Employer of Record in Egypt

Navigating the complexities of international hiring can be a significant challenge for businesses looking to expand their talent pool. In Egypt, employers have several avenues to consider when establishing a local workforce, each with its own set of administrative requirements and legal obligations. Understanding these options is crucial for any company aiming for compliant and efficient operations in the region.

When considering hiring employees in Egypt, companies typically have three primary approaches:

• Establishing a local entity: This traditional method involves setting up a registered business presence in Egypt, which entails significant time, cost, and administrative burden, including navigating local incorporation laws, tax registration, and obtaining necessary licenses.
• Utilizing an Employer of Record (EOR): A global Employer of Record like Rivermate allows companies to hire employees in Egypt without needing to establish their own legal entity. The EOR acts as the legal employer, handling all local compliance, payroll, and HR functions.
• Hiring independent contractors: This option allows for a more flexible engagement, but it comes with the critical risk of misclassification if the working relationship resembles that of an employee, potentially leading to severe penalties under Egyptian labor law.

How an EOR Works in Egypt

An Employer of Record simplifies the process of hiring in Egypt by taking on the legal and administrative responsibilities associated with employment. This model allows your company to direct the daily work of your team members while the EOR manages the backend complexities. Specifically, an EOR in Egypt takes care of:

• Payroll processing and tax deductions: Handling accurate and timely salary payments, along with all mandatory income tax, social insurance, and other statutory deductions in compliance with Egyptian regulations.
• Compliance with local labor laws: Ensuring that all employment contracts, working conditions, and termination procedures adhere strictly to the Egyptian Labor Law No. 12 of 2003 and its amendments.
• Benefits administration: Managing statutory benefits such as social insurance contributions, annual leave, public holidays, and sick leave, as well as any supplementary benefits required or desired.
• Onboarding and offboarding: Administering the necessary paperwork for new hires, including drafting compliant employment agreements, and managing all legal aspects of employee departures.
• HR support and advice: Providing ongoing guidance on HR best practices, policy implementation, and any employment-related issues that may arise.

Benefits for Companies Looking to Hire in Egypt Without Establishing a Local Entity

Partnering with an Employer of Record offers significant advantages for businesses eager to tap into Egypt's talent pool without the commitment of setting up a subsidiary. These benefits include:

• Accelerated market entry: Hire employees in Egypt swiftly, bypassing the lengthy and complex process of entity registration.
• Reduced compliance risk: Transfer the burden of navigating intricate Egyptian labor laws and tax regulations to the EOR, mitigating legal and financial penalties.
• Cost efficiency: Avoid the substantial costs associated with establishing and maintaining a local legal entity, including incorporation fees, office space, and administrative staff.
• Focus on core business: Free up internal resources from administrative and compliance tasks, allowing your team to concentrate on strategic objectives and business growth.
• Access to top talent: Recruit and employ top talent from across Egypt, expanding your global reach without geographical limitations or the need for a physical presence.

Rivermate's transparent pricing model eliminates complexity with a single, competitive monthly fee per employee. Unlike traditional PEO providers, our pricing in Egypt includes comprehensive HR support, benefits administration, compliance management, and access to our proprietary dashboard for real-time workforce analytics. No hidden costs, no setup fees—just straightforward pricing that scales with your business needs while ensuring full legal compliance in Egypt.

Egypt's tax system mandates employers to contribute to social insurance and withhold income tax from employees' salaries. Employer contributions for social insurance in 2025 include 12% for old age, disability, and death; 4% for health insurance; and 1% for unemployment insurance, calculated as a percentage of gross salary. Employers must also deduct income tax based on progressive brackets, with rates ranging from 0% up to 27.5% for income exceeding EGP 1,200,000. Employees benefit from deductions such as a fixed personal allowance of EGP 12,000 annually, social insurance contributions, pension contributions, medical expenses, and donations.

Tax compliance requires monthly payments of income tax and social insurance contributions by the 15th of the following month, and an annual reconciliation report due by the end of January. Foreign workers are taxed based on residency status, with residents taxed on worldwide income, and non-residents on Egyptian-sourced income. Egypt has double taxation treaties to mitigate double taxation, and foreign entities with a fixed place of business may face corporate tax obligations. Employers and foreign workers should seek professional advice to ensure compliance and optimize tax benefits.

Egypt's salary landscape varies by industry, role, experience, and location, with Cairo and major urban centers offering higher compensation. Typical monthly salaries range from EGP 5,000 for entry-level customer service agents to EGP 45,000 for marketing managers, with key figures summarized below:

The statutory minimum wage in 2025 is EGP 6,000 per month, applicable across sectors, with some regional or sector-specific variations. Compensation packages often include bonuses such as annual, performance, holiday, and allowances for transportation, housing, meals, and mobile phones, depending on company policies.

Payroll is predominantly processed monthly via bank transfers, with payslips detailing earnings and deductions. Salary trends are upward, driven by inflation, skill demand—particularly in tech fields—and a focus on benefits and performance incentives. Employers should regularly review their compensation strategies to stay competitive and compliant with evolving regulations and market conditions.

Egyptian labor law mandates a minimum of 21 days of paid annual leave, increasing to 30 days after 10 years of service or at age 50. Employees can take leave after six months of employment, and unused leave can be carried over for up to one year. Employers control the timing but must grant full entitlement, and employees are paid in advance. Upon employment termination, accrued but unused leave must be compensated.

Public holidays are paid days off, with key dates including New Year's Day, Revolution Day, Labor Day, Eid al-Fitr, Eid al-Adha, Islamic New Year, Armed Forces Day, and Prophet Muhammad's Birthday. Sick leave entitles employees to up to 90 days annually, with payment at 75% for the first 90 days and 85% for extensions. Maternity leave provides 90 days of full pay, with up to three occurrences per employee, while paternity and adoption leave are not legally mandated but may be offered by some employers.

Egyptian labor law mandates key employee benefits, including social insurance, paid annual leave (21 days, increasing to 30 after 10 years), public holidays, sick leave, maternity leave (3 months), bereavement leave, and religious holiday leave. Employers must contribute to social insurance covering work-related injuries, disability, old age, and death, with costs typically comprising 20-40% of an employee's salary depending on the benefit package.

In addition to statutory benefits, many companies offer optional perks such as private health insurance, life insurance, transportation and housing allowances, performance bonuses, training programs, and flexible work arrangements to attract and retain talent. Larger firms tend to provide comprehensive packages, including private health coverage, retirement plans, and additional allowances, whereas SMEs often focus on core benefits.

Employers should allocate 20-40% of salary for benefits costs and ensure compliance with labor and social insurance regulations. Offering competitive benefits is vital for attracting skilled employees in Egypt's evolving labor market.

Employment agreements in Egypt are governed by the Egyptian Labor Law, which mandates clear contracts outlining rights, responsibilities, and protections for employees. Employers must include mandatory clauses such as job description, salary, working hours, and termination conditions. The law recognizes two main contract types: fixed-term and indefinite-term, each with specific implications.

Additional regulations cover probation periods, confidentiality, non-compete clauses, and contract modifications. Employers should ensure compliance with these legal standards to avoid disputes and facilitate effective employment management.

Remote work in Egypt is expanding, driven by technological progress and changing employee expectations. While there is no specific law for remote work, existing labor and social insurance laws apply, emphasizing the need for clear employment contracts, data security, and employer obligations to ensure a safe and compliant remote working environment.

Key flexible arrangements include flextime, compressed workweeks, job sharing, telecommuting, and part-time work, allowing organizations to tailor work models to their needs. Employers should establish policies for data protection, secure network access, equipment provision, expense reimbursement, and reliable technology infrastructure, including communication tools and cybersecurity measures. Ensuring proper legal compliance, technological support, and clear policies will help organizations optimize remote work benefits.

In Egypt, employment termination is regulated by the Labor Law, requiring adherence to notice periods, severance pay, and procedural steps to ensure legality. Notice periods vary by tenure: 1 month for less than 1 year, 2 months for 1-10 years, and 3 months for over 10 years, with employers allowed to pay in lieu of notice. Severance pay is calculated at half a month's wage per year for the first five years and one month's wage for each additional year, payable upon lawful termination unless gross misconduct occurs.

Terminations can be with or without cause. Grounds for termination with cause include gross misconduct, confidentiality breaches, unexcused absence, criminal conviction, or neglect of duties. Without cause, employers must provide notice and severance, citing economic reasons, poor performance, or redundancy. Procedural compliance involves documentation, investigation, written notices, and final settlements, with some cases requiring labor office notification.

Employees are protected against wrongful dismissal, with options to claim compensation, reinstatement, or sue for discrimination. Employers must follow strict procedures to avoid disputes, ensuring fair treatment and lawful grounds for termination.

Egypt has experienced a notable increase in freelancing and independent contracting, driven by digital platform growth and demand for specialized skills. This trend offers businesses flexibility and individuals autonomy, making it important for employers to understand the legal and contractual nuances of engaging independent contractors. Key distinctions between employees and contractors include control over work, integration into business operations, dependency, provision of tools, duration of relationship, and payment method. Misclassification can result in penalties, emphasizing the need for clear contract terms.

Independent contractor agreements in Egypt typically cover scope of work, payment terms, duration, termination conditions, confidentiality, intellectual property rights, indemnification, and governing law. Intellectual property clauses are crucial, often stipulating that work is "made for hire" or assigning rights to the hiring entity. Contractors handle their own tax and social insurance obligations, with income tax rates ranging from 0% to 25% based on annual income. Common sectors employing freelancers include IT, creative services, consulting, media, education, healthcare, and construction.

Employers should ensure contractors are aware of their tax obligations and may request proof of tax registration. The rise of the digital economy and remote work continues to expand opportunities for independent contractors across various industries in Egypt.

Foreign nationals seeking employment in Egypt must obtain a work permit and appropriate visa before starting work. The primary visa type is the Work Visa, valid for one year and renewable, requiring employer sponsorship and documentation such as passport copies, attested educational certificates, medical and criminal checks, employment contract, and company registration. Processing times vary from a few weeks to months, with fees typically borne by the employer.

Employers are responsible for sponsoring, reporting changes, and renewing permits, while employees must ensure compliance with visa conditions. Successful application involves submitting documents to the Ministry of Manpower and obtaining security clearance. Additionally, foreign workers can pursue permanent residency after five years of legal residence, through investment, marriage, or extended stay, with requisite documentation.

Dependent visas are available for family members, contingent on the primary visa holder’s status and financial support capacity. Key data points are summarized below:

Compliance is critical; violations can lead to penalties, fines, or deportation. Both employers and employees must adhere to renewal and reporting obligations to maintain legal employment status in Egypt.