Egypt Country Facts
We provide comprehensive information regarding, Culture, Work life, Taxation, Visa’s & immigration, Labour Law, recruiting in your country of choice and employment contracts.
Global Expansion Made Easy for You
Expanding into Egypt generally comes with challenges, however, partnering with us and using Employer of Record (EOR) eliminates the frustrations you could encounter.
Egypt considers itself to be part of the Cradle of Civilization. It is also home to magnificent historical icons such as the Sphinx and Pyramids of Giza, with the estuary of the world’s longest navigable river, the Nile, on its Mediterranean coastline. It is geographically and politically strategically placed in North Africa, giving easy access to markets in Europe, the Middle East, and the rest of Africa, with Asia within reach through the Suez Canal and the Red Sea. Egypt is a popular destination for foreign workers, especially teachers, IT specialists, media personnel and the oil and gas industry.
People travelling to Egypt for leisure require an entry visa, apart from a few visa-exempt countries, including Bahrain, Kuwait, Oman, Hong Kong, Saudi Arabia, Macao, and Malaysia (14 days only). Over 180 countries’ nationals can apply for an e-Visa. All others must apply for the visa at an Egyptian embassy or consulate in their country of residence. Although some nationalities can get a visa arriving at the airport, it is not advised, as bureaucracy in Egypt depends on various factors which can differ daily, and queuing is a national pastime.
Working in Egypt requires various procedures, some before entering and some completed after arrival. Generally, employers are part of the process. Timelines are variable but typically between one and two months pre-entry and two to four months post-entry. Bradford Jacobs has been a Professional Employer Organisation and Employer of Record for more than 20 years and is aware of the intricacies and necessary measures when completing the paperwork successfully. Knowing the system can be a boon to the uninitiated in all aspects of company expansion into Egypt. Start as you mean to go on with the best advice and qualified specialists who can navigate the system, saving you time and dealing with obstacles that occur.
The different types of Visas and Work Permits for Egypt
Although a few countries’ nationals are visa-exempt for leisure purposes or to visit family, most citizens apply for an e-Visa online or obtain one from an Egyptian embassy abroad.
Main Short-Stay Visas:
- A tourism/temporary Visa can be converted to a Work Visa in Egypt.
- Visitors’ Visa to see family and friends.
- Business or Fair Participation Visa for business-related activities.
They fall into two categories, single or multi-entry. Single Visa allows one 30 day-period within the three months validity. With a Multi-entry, holders can come and go for over six months for visits of 30 days at a time.
Main Long-Stay Visas:
- Work Visa for employees of a resident company in Egypt.
- Research Visa. Researchers, Academics or Scientists working in a Research Center.
- Private Entrepreneur / Investor Visa.
Also exist the following Long-Stay Visas designed for people eligible for a long-term Residence Permit.
- Ordinary Visa for the spouse of employees with a Work Permit. Duration tied to the Work Permit.
- Special Visa for foreigners born in Egypt before 1952 or who have been domiciled for 20 years in the country.
However, regarding employment, all foreign nationals require specific documentation allowing them to enter, work and stay in the country. Exemptions are few, e.g., religious men, journalists, crews of vessels or through international agreements. For employees coming to work for either global companies expanding their businesses abroad or Egyptian-registered companies, various steps are required, and paperwork is to be applied.
All foreigners require:
- A Work Permit, which is permission to work and, when applied for by the employer, is tied to this employer.
- A Long-Stay Work Visa applied for at a consulate of the Embassy in the home country OR an *Entry Visa/ Temporary/Tourist Visa, which can be converted to a Work Visa in Egypt.
- A Residence Permit can be for one, three or five years and gives long-term permission to stay in the country. Staying for longer than three months requires a Residence Permit.
* Note: Not all embassies or consulates abroad can provide long-stay visas, including Work Visas. Therefore employees need to apply for a short-stay Visa, e.g., Tourist/Temporary Visa, and after arriving, convert to a Work Visa when finalizing their Work Permit and applying for Residence Permit.
Main steps to work in Egypt:
Processes and procedures can change quickly in Egypt; sometimes, it may depend on the official in charge. Employers or their agents, such as Bradford Jacobs, are more experienced and have their contacts to smooth the route to working in the country.
- Before entry to Egypt – the employer can initiate the Work Permit through the Ministry of Manpower and Immigration.
- Apply for an entry visa (if not one of the exempt countries).
- Register upon arrival.
- Take an HIV test to be able to complete the work permit and residence permit processes.
- Complete application for finalising Work Permit.
- Apply for the Residence Permit.
- Apply to renew the Entry Visa; this is now a Work Visa.
To apply for a Work Permit, the individual must have a confirmed job offer and security clearance from the National Security Agency in Egypt. As part of the application for the Work Permit, they also need a good health check-up and an HIV test.
Both employee and employer must supply documentation. Generally, the job offer comes first, and the employer applies for the permit. Entering Egypt and then applying for a license needs expert advice. However, individuals can look for a suitable job on a tourist visa and then leave the country, and the employer initiates the work permit application. Work permits are valid for up to one year and renewable from three to five years.
Employers should be aware that Egypt applies annual quotas to foreign nationals that companies can employ. For semi-skilled or unskilled, the limit is 10% of the workforce; for skilled workers, it’s 25%; and for those companies operating and employing foreigners in the free zones; plus, they apply percentage limits to payroll for foreigners. Employers in the country are urged to hire locals and may be asked to prove they have advertised the position (Labour Market Test). If a qualified local cannot be found for the job, an employer can apply for the relevant work permit for the foreigner.
Note: Health care in Egypt is costly, and many expatriates take out private insurance, which is highly recommended, although not mandatory.
How to apply for Visas and Work Permits for Egypt?
Employees who want to work in Egypt, and employers who are expanding into the country by bringing staff from abroad, need to understand the process required to work legally in Egypt. There is an ‘informal’ workforce, and those not compliant with work documentation face stiff penalties and possible deportation. It is not easy, and help to navigate the system can be essential for companies. Bradford Jacobs has 20 years of experience in this field and has the contacts and specialists to steer you through. It is the employer’s responsibility to make sure their staff are legal.
Paperwork needed:
- The Work Permit
- Long Stay Entry Visa for Work applied for at a local embassy or consulate or a Short Stay Visa / Temporary / Tourist Visa (if the embassy in the country of residence does not issue Long Stay Visas) can be converted to a Work Visa in Egypt. Applicants may be able to apply for the Visa online or at a local embassy.
- The Residence Permit.
The Work Permit
- Employees first need a confirmed job offer, as the employer instigates the process.
- Gather paperwork together (see below)
- Employees must have clearance from the National Security Agency (NSA), part of the Ministry of Interior in Cairo.
- After approval from the NSA, the employer starts the work permit process and takes an application form from the Ministry of Manpower and Immigration, which deals with migrant workers.
- After receiving the Entry Visa, the employee travels to Egypt and finalizes the Work Permit. He must obtain a certificate for good health and a negative HIV test.
Documents for the Work Permit
They are typically needed during the application process.
From the Employee
- Passport with a minimum six months validity (or length of Visa applied for) after arriving in Egypt, not older than ten years, with two facing blank pages for visa stamps
- Passport-styled photographs (7)
- Two photocopies of academic qualifications and proof of appropriate work experience for the role, typically three years
- Any license required to carry out the profession (where applicable)
- Copy showing HIV negative and in good health
From the Employer
- Employer’s Certificate of Incorporation – two copies
- Two copies of the employee’s Tax ID Card
- Letter from employer stating why his company needs to employ foreigners
- Security clearance from the NSA
- Letter of approval from the Ministry of Manpower and Immigration regarding work permit
- Details of a facilitator from an employer who acts on behalf of an employee regarding a work permit application
Entry Visa
While still abroad with the work permit approved and the employee has received security clearance, the Entry Visa can be applied for at the designated consulate or embassy. Long-stay Visas are not available in all embassies, so a Temporary/Tourist Visa is issued (and from some countries can be done online).
Upon receiving the entry visa, the employee can travel to Egypt, taking any paperwork to finalize the Work Permit and, if necessary, convert the temporary Visa to a Work Visa and apply for the Residence Permit.
All workers need to register with the police within seven days of arrival.
Documents
- Visa application form completed in English, signed, and dated
- Passport with a minimum six months validity (or for the length of Visa applied for) after arriving in Egypt, not older than ten years, with blank pages for visa stamps
- Two passport-styled photographs
- Memorandum of Employment from employer dated and signed, details of the company and the employee’s start date, salary, and location (may also ask for the employment contract)
- Proof of finances to support stay in Egypt
- Receipt of a return ticket or funds to cover the return ticket
- Proof of accommodation
- Proof of fees paid for the Visa
- Proof of Country of Residence
Residence Permit
For employees going to Egypt to work for local or registered foreign companies. This can be for between one and five years.
Documents
- Tax Card
- Certificate to show the company is on the Commercial Register
- Employment contract
- A printout showing the company’s percentage of local workers to foreigners
Our dedicated specialists remove the burdens of worrying about tax complications while you focus on building your business in a new territory. From locating the brightest talent to running your payroll, our Professional Employer Organisation (PEO) and Employer of Record (EOR) specialists will guide you in every way.
Overview of Tax in Egypt
Personal Income Tax (PIT):
Seven bands start from 0% up to EGP 15,000 (€750, US$800) to the top rate of 25% for excess income over EGP 400,000 (€20,050, US$21,420). There is an annual tax-free allowance of EGP 9,000 (€452, US$482) and an exempt amount of up to EGP 15,000.
Social Insurance Taxes:
Employers contribute 18.75% of payroll to the National Authority for Social Insurance. Employees’ contributions are based on their annual ‘social insurance salary’ limits, which have increased by 15% in January each year since 2021. From 2028 the increase will be based on inflation.
Corporate Income Tax:
The headline rate is 22.5% on resident companies’ net taxable worldwide profits. Non-resident companies are taxed on income earned in Egypt.
Value Added Tax (VAT):
The standard rate is 14% on all goods and services. Exceptions include machinery or equipment used to produce goods or supply services, which can be taxed at 5%.
Withholding Tax (WHT):
Dividends paid by companies not listed on Egypt’s Stock Exchange are liable for 10% WHT, reduced to 5% for listed companies.
Capital Gains Tax (CGT):
Gains from securities listed on the Stock Exchange are taxed at 10%, with 22.5% applying to securities from non-listed companies.
Annual Personal Income Tax in Egypt
*Rates also apply to non-residents’ income sourced in Egypt. Residents and non-residents have a tax-free allowance of EGP 9,000 (€450, US$480) in addition to the exempt amount of up to EGP 15,000.
Taxpayers earning net income above EGP 600,000 are precluded from the lower percentage rates, as follows:
Individual Tax Rules in Egypt
- The tax year is generally the calendar year, although any 12 months can be taken for assessing liability.
- Income tax from salaries is deducted by employers at source for remittance to the Tax Authority monthly by the 15th of the month following the payment.
- Employers must file quarterly payroll returns in January, April, July and October, plus submit an annual reconciliation of all salaries and taxes on January 1 following the tax year.
- Individual taxpayers not on payroll must submit returns by March 31, following their tax year.
- The progressive tax regime has seven bands up to a top rate of 25% for excess annual income above EGP 400,000 (EUR 20,050, USD 21,420).
- There is a tax-free allowance of EGP 9,000 (EUR 450, USD 482) in addition to the exempt amount of up to EGP 15,000 (EUR 750, USD 800).
- Taxpayers with net earnings from EGP 600,000 (EUR 30,000, USD 32,130) and above EGP 1,000,000 (EUR 50,110, USD 53,530) are excluded from the lower rates of 0% to 20%, depending on their income.
- Married couples cannot file joint returns.
- Those with a permanent home in Egypt, those living in Egypt for a total of 183 days, not necessarily continuous, and those who carry out duties abroad if their salaries are received in Egypt are considered tax residents.
- Residents are taxed on their worldwide income, and non-residents are on income sourced in Egypt.
Employer’s Social Insurance and Statutory Contributions in Egypt
Employers contribute 18.75% of the total social insurance salary on their payroll.
International companies planning to boost their global profile can set up a subsidiary overseas to “test the market”. But establishing a presence in a foreign country can be costly both in time and money. The risks come without any guarantee that the effort and financial outlay will bring success.
Egypt’s strategic location, which includes control of the globally-vital Suez Canal, attracts companies and corporations worldwide. Foreign entities must set up a subsidiary to hire staff there and operate payroll. The typical choice is a limited liability company, which generally protects the parent company and its shareholders from liability. The subsidiary complies with the Companies Law and Investment Law and needs approval from the General Authority for Investment and Free Zones (GAFI). However, expanding overseas is a significant step. If the move fails, companies face the extra expenditure and stress of closing their operation, selling property and paying off employees. It is easy to stumble while chasing two objectives – advancing your company at home while crossing the world into new territory.
The sensible alternative is to use a Professional Employer Organisation (PEO) and Employer of Record (EOR), such as Bradford Jacobs, to locate the finest local talent and administer your payroll in Egypt. Your company will be up-and-running in days rather than weeks or months without any risks.
How to Set Up an Egyptian Subsidiary?
Companies planning to establish their presence in Egypt must decide on the business structure best suited to their vision for expansion. A popular choice is setting up a subsidiary as a limited liability company, which operates under the Companies Law and Investment Law after obtaining approval from the General Authority for Investment and Free Zones (GAFI).
In general, procedures and requirements for setting up a limited liability subsidiary include the following:
- Commercial Registry must confirm the choice of a unique company name
- Obtain a certificate of establishment from GAFI after approval
- Bank certificate confirming deposit of at least 10% of any issued share capital
- Notarized Articles of Incorporation, Power of Attorney for all partners/founders/quota holders of the subsidiary, including IDs for Egyptians and foreigners
- The subsidiary has a minimum of two founders etc., and a maximum of 50
- Verification from the Register of Accountants that the auditor is certified to audit company accounts and complete details of the company’s legal advisor, who must be qualified for Court of Appeal level
- Obtaining the company’s Tax Identification Number (TIN), also known as the Employer ID Number (EIN) from the Egyptian Tax Authority of the Ministry of Finance
- Register with the National Authority for Social Insurance
After incorporating the subsidiary, the employer must undertake other procedures to comply with payroll regulations. Essential requirements include:
- Contracts must be completed before employment starts, composed in Arabic with copies for the employer, employee and the social insurance authority
- The third copy is deposited with the local authority verifying work permits for foreign employees.
- Contracts can be indefinite or fixed-term.
- Employees must be registered with the relevant local authority with confirmation of their contract, plus ID/passport, educational qualifications, birth certificate, work permit if required, Form (1) for social insurance
- Registration with the relevant Tax Authority office of the Ministry of Finance to obtain their Tax Identification Number
Responsibilities include:
- Remitting employee’s contributions for tax and social insurance by the 15th of the following month
- Submitting all employees’ reconciliations for gross income and taxes paid by January 1 following the financial year
- Maintaining employees’ employment records and payroll accounts and keeping them for a minimum of five years
Benefits of Setting Up an Egyptian Subsidiary
A significant benefit for international companies establishing a subsidiary is that it is a separate legal entity from the foreign parent corporation. The parent company’s liability is generally restricted to the invested share capital; neither is it responsible for any debts or liabilities. The same applies to its shareholders, founders and members, whose liability is also confined to their contribution to the capital.
Establishing a subsidiary needs approval from the General Authority for Investment and Free Zones (GAFI) and is regulated under the Companies Law and Investment Law.
The subsidiary provides the parent company with the potential for further expansion throughout Middle East North Africa (MENA) region, the Mediterranean and the Near East and as a stepping stone into other regional economies. Additionally, the subsidiary can ‘test the market’ by following its business ideas and entering into different areas of operation for the owning company. The subsidiary can also draw up contracts and agreements independently with clients.
Other benefits for a subsidiary:
- Easier to obtain potential tax incentives and enter into contracts with other Egyptian and regional corporations
- More impact with clients and suppliers, as subsidiaries imply more permanency than branches
- Employees feel there is more stability and job security than from being with a branch
However, there is a more straightforward option to bypass the risks and costs of setting up a subsidiary in Egypt. Using a global PEO such as Bradford Jacobs means staff can be sourced, placed in their roles and be up and running within days rather than months. All the payroll, taxation and compliance difficulties are under control thanks to our EOR services.
Subsidiary Laws in Egypt
Companies registered in Egypt are regulated by the Companies Law and Investment Law and need approval from the General Authority for Investment and Free Zones (GAFI). The Financial Regulatory Authority (FRA) must also give consent and permission if involved in the capital market.
The Companies law dictates that various procedures must be completed in establishing a limited liability company (LLC) as a subsidiary, including:
Registration and Documentation:
- Commercial Registry must approve a unique name for the subsidiary
- Obtain a certificate of establishment from GAFI after approval
- Copies of Power of Attorney for all partners/founders/shareholders, quota holders etc., in the LLC
- All Powers of Attorney and Articles of Incorporation must be notarized along with documents proving the IDs of all members involved with the company
- Proof, the company’s Egyptian legal advisor, is qualified to appear at the Court of Appeal level
- Obtaining the company’s Tax Identification Number (TIN), also known as the Employer ID Number (EIN) from the Egyptian Tax Authority of the Ministry of Finance
- Register with the National Authority for Social Insurance
- All necessary work permits and visas
Accounts and Taxation:
- Bank certificate proving at least 10% of any issued share capital has been deposited
- Verification from the Register of Accountants that the auditor is certified to audit company accounts
- There is no minimum requirement for share capital, which the members’ Articles of Incorporation determine
- Liable for Corporate Income Tax at 22.5%
- A withholding Tax of 10% applies to distributed dividends; shareholders or quota holders holding at least 25% of the capital for a minimum of two years are liable for Tax at 5%
- Where turnover exceeds EGP 500,000 (€25,000, US$26,740), companies must register for Value Added Tax with the Tax Authority
- File annual tax returns and monthly VAT returns
- A local corporate bank account must be opened
Management:
- An LLC must have an Egyptian manager
- There must be a minimum of two founders/quota holders/shareholders and a maximum of 50
- Where there are more than 10, the company is managed by a board of control comprising at least three quota holders
- Shareholders supervise the management of the company through board meetings
- Shareholders’ board meetings must be held once a year in the three months following the end of the financial year when they can decide on amendments to the Articles of Incorporation.
- There is no requirement under Companies Law for a board of directors.
Egypt is a significant economic force in the region with a membership in the Greater Arab Free Trade Area, the African Free Trade Zone and the Common Market for Eastern and Southern Africa. Globally, Egypt has a free trade agreement with the European Union (EU) and is a member of the United Nations, the International Monetary Fund, the World Bank and the World Trade Organisation. Egypt is a significant oil and gas producer, with large sectors in construction, architecture, engineering, health care and telecommunications and tourism. Investment also goes into chemicals, pharmaceuticals and renewable energy. Egypt’s population of 100 million and a workforce of around 30 million include a pool of well-educated, highly-trained and often multi-lingual professionals.
Starting a business in Egypt
Opening a business in any overseas territory brings issues, and entering the Egyptian market is no different. Moving staff worldwide means lengthy processes to obtain Visas and work permits. Once the employees are in place, who will handle their payroll? How will your company deal with regulations on taxation, entitlements and benefits, termination and severance? Drawing up an expansion blueprint is not enough. Your business plan will have to deal with all these issues.
Egypt is increasingly open to foreign investment, but there are always considerations surrounding compliance with the relevant legislation. In Egypt, this revolves around the Companies Law, Investment Law and the Labour Law, which lays down the obligations of employers and the protected rights of their employees. There are other issues, too. Where will you find manufacturers, offices and distributors? There is a simple and effective alternative. By partnering with a Professional Employer Organisation (PEO) and Employer of Record (EOR) such as Bradford Jacobs, companies can plot a time-efficient and cost-effective path to locating and employing staff in Egypt.
International companies moving into Egypt’s economy must set up a subsidiary to hire staff and run their payroll, with the typical choice being a limited liability company. This requires approval from the General Authority for Investment and Free Zones (GAFI) and is regulated by the Companies Law and Investment Law. Compliance includes the following:
- Approval from the Commercial Registry for the unique company name and certificate of establishment from GAFI after incorporation.
- Notarised Power of Attorney for all founders/ shareholders/ quota holders etc., along with proof of IDs, plus the Articles of Incorporation.
- Verification the subsidiary’s legal advisor is qualified for Appeal Court level and that the Register of Accountants authorizes the auditor to audit company accounts
- Register with the Tax Authority to receive the Employer Identification Number (EIN) and with the National Authority for Social Insurance.
- An LLC must have an Egyptian manager, and there must be a minimum of two shareholders/founders/quota holders and a maximum of 50.
Expanding your business into Egypt
Cairo, the capital of Egypt, topped the Statista Global Business Cities in Africa report based on, apart from other factors, the level of city development and its economic strength. It is one of the most populated cities in the world, with 20 million people within the Cairo Metropolis. Alexandria is Egypt’s second largest but number one on the Mediterranean. Companies entering the Egyptian Market will find most expatriate business communities based in the two major cities, with many others in the tourism industries around the coastal towns, the Sinai and Luxor.
Cairo: Most people coming to Cairo wonder how it works with its mad traffic and lawless driving, noise levels, hawkers, and masses in the streets until the early hours – but it does! It has virtually no rain but always has plenty of water, and you can see the modern architecture alongside the 4,500-year-old Pyramids.
Free Zones: Some are government-run, and some are privately managed. There are nine within the public domain, usually around ports, airports, and land and sea borders, e.g., Nasr City in Cairo, Amrya (Alexandria), Suez, Port Said, Ismailia, 6th October City (Media Zone), Damietta, Shebeen Al Koum and Qeft. Most are varied in their industrial and financial projects, with incentives and opportunities to invest with lifetimes exemptions from sales, income tax, and import and export duties. The private zones are defined by their location and proximity to factors of production tending towards individual projects. Any company can apply, depending on certain factors, and they enjoy the same benefits and privileges as the Public Zones. Among the incentives are exemption from sales and customs tax and any other fees and paying only a 1% charge on goods in and out of the duty-free zone.
Special Economic Zones: The Suez Canal Zone stretches across 460 sq. km. and connects the Mediterranean and the Red Sea. It boasts four industrial sectors and six seaports and enjoys accessibility to 10% of the world’s sea-based trade. It forms part of the country’s sustainability strategy to attract Foreign Direct Investment to its flourishing manufacturing industry.
In the Pipeline: A new phase of innovation clusters for funded projects in the IT field is being promoted through the Information Technology Industry Development Agency (ITIDA), encouraging university and industry collaboration. Industrial Parks in line with Eco-development and sustainability in Egypt have received support from the United Nations Industrial Development Organization (UNIDO). Switzerland is also part of the Country Partnership Program to curb gas emissions and waste while encouraging investment and creating job opportunities.
Wherever you decide to plant your company’s feet on Egypt’s landscape, there are specific questions that need to be asked about what office facilities are available – whether small or large, shared or more substantial premises:
- What government funding, grants, subsidies or tax benefits exist for start-ups and new companies?
- Are the premises near wholesalers, manufacturers, and distributors … and do they need to be?
- Are free trade zones, special economic zones, business hubs or clusters offering business space?
- Are the local businesses active with no adjacent vacant premises?
- Is the locality clean and suitable for mental health, providing services and accommodation for staff?
- Will it make a good impression on clients with good transport links if you need to move goods?
- Is it fit for purpose, within budget … but still has room for expansion?
Some Egyptian Facts
- Capital – Cairo
- Population – Around 100 million
- Regions – The geographic areas are the Nile Valley and Delta, Western Desert, Eastern Desert and the Sinai Peninsula
- Official language – Arabic
- Economy – US$396.33 billion, 36th in the world (2021)
- Leading sectors by GDP – Energy production, chemicals, steel, textiles, vehicles, consumer electronics, agriculture and tourism
- Primary exports include – Petroleum and related products, raw cotton and yarn, textiles, mineral and chemical products, rice, citrus fruits
- Leading imports include – Wheat, crude petroleum, vehicles, broadcasting equipment, refined petroleum
- Main trading partners – China, Russia, US, Germany and United Arab Emirates, Italy, Saudi Arabia, India and Turkey
- Government – Semi-presidential republic
- Currency – Egyptian pound (EGP)
Advantages and Challenges when entering the Egyptian Market
Some advantages of entering the Egyptian market include the following:
- Location: Strategically placed in the Middle East and North Africa (MENA) region, Mediterranean access to southern Europe and North Africa, controls Suez Canal, providing access to Red Sea, Arabian Gulf, Indian Ocean and the Far East
- Incentives: The government announced ‘golden licenses’ for foreign investment in sectors such as electric cars, infrastructure and renewable energy
- Workforce: Large pool of cost-effective labour, including predominantly young, well-educated, often multi-lingual, highly-trained individuals in the business and commercial sectors
- Infrastructure: Planned investment in ports, roads and railways
Some challenges of entering the Egyptian market include:
- Tourism: Heavily susceptible to outside influences, evidenced by Covid and the 2022 Russia-Ukraine conflict
- Operating: According to Statista.com, Egypt scored 60.1 points on its ‘ease of doing business report for 2021, 114th out of 190 countries, although this represented an improvement over 2020
- Bureaucracy: Contractual and legal grey areas; customs procedures; restrictions on foreign property ownership
- Business culture: Making inroads can be harrowing as Egyptians often opt for doing business with those they know
Companies extending into Egypt need a complete grasp of Egyptian employment contracts. They must decide which business structure best suits their vision for the future. In Egypt, the usual choice is to open a limited liability company as a subsidiary, partly due to the protection against liability it offers the parent company and its shareholders, founders and partners. The subsidiary needs approval from the General Authority for Investment and Free Zones (GAFI) and must comply with Egypt’s Companies Law and Investment Law. The Financial Regulatory Authority requires permission if it intends to operate in capital markets.
Additionally, the company’s employment relationship with its staff will be regulated by the Labour Law and the Law on Social Insurance, which set statutory minimums and entitlements. These are vital considerations for hiring, onboarding and drawing up contracts with new staff. Once Bradford Jacobs’ Professional Employer Organisation (PEO) recruitment networks have located the best talent for your company, we step in to steer you through Egyptian employment contracts.
The different types of Egyptian Employment Contracts
Indefinite, open-ended employment contracts: They have no specified end date and generally do not allow termination unless there is just or grave cause as specified under the Labour Law. Indefinite contracts require the employer to give the employee two months’ notice if they have worked for less than ten years and three months for working over ten years.
Fixed-term or definite employment contracts: Both parties agree on a start and end date, but if they agree work continues beyond the end date, the contract becomes indefinite. These agreements can also be tied to a specific project. However, this does not apply to foreigners. The maximum period for renewing fixed-term contracts is five years with the same employer. If the employee wants to terminate early, they should give the employer notice. If the employer releases early, they must remunerate the worker for the remainder of the contract and compensate or allow unused leave.
Probationary periods in contracts: These must be stipulated in the contract and cannot exceed three months.
Collective Bargaining Agreements (CBAs): The Ministry of Manpower and Migration oversees and monitors collective agreements and negotiations. The new Labour Law 213/2017 restricted employees’ ability to organise union committees. A union committee can only be formed in a single company where there are more than 150 workers (previously 50); a general labour union requires at least 15 union committees representing at least 20,000 workers; a labour union federation requires at least ten public labour unions representing at least 200,000 members. When the new law was implemented, existing affiliations that did not meet the requirements were automatically dissolved. The new law allows union committees to sign collective agreements.
Egyptian Employment Contracts Requirements
General considerations include:
- A written contract must be agreed upon before employment starts, compiled in Arabic and with copies for the employer, employee and local office of the social insurance authority
- In the case of foreign employees, the third copy is placed with the relevant labour office for dealing with work permits
- The contract can be either for open-ended indefinite employment or for a fixed term
- Any probationary period, which cannot exceed three months, must be detailed in the contract
- Additionally, the contract should include complete details of the employer, place of work and the employee, the employee’s professional and educational qualifications, type of work; salary and payment schedule.
There are other considerations for foreign companies in the market for recruiting staff. In April 2022, Egypt’s Senate began drafting amendments to the 2003 Labour Law, which could change various aspects of the employment relationship. International companies intending to hire employees and operate payroll in Egypt must establish a legal entity and then function within this legislation framework, which provides safeguards and guarantees for the workforce.
Foreign companies’ responsibilities reach beyond simply complying with tax, social security, and payroll regulations. Failure to comply with specific rules applying to benefits and entitlements runs the risk of fines and sanctions. Employers must have a firm grasp of what is guaranteed for their employees, which will affect the employer-employee relationship. This is where Bradford Jacobs points you in the right direction, drawing on over 20 years of experience as a Professional Employment Organisation (PEO) and Employer of Record (EOR).
What are the Compensation Laws in Egypt?
Employment legislation in Egypt is covered mainly by the Labour Law, officially Labor Law No. 12 (2003). The Law covers all relationships where the employer is an Egyptian individual or Egyptian-incorporated entity and applies to all local and foreign employees. Therefore subsidiaries, branches or other entities established by foreign companies in Egypt come under the Labour Law and must comply with its provisions.
National Minimum Wage (NMW): The monthly minimum wage as of July 2022 is EGP 2,700 for employees working for private sector companies.
Sick Leave and Benefit: The Labour Law and Social Insurance Law state that where a medical authority verifies illness or incapacity, the employee is entitled to 90 days leave at 75% of their salary and up to a further 90 days at 85%. Where employees have unused vacation, these can be converted to sick leave.
Working Hours and Breaks: The maximum is eight hours per day for a regular 40-hour week or up to 48 in a six-day working week. The Labour Law stipulates that schedules must be organised so that employees receive at least 24 hours of rest after a maximum of six working days. Employees should not work more than five hours without taking a break, and these should total at least one hour in a working day. Meal and rest breaks are not generally considered working hours.
Overtime: The Labour Law prescribes that daytime rates for overtime are 35% above the average hourly rate, 70% above the regular rate for extra night work hours, and double the standard rate for working on rest days (plus a day off in lieu). Employers requiring staff to work on official public holidays must pay them three times their usual salary.
Paid Vacations: Statutory paid vacation is 21 work days after completing one year’s service. Those who have worked for more than ten years with one or more employers receive 30 days, as do employees over 50. Employees qualify for a pro-rata allowance once they have worked for six months.
Public Holidays: The dates of the official holidays celebrated within Islam, Eid-al-Fitr and Eid-al-Adha, vary between years. Eid-al-Fitr marks the end of the month-long Ramadan, while Eid-al-Adha marks the end of the Hajj.
- Orthodox Christmas Day, January 6
- January 25 Revolution Day January
- National Police Day January
- Sham-el-Nessim April
- Sinai Liberation Day, April
- Labour Day, May 1
- June 30 Revolution and Uprising June
- Revolution Day July
- Islamic New Year July/August*
- Armed Forces Day October
- Prophet’s Birthday September/October*
* Dates vary annually.
Maternity / Paternity / Parental Leave and Benefit: Proposals announced in January 2022 included a total of four months paid leave before and after the birth, increased from 90 days, with an absolute minimum of 45 days post-natal. Under the proposals, women will be entitled to three maternity leaves during their careers. The benefit is 100% of the salary, 75% from social security and the balance from employers. Employees must have worked at least ten months with their employer and supplied a medical certificate predicting the likely due date. In companies employing more than 50, mothers are entitled to up to two years of unpaid leave for childcare and can do this twice during their work. The Labour Law does not provide for paternity or parental leave.
Discrimination: Article 53 of the Egyptian Constitution purports to bar discrimination on religion, beliefs, gender, origin and race, language, disability, social status or political and geographic affiliations.
Termination / Severance / Redundancies: The Labour Law stipulates specific instances where employers can terminate contracts if employees commit several ‘grave faults’ as detailed in Article 69. If the agreement is terminated without a reasonable cause, there is no statutory requirement for severance other than the money owed, such as salary and bonuses. Severance payments are under review in proposals for the new Labour Code drafted in 2022. In theory, employees terminating the contract should serve two or three months’ notice depending on the service period, although employers have little practical recourse if this is not applied.
The Labour Law does not allow for collective dismissals or mass redundancies, but there are procedures where employers intend to end their operation due to economic or organisational reasons.
Notice Periods: Employees receive two months’ notice if employed for less than ten years and three months if used for more.
Guarantees and Restrictions on Employee Benefits in Egypt
Guaranteed Benefits:
- Maternity / Paternity Leave: Statutory maternity leave of 90 days is to be increased to four months following proposals announced by Egypt’s Senate in January 2022. Mothers should take a minimum of 45 days after birth but will be restricted to three maternity leaves during their working lives.
- Sick Leave: Once verified by a medical certificate, employers are entitled to up to 90 days of sick leave on 75% of salary and up to an extra 90 days on 85% of pay.
- Paid Vacations: Under the Labour Law, the allowance is 21 paid working days once employees have worked a year. Employees with more than ten years’ service with one or more employers receive 30 days, as do over-50s. Pro rata days off apply after six months’ work.
- Maternity Benefit: Expectant months must have made social security contributions for at least ten months before the expected birth date.
- Unemployment Benefit: Claimants in the permitted work categories must have made social security contributions for at least six months, including the three months before becoming unemployed, and be registered with the Ministry of Manpower. The benefit is 60% of the last insured monthly wage, paid for up to 16 weeks after a seven-day delay. Benefits can be for 28 weeks if contributions have been paid for the previous 24 months. Excluded workers include the self-employed, over-60s, civil servants, temporary, seasonal, casual workers and those employed by family members.
Social Security in Egypt
Egypt consolidated the social security system under the amended Social Security Law of 2019 for private and public sector workers and those in the largely unregulated informal economy. The law covers pensions for old age, disability and survivors and benefits including work injury, sickness and unemployment.
Statutory health insurance in Egypt is funded by contributions from employers and employees, based on the annual ‘social insurance salary’, calculated between the minimum and maximum bands on income. Employees’ social insurance salary increases by 15% in January each year (since 2021) and will increase according to inflation from 2028.
Employers contribute 18.75% of the total social insurance salary. Employees whose monthly insurance salary exceeds EGP 7,000 (€350, US$375) can choose to make extra payments to the National Authority for Social Insurance. Additionally, the Universal Health Insurance Law was adopted in 2018 and aims for complete coverage by 2032 to support poor households, the elderly and the disabled.
Sectors attracting high levels of investment are also likely to be those seeking top-level recruits, such as construction, architecture, engineering, healthcare and education, telecommunications, electric power generating, and safety and security equipment. Nevertheless, recruiting staff in this extraordinary land can be a challenge. Where to begin? This is where Bradford Jacobs’ global experience is vital for taking the smartest recruitment route into Egypt. Our benchmark platforms as a Professional Employer Organisation (PEO) have worldwide reach and include a total understanding of the complexities of Egypt’s employment market.
Recruiting in Egypt
Searching for the perfect job in Egypt from abroad will be difficult, and the pay will not necessarily compare with salaries for similar positions back home. The capital Cairo is, of course, the financial centre where most opportunities lie, both with multinationals and local companies. Incoming expatriates may need a contract offer to obtain the necessary visas and permits. Making extensive use of the internet is a must, along with linking up with expatriate organisations, as personal contacts will prove vital.
For employers searching the recruitment market, restrictions apply to hiring non-Egyptians. Only 10% of employees can be foreigners or ex-pats, and they cannot account for more than 20% of the total payroll. In Free Trade Zones, 25% of staff can be foreign. Software engineers, systems and network administrators, data analysts, and project managers are in demand, as well as positions in sectors enjoying investment. These include construction, architecture, engineering, healthcare, pharmaceuticals and telecommunications, electric power generation, and safety and security equipment. Education is another option, with teachers always in demand among Cairo’s international schools and universities.
Recruitment is the first stage of making your company operational and competitive in Egypt. The competition will be intense. Although Egypt’s unregulated and informal economy affects millions of lower-grade workers, the employment pool of 30 million includes highly skilled, motivated and well-educated men and women from Egypt’s outstanding universities and abroad.
Employers are responsible for various procedures and registrations and must ensure their employees comply with several regulations. Once recruited, companies must then consider the implications of handling payroll for their staff and dealing with the Tax Authority of the Ministry of Finance and the National Authority for Social Insurance. Responsibilities include:
- Agreeing on an employment contract must be in Arabic with copies for the employer, the employee and the social insurance authority.
- Registering employees with the relevant local authority with confirmation of contract, ID/passport, educational qualifications, Form (1) for social insurance, birth certificate and, if required, work permit.
- Registering employees with the relevant Tax Authority office to obtain their Tax Identification Number.
- Employers must maintain employees’ employment records and payroll accounts and keep them for a minimum of five years, whether or not they are still with the company.
Employees’ Legal Checks in Egypt
In general there are few specific restrictions regarding background checks on applicants.
Criminal record: Can be carried out with the applicant’s permission and is conducted through the local area court in the relevant jurisdiction to obtain the individual’s Police Clearance Certificate.
Immigration: Check the applicant has all relevant documents.
Education and Professional Qualifications: Permitted to verify authenticity of degrees, diplomas and certificates etc.
Basic Facts when Recruiting in Egypt
Legislation that regulates the employer-employee relationship in Egypt is based on the Labour Law, officially Labour Law No. 12 (2003). The law covers all employees, Egyptians or foreigners, working for Egyptian-registered entities. Subsidiaries, branches or other entities established by foreign companies in Egypt come under the Labour Law and must comply with its provisions.
The Egyptian Social Insurance Law of 1975 applies specific regulations in some instances, while areas falling outside the scope of the Labour Law come under the Civil Code. Egypt’s Senate began drafting amendments to the 2003 Labour Law in April 2022 that could change various aspects of the employment relationship. Basic requirements include:
- A contract must be in place at the start of employment, written in Arabic with copies for the employer, employee and the local office of the National Authority for Social Insurance
- The contract can be open-ended and indefinite or fixed-term, which cannot exceed five years in total
- Any probationary period, which cannot exceed three months, must be detailed in the contract
- Two months’ notice applies to employees who have worked for the company for up to 10 years, with three months for more than ten years of service
After hiring and onboarding, employers must comply with statutory minimums set by the Labour Law and the Social Insurance Law. Examples include:
- Illness or injury must be certified by a medical practitioner or authority, entitling employees to up to 90 days paid leave at 75% of salary and up to a further 90 days at 85%
- Maximum working hours are set at eight per day in a regular 40-hour week or up to 48 hours in a six-day working week
- Maternity leave proposals announced in January 2022 included four months’ paid leave before and after the birth, with an absolute minimum of 45 days post-natal. Women will be entitled to a maximum of three maternity leaves in their working life. The benefit is 100% of the salary, 75% from social security and the balance from employers.
- The statutory paid vacation allowance is 21 work days after completing one year’s service. Employees qualify for a pro-rata entitlement after working for six months. Those who have worked for more than ten years with one or more employers receive 30 days, as do those over-50s
The cradle of western civilisation and the ‘land of the Pharaohs’ now has a significant role in the 21st century, but its culture and heritage are also among the attractions. The list is impressive Cairo, the capital with the Museum of Egyptian Antiquities, Luxor, Abu Simbel, the Valley of the Kings, beguiling desert landscapes, Red Sea resorts, diving hot spots such as Dahab, the Siwa Oasis, the majestic River Nile, Karnak and, of course, the Pyramids of Giza on Cairo’s outskirts. However, incomers should resist stereotypical attitudes towards today’s Egypt and its past. While Egyptians are mindful of their country’s culture and heritage, they are also proud of today’s dynamic, flexible, forward-looking nation.
The population of over 100 million has a massive 30 million workforce, including highly-educated and well-trained personnel in a competitive employment market across various sectors. Roughly half the population are under the age of 24, making it a young person’s challenging employment environment.
The Basics of the Egyptian Work Culture
Language: Arabic is the language. Although many Egyptians in the business environment are multi-lingual, having a fluent Arabic-speaker on the team makes sense to highlight the significant points for discussion.
Punctuality: Be on time for the meeting, although this may not be reciprocated.
Negotiations: Traditionally tough negotiators, Egyptians tend not to respond to high-pressure tactics. Raised voices are pretty standard and do not necessarily signify anger or irritation.
Greetings: Wait for your host to initiate the greetings process, as it can take various forms. Egyptians are proud of titles that reflect qualifications, so be sure to learn if they apply. Otherwise, Mr. or Mrs. followed by surname until the formality relaxes. Eye contact, a firm handshake and a pleasant smile make the best combination, but if women are part of the meeting, wait to see if they offer their hand first—respect personal space.
Business Cards: English on one side, Arabic on the reverse side, which should be offered face up.
Dress Code: Smart and discreet, especially for female team members.
Out of Hours: An essential part of the building process as business talks will progress smoothly once everyone is socially comfortable. There must be no alcohol or pork on the menu dining with strict Muslims. Leave a small amount of food on your plate.
Gifts: If these are exchanged, always give or receive with the right hand or both hands. If taking food with your hands, use only the right. The left hand is considered unclean.
Taboos: Do not cross your legs when sitting and risk showing the soles of your shoes or giving a ‘thumbs up sign, which is equally rude.
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