefits like pensions, healthcare, and unemployment protection.
4. Vacations and Paid Time-Off in Egypt
In Egypt, employee leave entitlements are governed by the Labor Law No. 12 of 2003, which ensures workers receive adequate rest and work-life balance.
Annual Leave
- Employees get 21 days after one year of work.
- Those with 10+ years of service or aged 50+ get 30 days.
Sick Leave
- Employees can take up to 180 days of paid sick leave.
- First 90 days: 75% salary (covered by social insurance).
- Next 90 days: 85% salary.
- Unused annual leave can be converted into sick leave if needed.
Public Holidays
Egypt observes several public holidays, including:
- Coptic Christmas (Jan 7)
- Revolution Day (January 25, June 30, July 23)
- Eid el Fitr Holiday (April 10, 11, 12)
- Sinai Liberation Day (April 25)
- Labor Day (May 1)
- Spring Festival (May 6)
- Arafat Day (June 16)
- Eid al-Adha Holiday (June 17, 18, 19)
- Muharram (July 8)
- Prophet Muhammad’s Birthday (September 16)
- Armed Forces Day (Oct 6)
Maternity Leave
- 90 days of paid leave (75% of salary).
- Requires 45 days’ notice.
- Employee must have 12+ months of service with the same employer.
Paternity & Study Leave
- Paternity leave is not required by law but may be offered by companies.
- Study leave is optional, depending on the employer.
Special Leave
- Unpaid leave for specific reasons (e.g., caring for a sick relative).
Carry Forward of Leave
- Employees can carry over 30 unused annual leave days to the following year.
5. Personal Income Tax in Egypt
In Egypt, residents pay income tax on all their earnings, both from Egypt and abroad, if their main
business is in Egypt. Additionally, non-resident individuals are subject to tax on income generated
within Egypt.
| Earned income (EGP) | Tax rate on bracket (%) |
| From 1 to 40,000 | 0 |
| 40,000 to 55,000 | 10.0 |
| 55,000 to 70,000 | 15.0 |
| 70,000 to 200,000 | 20.0 |
| 200,000 to 400,000 | 22.5 |
| 400,000 to 1,200,000 | 25.0 |
| More than 1,200,000 | 27.5 |
The above rates also apply to non-residents on income from the Egyptian treasury or for work performed in Egypt. Please note that residents and non-residents are entitled to an annual salary tax exemption of EGP 20,000.
6. Employment Contracts
Labor law in Egypt recognizes three main types of employment contracts between employers and employees, each with distinct regulations regarding their duration and termination.
Indefinite Term Contract
An indefinite-term contract, as outlined in Article 110 of the Labor Law, does not specify an end date. This type of contract ensures continuous employment until the employer or the employee decides to terminate it. If the employer opts to end the contract, they must provide a valid reason, such as the employee’s poor performance or misconduct.
Fixed Term Contract
Under Egyptian labor law, a fixed-term contract establishes a specific duration for the employment agreement. The length of this term is mutually agreed upon by both parties, with no minimum duration required by law. Once the contract reaches its specified end date, it automatically terminates without the need for further action or compensation.
Contract for the Completion of Specific Tasks
This type of contract is designed to complete a particular project or task. Like a fixed-term contract, the employment ends once the specified work is finished.
Key Requirements and Provisions in an Employment Contract
1. Written Form
All employment contracts must be documented in writing and signed by both parties in Arabic (or bilingual).
2. Three Copies
The contract should be prepared in three copies: one for the employer, one for the employee, and one for the social insurance office.
3. Essential Information
The contract must include the following details:
- Names, addresses, and social insurance numbers of the employer and employee.
- Job description and nature of the work.
- Wages, benefits, and other forms of compensation.
- Probation period, if applicable.
- Notice period for termination.
4. Termination
- Indefinite Contracts: These can be terminated by either party with notice, with potential
compensation based on the length of service. - Fixed-Term Contracts: Unless extended, these automatically end when the contract term
expires.
5. Probation Period
The probation period, if applicable, cannot exceed three months, and an employee can only be placed under probation once by the same employer.
6. Non-Compete/Non-Solicitation Agreements
If the employer wishes to include such clauses, they must be documented in writing.
Termination of a contract in Egypt
The employment relationship is a crucial element of the labor market, and its termination holds significant legal implications. Several factors can contribute to the end of this relationship, each carrying legal consequences. Below are some key factors that may lead to the termination of an employment contract:
1. Termination for Cause:
Termination for cause occurs when an employee’s actions justify immediate dismissal without notice or severance. Under Egyptian law, these include:
- Gross Misconduct: Serious breaches like theft, fraud, violence, or harassment.
- Repeated Violations of Work Rules: Consistently breaking rules despite warnings.
- Incompetence or Negligence: Poor performance causing significant harm.
- Absence Without Justifiable Excuse: Long-term absence without a valid reason.
- Breach of Confidentiality: Disclosing sensitive information or damaging the employer’s
reputation.
2. Termination for Poor Performance:
When an employee fails to meet performance standards, termination may follow, but key steps must be taken:
- Performance Expectations: Clear, reasonable goals set by the employer.
- Documentation and Feedback: Keep records of performance issues and provide regular
feedback. - Performance Improvement Plan (PIP): A structured plan with goals, timelines, and support to help the employee improve.
- Reasonable Time for Improvement: Considering job complexity, a fair opportunity to improve.
- Fair Evaluation: Assess progress objectively and without bias.
- Procedural Requirements: Follow legal and contractual requirements for termination.
3. Objective Grounds-Based Termination:
Terminations can also occur due to external factors beyond the employee’s control, including:
- Redundancy: Job loss due to economic reasons or restructuring.
- Workforce Reduction: Downsizing for financial stability.
- Job Elimination: Discontinuation of a position due to changes in the business.
- Force Majeure: Events like natural disasters or war that prevent employment continuation.
- Expiry of Fixed-Term Contracts: When a fixed-term contract ends.
- Statutory Retirement Age: In Egypt, employees reach the legal retirement age, usually 60.
6 Factors to Consider When Choosing an EOR Provider in Egypt
Choosing the best Employer of Record in Egypt is crucial for ensuring compliance, efficiency, and smooth operations when employing staff remotely. Here’s a guide to help you choose the right EOR in Egypt:
1. Compliance with Local Labor Laws: Ensure the EOR provider has a strong local presence and
expertise in Egypt’s labor laws, including taxation, benefits, working hours, contracts, termination procedures, etc.
2. Global Reach and Local Expertise: Look for an EOR provider with operations in multiple countries (for global scalability) but deep knowledge of Egypt’s employment market.
3. Range of Services Offered: Review the services included in the provider’s offering. Make sure they handle payroll, taxes, benefits, compliance, and employee contracts. Some providers offer more specialized services, like visa sponsorship or work permits.
4. Technology and Reporting Capabilities: Look for EOR providers that offer user-friendly, secure
technology platforms for managing employees and accessing reports. Ease of communication and transparency of reporting are key to successful partnerships.
5. Reputation and Track Record: Research the provider’s reputation, client reviews, and case studies. Contact current or past clients to gain insights into their experience.
6. Cost Structure and Transparency: Compare costs, including initial setup fees, monthly service fees, and additional charges for specific services. Ensure that the provider has a clear, understandable pricing structure.
Why Choose Afrisetup as Your Egypt Employer of Record
Here are several compelling reasons why Afrisetup stands out as an EOR provider in Egypt:
1. Local Expertise and Compliance
We have a deep understanding of Egypt’s labor laws and regulations. As an Employer of Record, we handle compliance, ensuring your business stays up-to-date with local employment laws, tax requirements, and other regulatory obligations. This helps avoid costly legal issues and ensures smooth operations.
2. Cost and Time Efficiency
You can save both time and money. You won’t need to establish a local legal entity, which can be expensive and time-consuming. We take on the responsibility of hiring, paying, and managing employees, which frees up your resources to focus on core business activities.
3. Risk Mitigation
With us as your EOR, you mitigate the risk of non-compliance with local labor laws. We manage all legalities, including employment contracts, work permits, and other necessary documentation, reducing the likelihood of costly penalties or legal challenges.
4. Flexibility in Workforce Management
We provide flexibility to scale your workforce up or down as needed without the complexities of hiring or laying off employees directly. This is particularly beneficial for businesses with fluctuating needs or those testing the market before making long-term commitments.
5. Focus on Core Business
By outsourcing HR functions to us, your business can focus on what it does best while leaving the
complexities of hiring, employee management, and legal compliance to the experts.
Services Offered Under Afrisetup Employer of Record Egypt
Choosing us as your EOR provider in Egypt offers a range of benefits for businesses looking to expand or manage their workforce in the region. Here are several reasons why Afrisetup stands out as a preferred choice:
1. Talent Acquisition and Seamless Onboarding
We simplify hiring and onboarding and ensure compliance with Egyptian labor laws. From verifying work eligibility to managing necessary employment documentation, we provide a smooth and legal transition for employers and employees.
2. Accurate Payroll Management
Our expert payroll team handles all aspects of payroll processing, from calculating salaries to
managing deductions and statutory contributions. We ensure timely payments and full compliance with Egypt’s tax laws and labor regulations, so you don’t have to worry about errors or delays.
3. Tax Compliance and Reporting
We take the burden of tax management off your shoulders by handling tax filings, remittances, and compliance with Egypt’s tax regulations. Whether income tax, social security contributions, or other relevant taxes, we ensure your business always remains tax-compliant.
4. Comprehensive Employee Benefits Administration
Afrisetup offers a complete benefits package for your workforce, including health insurance, pension plans, and other mandatory benefits required under Egyptian law. We manage these programs to ensure your employees have access to the benefits they deserve while complying with local regulations.
5. Ensuring Legal Compliance Across All Areas
We support you in meeting all legal obligations related to employment in Egypt. From labor law compliance to visa and immigration services for expatriate workers, we ensure all contracts and policies align with local regulations. Additionally, we help with workplace health and safety standards to provide your employees with a legally compliant and safe working environment.
Frequently Asked Question (FAQs)
The Employer will grant the Employee 21 days of annual leave after six months of service (Refer to Article 47 of the Egyptian Labor Law). After 10 years of service, the Employer will grant the Employee 30 days of annual leave (See Article 47 of the Egyptian Labor Law).
Employees are liable for tax if they work in Egypt, regardless of where their salary is paid, or if they work outside Egypt but receive compensation from an Egyptian entity. Salaries are taxable even without an employment contract. The salary tax rates range from 2.5% to 25%, depending on the income level.
The National Council of Wages (NCW) increased the minimum wage for private sector workers to EGP 7,000 on 1 March 2025. In its meeting, the NCW also established an annual mandatory raise for private sector employees, which will be at least 3% of their social insurance wage, with a minimum of 250 EGP per month.
Employers should know that the notice period in Egypt is determined by the duration of the employee’s service. For employees with less than 10 years of service, a two-month notice period is required; for those with over 10 years of service, a three-month notice period is necessary.
Yes, non-resident individuals are subject to tax on income earned from work performed in Egypt, regardless of where the payment is made, as well as on income derived from Egyptian sources.
The standard value-added tax (VAT) rate in Egypt is 14%. However, certain services, such as banking, medicines, and healthcare services, are exempt from VAT. This rate applies to most taxable goods and services, with a few exceptions.
Salaries and bonuses earned from employment are taxable for residents and non-residents, regardless of where the income is received. The tax rates vary from 10% to 27.5%, depending on the income level.
Yes, an Employer of Record operates within Egyptian labor laws to provide compliant employment solutions.
Typically, it takes 2-4 weeks, depending on documentation and visa requirements.
Technology, manufacturing, retail, oil & gas, and healthcare benefit significantly
Yes, EORs assist with visa applications, work permits, and immigration compliance.
Conclusion
Employer of Record Egypt simplifies business expansion by handling compliance, payroll, and hiring ncomplexities. For companies looking to hire in Egypt without establishing a local entity, an EOR offers a cost-effective and efficient solution. Contact us today to get started!
