Employee Benefits and Compensation in Egypt: Comprehensive Guide for Employers

What are Employee Benefits?

Employee benefits are the extra perks and benefits businesses provide to their employees according to their compensation structures and other internal rules. Depending on the employees’ demands and the organization’s financial resources, these perks can be monetary or non-monetary.

Offering benefits to employees has its own merits. Businesses can improve employee satisfaction and reduce staff turnover by offering more employee benefits. Employers may entice top talent to their businesses by offering different kinds of benefits to employees.

Different employee benefits are offered to all the employees working in Egypt. Every employee receives compensation that is at least equal to the minimum wage as established by the Egyptian government. In addition, the employees in Egypt are permitted to take several kinds of leaves depending on their needs. In addition to these mandatory perks, the employees also enjoy supplemental benefits like a company car, health insurance, etc. You must do extensive market research before selecting employee benefits in Egypt. 

This guide will assist you in creating and drafting a compensation and benefits policy in Egypt that will help keep your employees motivated.

Compensation Laws in Egypt

Several compensation laws in Egypt govern employee benefits in the country. These include:

• Employers must draft all the employee benefits in Egypt in compliance with the labor law of Egypt. 
• As per Article 37 of the Labor Law, all employees must receive a salary not less than the minimum wage decided by the company. 
• Some laws define the number of ex-pats who can be a part of a company in Egypt. As per Article 174 of the Companies Law, the number of foreign employees in a company cannot exceed 10% of the total workforce.
• As per Article 201 of the Labor Law, the employer must pay a month’s salary to an employee terminated from the organization. 
• According to Article 35, all employees must be entitled to fair pay irrespective of gender, nationality, religion, etc. 
• As per Article 85 of the labor law, employees in Egypt who work additional hours are entitled to overtime pay. 

All companies in Egypt must adhere to these compensation laws laid out by the government. You may attract heavy penalties if you don’t abide by these laws.

How to Design an Employee Benefits Program for Employees in Egypt?

Designing a benefits plan can be challenging as it involves qualitative and quantitative aspects. You are required to come up with benefits and give them a monetary value to create a budget accordingly. 

The process of drafting a compensation package in Egypt is quite comprehensive as it involves curating the benefits plan and checking its viability at the company’s level. To have a threshold in mind, you must also decide on a budget before beginning the process. You must also consider the needs of the employees while designing an employee benefit program.

Let’s look at some of the elementary steps you can take to create a benefits plan for your company.

Step 1: Decide a budget and finalize the goals

You must have a set of objectives before designing a compensation structure in Egypt

Before establishing the benefits policy, consider the company’s size and the economic sector in which it operates. Businesses must read through the collective bargaining agreements or job engagement contracts when deciding on benefits. You must consider your organization’s commercial climate before drafting the policy.

The policy’s objectives should include the maximum budget to manage all benefits. You can set goals by taking into account the following:

• Energizing and motivating the existing workforce and luring in new talent
• Sticking to the budget while developing employee benefits in Egypt
• Complying with all the applicable labor laws

Step 2: Scan the industry to know the industry standards and understand the employee’s requirements

While working within a given budget is important, providing employee benefits is equally important. You must add the best benefits to the plan to keep your employees happy. You can conduct thorough research to understand the prevailing industry standards and the benefits your competitors provide to their employers. These findings will help you create a compensation and benefits policy in Egypt plan at par with the industry standards and the competition.

You can also conduct an internal survey among the employees to understand their expectations from the benefits plan. The survey will chalk out the kind of benefits that employees are seeking from their company. Also, it will help you find the areas of improvement to fill in the gaps and make necessary changes to the draft. Also, per the survey, you could reduce certain costs and do away with rewards that your workforce isn’t using.

Step 3: Curate a flexible compensation structure

After analyzing the survey and research results, you should develop a framework for worker’s compensation in Egypt.  

As every employee has unique demands, there might not be a single framework that you can use to analyze every potential course of action. Employers must consider every employee’s needs and create an adaptable benefits package. Employees can choose relevant benefits, and the company must guide and clarify how to make the most of them.

Step 4: Communicate the plan to the stakeholders and get their feedback

Once you have a benefits plan, you can let all the stakeholders and employees know about the same. You can share the draft with them and ask for their feedback. If you find any feedback that adds value, you must incorporate them into the plan.

Also, if the feedback reveals that a particular benefit will go unused, you can either try to make necessary changes to make it lucrative or remove that particular benefit altogether. 

Step 5: Analyze

All businesses work in a fast-paced and dynamic business environment. Hence, businesses are volatile and subject to different kinds of changes. You must evaluate the entire compensation structure in Egypt at different intervals and make it future-ready. 

You must also check for any potential errors before releasing Egypt’s employee compensation policyyou release the employee compensation policy in Egypt. Try to assess all the components of the benefits plan before you move to the implementation phase. You must also develop a few metrics to check the plan’s effectiveness and the entire exercise.

Types of Guaranteed Benefits in Egypt

The employees can access various employee benefits in Egypt. Some of these mandatory benefits include:

Minimum wage

• All employees in Egypt must receive a salary equivalent to at least the minimum wage decided by Federal law.
• The minimum wage public sector is 2,700 EGP.
• Employees working in the private sector have a minimum wage limit of 2,400 EGP.
• Also, as per Article 174 of the Companies Law, the aggregate salaries of all foreign employees cannot exceed more than 20% of the aggregate salaries of all the employees working in the organization.

Working hours and overtime

• All employees must work 8 hours daily, which translates to 40 weekly.

• Any employee who works beyond these regular hours is entitled to overtime pay. Collective agreements or employment contracts govern overtime payments and rates.

• The employees receive a payment equivalent to 135% of their regular salaries if they work beyond their regular hours. However, if the overtime hours are covered during the night, they become eligible for an amount equivalent to 170% of their salary.

• Employees asked to work during weekends or public holidays must get overtime pay equivalent to twice their salary.

Paid leaves

• Employees can also avail of leave benefits in Egypt. They can take an annual paid leave of 21 days. However, they must complete a year in the organization to avail of these leaves.

• Once the employee completes ten years in the organization, the number of annual leaves increases from 21 to 30. The same happens if the employee turns 50. 
• The number of paid leaves increases by seven days if the employee is working under hazardous conditions or if the nature of work involves dangers.

Public holidays

• There are 16 public holidays in Egypt. The government releases a list of public holidays, and all companies adhere to it, irrespective of their industry, sector, etc. 

Sick leaves

• An employee in Egypt can take sick leave for up to 6 months. However, the employee must furnish a valid medical certificate supporting the illness.
• These sick leaves are paid. The employee receives an amount equivalent to 75% of their regular pay for the first 90 days of the sick leave.
• The pay increases to 85% for the remaining 90 days.
• The employee will get a 100% of their regular pay if they are on sick leave due to a mental condition or are suffering from Leprosy.

Maternity leaves

• A female employee becomes eligible for maternity benefits in Egypt after ten months in the organization.
• They have to provide a medical certificate with a due date of delivery to exercise the benefit of maternity leaves.
• A female employee can take maternity leave for up to 90 days. They can split these days between pre- and post-delivery.
• A female employee cannot avail of maternity benefits more than twice in an organization.

Parental leaves

• Female employees can avail of parental leave with 24 hours of unpaid leave for each child. 
• An employee can take this parental leave at least twice during the entire service with an employer.

Annual bonus

• In Egypt, there are no provisions for an annual bonus. However, if the employer has promised any annual bonuses to the employees, they need to duly make the payment. 

Employee Benefits for Expatriates

Foreign employees in Egypt are entitled to the same benefits as local employees. While working in Egypt, ex-pats can benefit from health insurance and travel allowances that all employers mostly provide. Additionally, ex-pats can exercise the following benefits apart from the mandatory benefits:

• Lodging expenses
• Benefits of relocation and travel

How are Employee Benefits taxed in Egypt?

It is important to understand the calculation of taxes for the benefits that you provide to your employees. Most of these benefits are included in the employee’s compensation package in Egypt and are subject to regular income tax rates. Some of the benefits that are taxed as regular income in Egypt include housing allowances, etc. The residents and ex-pats must make tax payments regularly if employed in a company in Egypt. 

Egypt follows a progressive tax system. Hence, with an increase in the value of the benefits, you will have to pay more taxes on them. The current tax rate ranges from 0% to 25%.

Apart from the tax, the employees must also contribute to social security. The employer makes these deductions from the employee’s salary and is directly paid to the institutions managing the social security accounts. 

Restrictions for Egypt Benefits and Compensation

Most benefits in Egypt, like in other economies, are taxable. As a result, you need to know the financial worth of these benefits to calculate how much tax the employee will owe. An employer must also ensure that all tax payments are sent to the concerned authorities on time.

Make sure your company is officially incorporated in Egypt and that you can conduct business there before you begin developing a benefits package for your staff. Companies must follow the industry-specific minimum salaries for employees. Also, the benefits and compensation package in Egypt should adhere to all the labor laws governed by the government. 

Supplemental Benefits for Employees in Egypt

Egypt offers many supplemental benefits to its employees apart from the mandatory benefits. The supplemental benefits act as an extrinsic motivator and push the employees to give their best work. Some of these supplemental benefits include:

• Company Car: A company car is Egypt’s most popular supplemental benefit. Most employers provide employees with a company car to travel for work and their activities without hassle.
• Health Insurance: Several employers provide medical benefits for employees in Egypt. This helps the employees access the best-in-class healthcare—health insurance safeguards employees in Egypt from unexpected events like accidents, critical illness, etc. If you provide supplemental benefits like these, your employees will be motivated to perform their job functions.
  Some employers might also choose to provide dental and vision insurance to their employees if they have the required budget.
• Disability benefits: If the employee faces any temporary disabilities, they will receive their regular salary from the date of the disability to the time they recover from it. However, in case of a permanent disability, where the employer can no longer come to work, they will be eligible for a payment equivalent to 80% of their salary up to a limit of 875 EGP.
• Pilgrimage leave: Employees who have worked for the company for five years are eligible for a paid leave of one month with pay for travel to Mecca or Jerusalem for religious purposes. Only one such leave is given to an employee during their employment.

How Multiplier Can Help with the Benefits Management in Egypt

Starting a business and finding employees abroad could be challenging. Employers must follow local laws and ordinances while creating employment contracts and offering employee benefits. You can get help with this process from a worldwide PEO platform like Multiplier.

Multiplier helps you with compliance with Egyptian labor laws, and they also help you with accessing qualified and educated personnel. Without establishing a subsidiary within the country, our knowledgeable personnel can help you manage the workforce effectively. As a result, you can decrease your employment costs and explore new markets.