EgyptAn employer’s guide to employment laws, regulations, and Employer of Record (EOR) in Egypt.
Looking to hire in Egypt? An EOR can help
If you’re expanding your business into Egypt, the complexities of local labor laws can be daunting. You can avoid worrying about these, or setting up a local entity at all, by using an Employer of Record solution.
An EOR acts as the official employer for your Egypt-based workers. This means managing payroll, handling employment-related tax obligations, and overseeing benefits — all the while ensuring legal compliance with Egyptian labor laws.
As businesses increasingly expand globally, using an EOR in Egypt can be an important part of their strategy. With no need to set up a local office or manage core HR functions, you’ll save money and gain time to focus on strategic business growth.
How to hire in Egypt
Step 1: Choose between creating an entity and using an EOR
The initial decision when expanding into Egypt is whether to establish a local entity or use an EOR to employ people. Establishing a local entity offers you complete control over your operations. It enables a direct relationship with your employees and allows for a significant presence in the market.
This can be a suitable option for businesses with a larger headcount. However, it entails a substantial investment in terms of time and money. You’ll need to set up a local entity, learn local laws, and meet compliance requirements.
An EOR significantly reduces these barriers because it manages the legal and administrative aspects of hiring, allowing your business to focus on strategic initiatives. This means you can enter and exit new markets more easily, with less risk as you scale.
It’s worth noting that while an EOR retains the legal responsibilities, your company maintains operational control over the employees.
Step 2: Finding the right EOR
When choosing an EOR in Egypt, consider these key factors:
- Local legal expertise: Look for an EOR with a proven track record of understanding and adhering to Egypt’s labor laws and regulations. This ensures compliance and mitigates risks of fines, penalties, and disruptions for your business.
- Payroll and tax administration: Accurate and timely payroll processing in compliance with Egyptian law is important. A good EOR should handle all payroll functions, including tax calculations and deductions, to ensure your employees are paid correctly and on time.
- HR support: EORs provide comprehensive HR support to ensure your employment practices align with Egyptian law. This may include assistance with onboarding, drafting contracts, and managing employee relations.
- Customer service: Does the EOR provide round-the-clock support and dedicated account managers?
- Transparent pricing: Some EOR solutions may have hidden fees or a confusing pricing structure. Make sure to understand your EOR’s associated costs before partnering up to fuel your expansion efforts.
- Total cost of ownership: The lowest service price may not translate to lower costs. When it comes to choosing an EOR, make sure you invest in a product that prioritizes quality without overshooting your budget.
Multiplier offers a cost-effective solution through its combination of best-in-class technology, human-centered support (No bots!), and transparent pricing, with no hidden fees or charges.
This translates to a 35% lower Total Cost of Ownership compared to traditional methods of hiring in Egypt. And with on-ground experts well-versed in Egyptian employment law, you’ll know that your operations comply with all local regulations and will run free of disruptions.
Step 3: Employing and onboarding in Egypt
Send that contract over
Once you have identified the candidate, you must create an employment contract compliant with local Egyptian labor laws. Present the contract in both English and Arabic to ensure transparency for all parties involved.
The contract must include essential details such as job responsibilities, compensation package, working hours, and the terms of termination. You can read a full list in our guide to Hiring in Egypt.
Once it’s ready to go, your EOR will send the contract securely and get it signed.
Multiplier can generate contracts that are fully customizable and completely compliant with Egyptian law in less than five minutes.
Enhance compensation with competitive benefits
You can add a competitive, locally administered benefits package to the contract to attract the best talent in Egypt. Rather than going through local vendors yourself, go through the packages that your EOR will put together. The EOR can even send employees the IT assets they need to start working with you.
Get all your documentation in order
The next step involves onboarding the new hire. You’ll have to compile the new hire’s tax and banking information. By using an EOR like Multiplier, you can automatically collect that information and set up payroll – without having to handle reams of paper and wasting time going back and forth with the candidates.
With Multiplier’s streamlined processes, the entire onboarding process can be completed within two weeks.
Step 4: Run payroll for employees based in Egypt
Running payroll for employees based in Egypt requires a keen understanding of the country’s taxation system, contributions, and benefits.
Here’s a breakdown of the key components:
- Payroll tax rates: Egypt utilizes a progressive income tax system with rates ranging from 0% to 25%. The specific tax rate applied to your employees will depend on their individual income brackets.
- Social Security contributions: Social Security contributions are mandatory for both employers and employees in Egypt. The specific contribution rates are defined by law and typically range from a percentage of the employee’s salary for both parties.
- Employee income tax: Employees in Egypt are also subject to income taxes withheld from their salaries during payroll processing.
- Minimum wage: The minimum monthly salary in Egypt is currently set at EGP 6000, and the actual salary offered is determined by agreement between employers and employees and should meet or exceed this minimum.
A global payroll management platform like Multiplier will handle all of the above to ensure employees are paid on time and in accordance with Egyptian labor law.
Employ top talent in Egypt through an EOR
Onboard, pay, and manage all your international employees
Employment laws and regulations in Egypt
Employers in Egypt are required to comply with several regulations to maintain a legally sound workforce. This includes adhering to the stipulated working hours, compensating for overtime work adequately, providing mandated benefits such as health insurance and paid leave, and following due process during termination.
- Working hours and overtime: Standard work hours are capped at 8 hours per day and 48 hours per week. Overtime work must be compensated at the hourly rate and percentage set by the government. There are also special provisions for working women and minors.
- Paid leave: Employees in Egypt are entitled to a minimum of 21 days of paid annual leave, increasing to 30 days after 10 years of service or upon reaching 50 years of age. They also receive 15 days of paid sick leave per year, which can accumulate up to a maximum of 20 days.
- Benefits: Employers are required to provide health insurance coverage for their employees. Additionally, female employees are entitled to 90 days of paid maternity leave.
- Termination: Termination procedures must follow due process as outlined in the Egyptian Labor Law. The required notice period for termination depends on the employee’s length of service. It’s two months for employees with less than 10 years and three months for those with 10 or more years.
- Other regulations: Employers must comply with minimum wage requirements set by the National Wages Council. Employers are required to withhold income taxes from employee salaries and make Social Security contributions for both employers and employees.
For a detailed understanding of how these laws apply to hiring employees in Egypt, refer to Multiplier’s guide on employment law in Egypt.
Employee benefits and compensation
The minimum wage set by the National Wages Council is 6000 Egyptian Pounds per month, effective from May 2024.
Employee benefits are an integral part of the compensation structure in Egypt. Under the law, employees are entitled to various benefits such as paid leave, health coverage, and pension benefits.
Furthermore, the Social Insurance Law mandates employers to provide pension benefits for Egyptian nationals and even requires contributions for expatriate workers not covered by the law. However, it’s worth noting that Egyptian labor law does not have specific provisions regarding bonuses.
Multiplier’s Global Benefits platform offers a comprehensive suite of localized benefit options that you can tailor to your team’s needs. This can include health and life insurance plans, ESOPs, and more.
Termination and offboarding procedures
Egyptian Labor Law governs the termination process in Egypt. According to this law, employers are required to issue written notice of termination:
- Two months in advance for employees with less than ten years of service.
- Three months in advance for employees with ten years or more of service.
Compensation for wrongful termination is set at two months’ salary per year of service or the remaining contract period, whichever is less. Employees can also terminate their contract with two or three months’ notice.
Even during terminations and offboarding, EORs can simplify the process by handling all the associated complexities according to Egyptian labor law. Multiplier’s offboarding process, for instance, ensures a smooth and compliant termination experience for both employers and employees in Egypt.
Visa and work permit assistance
Foreign nationals intending to work in Egypt must first obtain the appropriate work visa. The common types of visas include:
- Work visa: Standard visa sponsored by your Egyptian employer.
- Ordinary visa: Valid for 3-5 years, allows residency for spouse and dependents (ideal for long-term assignments).
Employers must sponsor the visa application and ensure its renewal as needed. The process generally requires a valid passport, employer’s documents, and academic credentials, among other specific documents.
Remember that a temporary or tourist visa is not meant to serve as a work visa – working on a tourist visa is illegal in Egypt.
To learn more about this process, refer to Multiplier’s work permit page for Egypt. With Multiplier’s global immigration services, businesses can get valuable assistance in navigating visa applications, renewal, and processing. You can benefit from our worldwide visa expertise when ensuring compliance with immigration laws and eliminating potential delays or legal issues.
Get started with Multiplier’s EOR services
If you’re planning to expand your business operations in Egypt, consider leveraging Multiplier’s Employer of Record (EOR) services. As a leading provider of global employment services, Multiplier can onboard your international employees and then take up your HR and compliance processes.
Through our all-in-one platform, we handle HR responsibilities such as onboarding, payroll management, benefits administration, and taxation in compliance with Egyptian laws. This allows you to focus on your core business activities while we handle the complexities of global employment.
To see how our platform works and how it can benefit your business expansion plans into Egypt, book a demo with us today.
