Companies typically use an Employer of Record for fast entry, payroll management for existing entities, and entity setup for durable presence. Egypt's social insurance contribution structure and its contract-type rules are the features requiring the most careful planning.

Employer of Record in Egypt

An EOR removes the need to register with Egyptian social insurance authorities and navigate the contract-type rules that affect termination entitlements. It suits early hires and outsourcing/BPO-style hiring; it is less suited to established entities. Egypt's growing technology and customer support sector makes it an increasingly attractive market for companies building distributed teams, and an EOR provides a fast, compliant entry path.

How payroll works in Egypt

Egyptian payroll withholds income tax at progressive rates and both employer and employee contribute to social insurance, covering pension, health, and unemployment-related benefits. Payroll is monthly. Social insurance contributions are calculated on a capped salary base — contributions apply up to a statutory ceiling rather than on the full salary for higher earners — which affects the employer cost calculation for senior roles.

Payroll frequency and reporting obligations

Monthly payroll is standard, with social insurance contributions remitted monthly to the relevant social insurance authority. Annual tax reconciliation applies for most employees. Employers must register with the social insurance authority before the first employee starts work, and each employment contract must specify whether it is fixed-term or indefinite, as this affects the applicable termination rules.

Key payroll nuances

There is no universal statutory 13th-month payment, though profit-sharing or annual bonus practices exist in some sectors and multinational companies. Social insurance contribution ceilings and rates are periodically revised, and the applicable ceiling needs to be verified at the time of hiring. Severance-style entitlements apply on termination depending on contract type and cause — fixed-term and indefinite contracts have different termination rules, making the initial contract-type decision an important compliance consideration.

Pay components and employer costs

Typical pay components include base salary and, in some sectors, an annual bonus. Employer social insurance contributions commonly add around 18.75 percent on top of the capped contribution salary base. For employees earning above the contribution ceiling, the effective employer on-cost percentage is lower than the headline rate, since contributions are capped. The contribution ceiling is reviewed periodically and should be verified at the time of hiring.

Benefits and leave entitlements

Statutory annual leave is 21 days, rising to 30 days after ten years of service — a solid minimum by regional standards. Sick leave is covered by the social insurance system after an initial period. Maternity leave is 90 days, with a limit on the number of times it can be taken with the same employer under the Labour Law. Public holidays include national and religious observances, with Islamic holidays shifting by lunar calendar each year.

Hiring and employment contracts

Written contracts are required in Egypt and must specify whether the contract is fixed-term or indefinite. Probation periods are capped at three months. Fixed-term contracts are permitted but must genuinely reflect temporary or project-based work. Termination rules and required notice vary by contract type and cause — indefinite contracts have stronger employee protections than fixed-term ones, and termination without just cause triggers statutory compensation obligations.

Entity setup in Egypt

A Limited Liability Company (LLC) is the standard vehicle for foreign employers, registered through the General Authority for Investment (GAFI). GAFI provides a one-stop-shop registration service for foreign investors. Post-incorporation, the entity registers with the social insurance authority and the Tax Authority before hiring. End-to-end setup typically takes six to eight weeks, with GAFI registration and bank account opening often the pacing items.

EOR vs Payroll Management vs Entity Setup — Egypt

Frequently asked questions