Introduction to Payroll in Egypt
If you’re planning to hire a remote employee in Egypt, you need to carefully consider the local labor laws to ensure that your payments are timely, accurate, and legally compliant.
Skuad, an Egypt payroll company, can provide updated and accurate guidance about:
- Compensation requirements
- Benefits requirements (i.e., leave and holidays)
- Help with local tax legislation
- Deductions and employer contributions requirements
Staying on top of local employment rules across numerous nations can be tough. But, Skuad's experience with the legality of payroll in Egypt can assist you and keep you informed of new regulations and legislative changes.
Payroll Process in Egypt
Payroll processes are fairly similar across countries. But, you may need to adapt within certain steps to ensure compliance with national regulations. The payroll process in Egypt includes three main phases: pre-payroll, payroll calculations, and post-payroll.
During the pre-payroll period, you'll need to focus on gathering documentation, confirming HR policies, and ensuring your business is ready to pay employees while staying compliant.
Setting up the organization
When you set up your organization to pay remote employees, you'll need to have policies in place, such as leave policies, pay frequency, and attendance.
To construct your business profile, you'll need to register with the municipal or county government. You'll also need to obtain information such as PAN and TAN and collect and file papers such as tax forms and other documents. Check your business registration numbers and any other identifying information for accuracy.
Even if the locations are all in the same country, requirements can differ locally or regionally; each workplace should have its own set of policies.
Annual leave is a minimum of 21 days for employees who have worked for the company for at least six months and 30 days for employees who have worked for the company for at least ten years or who are 50 or older. Since 2020, most holidays in the week are observed on Thursday. Employees must take off and be paid a full wage for public holidays in Egypt. If any personnel must work on one of the public holidays, they are entitled to three times their normal pay.
Other leave allowances are:
- Sick leave is 75% of a salary for 90 days and 85% for longer periods of up to 180 days.
- Arrangements for study leave agreed upon during collective bargaining must be fulfilled.
- Employees who have worked for a company for at least five years may be eligible for a paid month off on a pilgrimage.
- Casual leave of up to six days per year can be taken in two-day increments and deducted from the overall yearly leave entitlement.
Document timesheets, doctor's notices, or supervisor permission allow employees to take leave as needed.
Account for all statutory payroll components such as income tax deductions, contributions to social insurance, benefits, or other perks.
When planning your pay and salary structure, ensure that it adheres to Egypt’s requirements. Employees must be paid a minimum wage of 2,700 EGP or about $171 per month, as of February 2022 for the public sector, and 2,400 EGP for the private sector. Payroll is due on the 5th calendar day of each month for the preceding month's labor.
The typical payroll schedule in Egypt is monthly, with monthly hours paid by the 5th day of the following month.
Collect, document, confirm and report information about individual employees. You will need the employee’s name, job title, department, work location, and information on how they will receive their pay.
Payroll calculation phase
The main component of this process is the Egypt payroll calculation phase. You'll need to double-check everything that could affect payroll depending on pay cycles. Employees will most likely receive different compensation packages, and their total remuneration may be affected by absences and leave. If a pre-payroll process is in place to obtain the necessary data, partnering with an Egyptian payroll provider to employ an automated system can make this process easier.
Employees receive their paychecks during the post-payroll phase. Your company will need to inform your bank about how to handle salary disbursement. Once you've prepared your calculations, an automated system can help you save time in this stage.
Make sure the accounts are balanced after you've made payments. Salary payments are a significant business expense, and you'll want to keep track of how much you've spent.
Payroll reporting and compliance
Deductions and employer contributions should be made during payroll processing. They must then be reported and remitted to the appropriate government entities. Skuad can help with reporting and compliance.
Payroll Processing Company in Egypt
Skuad can assist you in setting up payroll processing in Egypt, allowing you to focus on growing your company. Get in touch to learn more about our services and how we can help you achieve your goals.
Payroll Management in Egypt
You may automate your payroll to ensure that your employees are paid, that proper records are preserved, and that you stay in complete compliance with the law.
Payroll Compliance in Egypt
Part of the process of managing payroll is ensuring that you are compliant with labor laws and benefits regulations. If you work with an Egypt payroll provider like Skuad, all of the compliance is handled for you, ensuring that you are in full compliance with all foreign and domestic legislation.
Payroll Components in Egypt
Payroll is made up of remuneration for the hours an employee has worked and deductions for perks like health insurance and employer contributions.
Employees must be paid a minimum wage of 2,700 EGP (Egyptian pound) or about $171 per month, as of February 2022 for the public sector, and 2,400 EGP for the private sector.
Workdays must be only 8 hours long. Workweeks must have no more than 48 hours.
If employees work over regular hours, they must be paid overtime for an additional 35% during daytime hours and 70% for nighttime hours. Payroll must be paid monthly by the 5th calendar day for the previous month’s work.
Egypt Employee Benefits
Private companies in Egypt are required to provide healthcare for employees and pay for social insurance, which covers old age, illness, death, disability, and unemployment. Employers must pay into social insurance 18.75% of the employee’s income, and the employee must pay 11%. Using an EOR such as Remote can ensure both are paid.
Sick leave is 75% of a salary for 90 days and 85% for longer periods of up to 180 days.
Maternity leave is three paid months per child for up to three children for female employees who have paid into social insurance for the previous ten months; maternity leave is 75 percent of the most recent wage. For up to 24 months after giving birth, women can have two half-hour or one-hour nursing breaks every day. Women who have given birth retain their full benefits when they return to work. Egyptian legislation does not provide for paternity leave.
Employees who adopt children are entitled to fifteen days of paid leave from the day they get legal custody of the child.
Your workforce must be given paid time off for Egyptian national holidays. The dates of some Islamic holidays may change based on moon sightings.
- Coptic Christmas
- Coptic Easter
- Sinai Liberation
- Sham el Nessim
- Labor Day
- Eid Al Fitr, three-day observance
- Eid Al Adha, four-day observance
- National Day
- Islamic New Year
- Armed Forces Day
- Milad un-Nabi – Prophet Muhammad’s Birthday
Payroll taxes in Egypt
Employee checks must have income taxes withheld. Employers must also pay taxes such as social security and unemployment insurance.
Payroll Tax Egypt
- 0% Up to 15,000 EGP
- 2.5% 15,001 EGP to 30,000 EGP
- 10% (Tax Credit of 85%) 30,001 EGP to 45,000 EGP
- 15% (Tax Credit of 45%) 45,001 EGP to 60,000 EGP
- 20% (Tax Credit of 75%) 60,001 EGP to 200,000 EGP
- 22.5% (Tax Credit not applied) 200,001 EGP to 400,000 EGP
- 25% Over 400,000 EGP
- Employers can only fire employees for breach of contract.
- If an employee is fired without cause, they are entitled to two months' pay for every year of service.
- The law does not demand severance pay.
- Those with fewer than ten years of service must be given two months' notice.
- Staff members with more than ten years of service must be given three months' notice.
- Probationary periods are limited to three months.
Unemployment benefits are available for employees who have paid at least six months of contributions, provided they did not leave voluntarily, were dismissed for misconduct, or refused a suitable job offer. The employer must pay 1% toward unemployment insurance.
Disability and Injury
Employees who pay into social insurance are eligible for injury benefits: 100% of the wage paid until the employee returns or is considered permanently disabled, after which they are entitled to an 80% monthly salary for the year before the injury with a maximum of 875 EGP. You’ll want to make sure you take these laws taken into account. To do that, partner with a payroll provider in Egypt like Skuad.
Begin Payroll in Egypt
With the correct management system in place, paying independent contractors and employees in Egypt can be simple. To take care of your payroll process in Egypt while staying fully compliant, contact Skuad and request a demo.
As of May 2022, the currency exchange rate of the Egyptian pound is one United States dollar to 18.28 EGP.