Employer of Record in Egypt

Employer of Record in Egypt

Skuad’s Egypt Employer of Record (EOR) solution helps your business expand without the need for an entity setup. Our unified and automated global human resource (HR) platform enables you to expedite the onboarding of your remote team, manage their payroll, benefits, taxation, probation, and termination in compliance with the local laws. In addition, we help you streamline the global expansion process with the able assistance of our international network of experts from over 150 countries. Book a demo with Skuad to kick-start your expansion into Egypt.

Egypt at a Glance

Population: 102.3 million people (2021)

Currency: Egyptian pound (EGP)

Capital: Cairo

Languages spoken: Arabic

Gross Domestic Product (GDP): USD 3,586.97 (2020)

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Employment in Egypt

Egypt’s employment laws are largely governed by the following sources of legislation.

  • The 1978 Government Service Law No. 47 governs civil employees.
  • Employees in the public sector are governed by Law No. 48, which was enacted in 1978.
  • Law No. 203, enacted in 1991, addresses particular criteria for personnel employed in the state’s public commercial (business) sector.
  • The 2003 Law No. 12 regulates the interaction between employers and employees in the private sector.

In addition to the Labor Law, several ministerial decrees are deemed complementary. When no explicit regulations apply to a certain problem in an employment connection, the Egyptian Civil Code’s provisions are applied to the employment contract.

Entitlements Explanation
Working hours The Labor Law sets the maximum working hours per day at eight hours per day or 48 hours per week in the event of a six-day workweek. However, the organization may compel an employee to work more hours occasionally due to a special requirement.
A typical work week is 40 hours long in Egypt, with Fridays and Saturdays off.
Overtime Eligibility Working overtime requires the specific consent of the employer. Further, the total working hours for a day shall not exceed 10 hours, according to Article 85 of the Labor Law. This implies the employee is only eligible for two hours of extra compensation in most cases.
The Labor Law establishes minimum overtime compensation rates and distinguishes between daytime and nighttime overtime pay.
Overtime during the day will be rewarded at a rate of 35% of the usual working hours’ income, while overtime during the night will be compensated at 70% of the normal working hours’ wage and 100% for work on a rest day (or a day off the following week).
If a firm establishes a higher threshold through its general internal regulations, it develops a contractual right and loses the ability to reduce the overtime rate later.
Paid Public Holidays Employees are entitled to the following holidays in Egypt.
  • Egypt Public Holiday / Western New Year (January 1)
  • Coptic Christmas (January 7)
  • Revolution Day and Police Day (January 25)
  • Public Holiday (March 12)
  • Coptic Easter Sunday (May 2)
  • Spring Festival (Sham Ennessim)
  • Eid Al Fitr
  • June 30 Anniversary Holiday
  • Sham El Nessim (May 3)
  • Sinai Liberation Day (April 29)
  • Labor Day (May 1)
  • End of Ramadan (May 12)
  • End of Ramadan day 2 (May 13)
  • End of Ramadan day 3 (May 14)
  • End of Ramadan day 4 (May 15)
  • End of Ramadan day 5 (May 16)
  • Wakfet Arafat
  • Eid Al-Adha
  • Revolution Day (July 01)
  • Eid Al Adha (July 31 to August 3)
  • El Hijra (August 20)
  • Armed Forces (October 7)
  • Birthday of the Prophet
  • Al-Mouled Al-Nabawy (October 21)
Holiday pay Once an employee has worked for one year, they are entitled to 21 days of paid yearly leave. They are further entitled to a month of paid leave after 10 years of service or upon attaining the age of 50.
Employees who have worked for the company for five years are usually entitled to a one-time, one-month, paid religious pilgrimage vacation.
Sick leave Employees are entitled to sick leave based on a report from the competent medical authority, as specified in Article 54 of the Labor Law. According to Social Insurance Law, an employee is entitled to their income while on sick leave.
An employee with a history of sickness is entitled to paid sick leave at the rate of 75% of their income, which is used to compute social insurance payments for 90 days—the compensation rate increases to 85% for the next 90 days in such cases.
Sick leave can be used for up to 180 days. The employee retains the ability to use their accrued annual leaves and can convert them to sick leaves if there is a balance.
Maternity Leave A female employee is entitled to 90 days of fully paid maternity leave. She must spend at least ten months working before qualifying for maternity leave.
For the first 24 months after the birth of each child, women are entitled to two half-hour breastfeeding breaks each day or one cumulative hour-long break.
When a woman returns to work after maternity leave, she retains all her rights and benefits.
Health insurance Private firms must offer free health care to Egyptian employees either through the Ministry of Social Insurance’s Medical Insurance Plan or privately.
Employee protection and anti-discrimination laws According to Article 35 of the Labor Law, discrimination in the workplace is illegal based on gender, ethnicity, language, religion, or beliefs.
The Ministry of Manpower and Immigration, unions, the Social Security Organization, and different bodies all have judicial authority.

Skuad’s high-tech HR platform can manage all your employment requirements while complying with the local laws and entitlements mentioned above. To avail yourself of our services and kick-start your expansion, get in touch with Skuad experts.

Contractor vs. Full-time Employees

In Egypt, there are contractual as well as full-time employees. However, with the emergence of remote jobs in the Egyptian economy, the demand for contractual employees has rapidly increased. Depending upon the needs of your organizations, the employer chooses between the two. Having said that, There is a key difference between a contractor and a full-time employee. 

Full-time employees are entitled to statutory sick pay, statutory maternity and paternity leaves, minimum notice periods, legal protection from unfair dismissal, statutory redundancy pay, time-off for emergencies, and flexible work requests. These benefits are extended only to employees who meet the continuous employment criteria as per the employment contract in Egypt. However, A contractor in Egypt can be self-employed or an employee or an employee of an agency and working for a client. Contractors work on a project-to-project basis, have their entity, pay their taxes, work for multiple clients simultaneously, and are not part of the payroll.

To hasten your expansion process and learn more, talk to Skuad experts!

Hiring in Egypt

The employer has the right to gather personal information relevant to employment applications, salary and benefits, and other company policies.

Each employee must have a file that includes their credentials, certifications, social status, a copy of their ID or passport, and certificates from their former job. The employer is required to keep records of the employee’s past work history, performance, and disciplinary records while they are employed by the company.

Employment contracts must be drafted in Arabic for both international and Egyptian employees. Multiple renewals of temporary work contracts are permitted under the labor law.

The following list includes some of the best job posting sites in Egypt.

There is no doubt, while expanding your business to a new location, recruitment decisions often need to be made fast. Additionally, you might want to hire a large number of employees within a limited time which can be brainstorming at times. Skuad's unified employment platform enables seamless hiring and onboarding of top talents in Egypt while ensuring compliance with employment laws so that you can focus on other aspects of your business at once. It also allows for the signing of documents remotely to help speed up the onboarding process considerably. Learn more about Skuad’s Egypt EOR solutions.

Probation & Termination

Probation

In Egypt, the probation period is restricted to three months.

Compensation upon Termination

  • If an employer terminates a fixed-term employment contract without cause at any time during its duration, the employer is obliged to cover the full wage that the employee would have received for the whole period of the contract. The applicable notice period is determined by the terms of the definite-term employment contract.
  • If an employer terminates an indefinite-term employment contract without cause, the employee is entitled to compensation, which includes no less than two months' full income for each year of service, as well as entitlements such as earned leaves, bonuses, and other benefits.

Notice Period

If the employee’s service with the employer is less than 10 years, the employee will be given two months’ notice (60 days). 

If the employee has served the company for more than 10 years, the employee will be given three months’ notice (90 days).

Special Causes for Termination 

The employer has no right to cancel an employment contract unless the employee commits a “severe fault” violation (Article 69, Labor Law). The following are examples of such violations. 

  • Continuous breach of safety regulations
  • Assumption of fake identity or submission of falsified papers
  • Absence from work for more than 20 days in a row or more than 10 days in a row in a year
  • Tangible loss as a result of the employer’s trade secrets being revealed
  • Competitors in the same field of employment as the employer
  • Inebriation during working hours 
  • Assault on the employer, general manager, or any of the superiors
  • Incompetence on the job

In Egypt, when firing employees, the matter must be presented to the Ministry of Manpower and Migration, which has 15 days to make a judgment. The employee has the right to appeal the judgment.

To ensure your expansion endeavors are in compliance with the Egyptian employment laws, Contact Skuad today.

EOR Solution in Egypt

The Employers of Record (EOR) model is a smart solution for companies seeking to enter and expand in Egypt fast and agilely. With the help of Skuad's Employer of Record solution, business entities abroad can quickly source and hire the right professionals as per the organization's requirements. Hired employees get onboard seamlessly, helping your business save up a huge percentage of hiring and onboarding costs. Skuad’s End-to-end solutions help manage employment contracts, process payroll and income tax, blend statutory benefits, and manage overall administration of the backend HR processes. 

Skuad EOR solution works as a unified employment platform with automated workflows, digital signatures, employee payroll, contractor payout, and all types of compliance solutions. Book a demo today.

Types of Visas in Egypt

Egypt provides a variety of visa options, such as the following.

  • Work Visa: When a foreign national obtains a work permit, their temporary/tourist visa is changed to a work visa.
  • Temporary/Tourist Visa: This option is a single-entry, renewable 30-day tourist visa that may be obtained at Egyptian airports. It is also the type of visa that people need to work.
  • Ordinary Visa: An ordinary visa is valid for three to five years and grants a residence permit to an employee’s spouse for the time specified on their work permit.
  • Special Visa: This visa is only for ex-pats who were born in Egypt before May 26, 1952, or have resided in Egypt for more than 20 years after then. It has a 10-year validity period and can be renewed.

Skuad’s customized EOR solution for Egypt can take care of your employees’ work visas while adhering to the local laws. We can also ensure all your documents are in place to avoid delays and setbacks. Please talk to a Skuad expert to learn more!

Work Permit

The Egyptian Companies Law states that foreigners may make up no more than 10% of a company’s employees, with wages not exceeding 20% of total compensation. Companies created in any of the free zones can hire foreign personnel who make up no more than 25% of the total workforce, according to the Investment Law. Therefore, foreign employees are not authorized to work in Egypt unless they have received residency and work permits.

Foreign technical specialists must be accompanied by two Egyptian employees. To get a work permit, employees in particular industries such as tourism and education must submit supplementary papers and obtain special authorization.

The Labor Office issues a temporary slip that is connected to the employee’s passport and allows them to begin working in Egypt when they have submitted all the appropriate paperwork. The work permit and residence permit are granted once the security clearance processes are completed, which usually takes two to three months.

Work permits are only issued temporarily; no permanent work permits are issued. Depending on the work permit duration, it must be renewed every year or every six months.

Skuad can secure work permits for your organization and ensure your expansion plans are carried out without a hitch. To avail yourself of our services, get in touch with Skuad experts.

Payroll & Taxes in Egypt

Various Egyptian payroll solutions are available for your firm, including the following. 

  • Remote: If a firm wants to add the employees of a subsidiary to an existing payroll, it can pick remote payroll through its parent company. However, each country’s employees will be subject to their own set of rules and laws.
  • Internal: If you’re serious about staying in Egypt, you can set up an internal payroll at your subsidiary to pay employees, but you’ll need a bigger budget to recruit HR personnel.
  • Payroll processing firm in Egypt: You can also choose to outsource your payroll to a local Egypt payroll processing business. If you do so, keep in mind that you’ll still be held accountable for your employees’ salaries.
  • Egypt payroll outsourcing: Finally, organizations can pick EOR services such as Skuad’s Egypt payroll service. This is the only way to outsource your payroll and have someone else handle compliance, so you won’t have to worry about anything to do with HR and compliance.

Employers in Egypt typically withhold income tax at source and send it to the tax administration within 15 days after the end of the payment month. Employers are also required to deduct social security payments from employee wages and send them to the Social Insurance Organization. Employers with a global workforce should be aware that residency status affects tax payments in Egypt. Resident employees are taxed on both domestic and international income, but non-residents are solely charged on domestic tax.

In Egypt, taxes are levied at the following rates.

Employee Taxation

Income Tax Rate
Zero to 15,000 0%
15,000 to 30,000 2.5%
30,000 to 45,000 10%
45,000 to 60,000 15%
EGP 60,000 to 200,00 20%
200,000 to 400,000 22.5%
400,000 and above 25%

In Egypt, social security covers retirement, disability, accidents and death, and unemployment. To know more about expanding your business while adhering to the regulations on payroll and taxes in Egypt, talk to Skuad experts. 

Bonuses

Although bonuses are customary, there is no legal necessity that firms offer annual bonuses to their employees.

Incorporation: How to Set Up a Subsidiary in Egypt

To execute payroll, a firm must have a legal entity formed in Egypt. Further, to incorporate a business under Egypt’s Investment Law, the investor must complete the incorporation process at the General Authority for Investment and Free Zones (GAFI). The GAFI is a one-stop-shop for business services. 

All Egyptian government departments involved in the business are housed in one building. GAFI has the authority to negotiate and execute contracts on behalf of all parties and to apply for permits and permissions. Foreigners are allowed to start or buy Egyptian businesses.

Procedures for Holding a Company in Egypt

  1. The contract for forming the business is filed as long as it satisfies the fields outlined in Egypt’s Investment Law. The following should be included in the proposed contract.
  • The company’s data form, which includes the company’s purpose, capital, investment expenses, statement of partners, location, and projected labor.
  • The Commercial Register of Investments issues a certificate certifying the feasibility of a company name (at the Ministry of Economy & Foreign Trade).
  • A Bank Deposit Certificate backed by at least 25% of the capital of joint-stock firms and 100% of the capital of limited-liability corporations is required.
  1. Within 24 hours after receiving the application, the contract is evaluated and approved. The signature of the lawyer who created the contract must be legalized by the Cairo Bar Association. It is then legalized and submitted to the Authority, which will issue a licensed decree with the company’s establishment within 24 hours of receiving the full contract.
  2. An official copy of the Authority’s decree with the permission to form the business is sent to the applicant, together with an official copy of the contract and a letter to the competent commercial register office. Following the company’s registration, the investor sends a copy of the company’s commercial register to the Authority.

If you wish to start your own Egypt subsidiary, you’ll need a full understanding of the country’s subsidiary laws. You’ll also need to budget for various phases of the operation and be prepared to pay for them. 

Consider whether there is a better method to accomplish this before you create your subsidiary. Working with an EOR firm such as Skuad might save you money on these expenses. Contact Skuad now to learn more about creating an Egypt subsidiary through a partnership with us.

Professional Employer Organization (PEO)

The organization’s co-employer, a PEO, is utilized to hire the entire staff. It assumes all HR-related responsibilities and shares an organization’s HR obligations and liabilities. It works for a firm with at least five to 10 employees and is registered in each country or state where its employees work.

On the other hand, by taking on a portion of the organization’s duties, an EOR firm functions as a legal employer. An EOR service can handle only a piece of the HR responsibilities. It allows firms to migrate to another state or country without forming a legal corporation. The EOR firm is in charge of employees compensation and unemployment claims.

As a company grows and expands across multiple regions, employment norms and regulations become increasingly intricate and diverse. When a company joins forces with a PEO, it must establish a legal presence in each state or country where it employs employees. However, if the firm’s EOR solution is developed across geographies, the EOR firm allows the company to legally employ people in those states.

Skuad's EOR solution is a good way to expand your business in Egypt without setting up a separate entity. Our solutions help you to stay focused on your business and leave all business compliances, payroll processing and complete management work to us. Connect with Skuad to know more.

Conclusion: What Gives Skuad’s Egypt Solutions an Edge?

The most important part of business expansion and setting up a remote team is about being knowledgeable on the local laws and how they are going to shape the employment process. Setting up reliable team can be a brainstorming task but not anymore. To learn more about how our unique tech-enriched platform can add value to building remote teams, book a demo with Skuad today. Call Skuad to know more.

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