Payroll in Egypt

How Payroll Works in Egypt: Key Facts at a Glance

Egypt payroll is governed by Labor Law No. 12 of 2003. Payroll runs monthly in Egyptian pounds (EGP). The table below covers the headline figures for wages, tax, social insurance, and leave. For comparable country guides, see Payroll in Germany and Payroll in Canada.

Social insurance salary caps increase 15% each January through 2028. The minimum wage is set by the National Wages Council and can change mid-year. Verify both figures before processing January payroll.

Registering to Run Payroll in Egypt

Before paying a single employee in Egypt, an employer must complete three registrations in sequence. Skipping any step creates direct legal exposure, including per-employee fines for unregistered social insurance.

1. Obtain a Tax Identification Number (TIN) from the Egyptian Tax Authority.
2. Register with the Social Insurance Authority before the first payroll run.
3. Submit Form 1 for each new hire within two weeks of their start date.

Each registration feeds the next. The Social Insurance Authority will not accept Form 1 without an active employer registration, and the Tax Authority requires a TIN before any payroll tax filing. The sub-sections below cover each step in detail.

Tax Identification Number and Egyptian Tax Authority Registration

A Tax Identification Number (TIN) is the employer's identifier for all wage and salary tax filings in Egypt. The Egyptian Tax Authority issues the TIN, and no monthly payroll tax report can be submitted without one.

The TIN is distinct from any foreign tax ID your company holds in another jurisdiction. Do not treat it as equivalent to an EIN or similar identifier.

Registering with the Egyptian Tax Authority triggers the obligation to file monthly wage and salary tax via the e-tax system, introduced under Law No. 386 of 2023. Most companies are now covered under the phased rollout. See the e-tax reporting section below for full filing requirements.

Social Insurance Authority Registration and Form 1

Form 1 registers a new hire with the Social Insurance Authority. Employers must submit it within two weeks of the employee's hire date. The obligation applies to all employees, including foreign nationals, per Decree No. 2437 of 2021.

Failing to register an employee carries a fine of EGP 10,000 per unregistered worker. An employer with ten unregistered employees faces a combined penalty of EGP 100,000. Retroactive social insurance liability is also triggered. Keep a copy of the submission confirmation for each filing.

Pre-Employment Medical Form 111

Form 111 records the results of a pre-employment medical examination. From 2025, it is mandatory and must be submitted during onboarding alongside Form 1, not after.

Retain copies of both Form 1 and Form 111 confirmations. Audit onboarding records periodically to catch any missing submissions.

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How Payroll Is Calculated in Egypt

Egypt payroll follows a straightforward formula: Monthly Gross Salary plus the employer social insurance contribution equals total employment cost. Net salary is gross salary minus income tax and the employee social insurance deduction. Salaries are due by the 5th of the following month.

Each formula input updates on its own schedule. The National Wages Council sets the minimum wage, last revised in March 2025. Social insurance caps update each January. Tax brackets are set by the Ministry of Finance, last changed in 2024.

Gross Salary Formula and Payroll Components

Gross salary in Egypt includes basic pay plus all allowances. Under Law No. 148 of 2019, certain allowances are excluded from the social insurance base: conveyance, food, clothing, housing, and living benefits. These exclusions cannot exceed 25% of total salary.

• Included in social insurance base: Basic pay and any allowances above the 25% threshold
• Excluded from social insurance base: Conveyance, food, clothing, housing, and living benefit allowances (up to 25% of total salary)

Egypt operates a monthly payroll cycle. Salaries must be paid by the 5th of the following month. A bi-monthly schedule is permitted but monthly payment is the standard practice.

Minimum Wage in Egypt (2025 Update)

Egypt's minimum wage is EGP 7,000 per month, effective March 1, 2025. The National Wages Council, chaired by Minister Al-Mashat, set this rate in February 2025. It replaces the previous EGP 6,000 figure established in May 2024.

For the first time, Egypt also set a statutory minimum for part-time workers: EGP 28 net per hour. The National Wages Council additionally established a periodic allowance minimum of 3% of the insurance subscription wage, with a floor of EGP 250 per month.

Working Hours and Overtime Pay Rates

Egypt's standard workweek is 40 hours across five 8-hour days. Hours worked beyond 48 per week qualify for overtime at 135% of the regular rate for daytime hours and 170% for night hours.

Work on non-regular days is compensated at twice the daily wage plus an additional day off the following week. This arrangement requires mutual agreement between the employer and employee and is separate from standard overtime rates.

Employee Income Tax in Egypt

Egypt operates a progressive income tax system governed by Income Tax Law No. 7 of 2024, which amends Law No. 91 of 2005. Residents are taxed on worldwide income; non-residents are taxed on Egypt-sourced income only. Both groups are entitled to an annual personal exemption of EGP 20,000.

Progressive Tax Brackets and Personal Exemption

Income Tax Law No. 7 of 2024 raised the 0% band to EGP 40,000, up from EGP 30,000. The table below reflects the current unified bracket structure.

The standard annual personal exemption is EGP 20,000, increased from EGP 15,000 in 2023. Disabled employees qualify for an EGP 30,000 exemption. Both residents and non-residents may deduct the EGP 20,000 annual exemption before applying these brackets; disabled employees deduct EGP 30,000.

Worked Tax Calculation Example

For an employee earning EGP 600,000 per year, subtract the EGP 20,000 exemption first. Taxable income is EGP 580,000. Apply each bracket in sequence, not a flat rate on the total.

Total annual tax on EGP 600,000 gross (after the EGP 20,000 exemption) is EGP 119,750, an effective rate of approximately 20.0%. Payroll software should replicate this calculation monthly on a pro-rated basis.

Social Insurance Contributions in Egypt

Social Insurance and Pension Law No. 148 of 2019 governs all employer and employee contributions in Egypt. The law mandates a 15% annual increase to insurable salary caps each January from 2021 through 2028. After 2028, increases will track the actual inflation rate.

Employer and Employee Contribution Rates

Employers contribute 18.75% of the total social insurance salary. Employees contribute 11%, bringing the combined rate to 29.75%. This total covers pension, end-of-service, work injuries, medical insurance, and unemployment.

Managers and board members listed in the commercial register are subject to a flat 21% rate on the maximum insurable salary (EGP 16,700 as of January 2026), regardless of their actual salary.

Insurable Salary Caps: Annual Update Schedule (2022–2027)

Egypt's insurable salary caps rise each year, directly affecting how much employers and employees contribute to social insurance. The 2026 caps are EGP 2,700 (minimum) and EGP 16,700 (maximum). By 2027, the projected figures are EGP 3,200 and EGP 19,300 respectively.

Update payroll software on 1 January each year to apply the new caps. Using the prior year's ceiling understates employer contributions and creates a compliance gap.

Emergency Aid Fund and Martyrs Fund Deductions

Two mandatory deductions sit outside the standard social insurance calculation and are frequently missed in payroll configuration: the Emergency Aid Fund and the Martyrs Fund.

Employers contribute 1% of the basic social insurance salary to the Emergency Aid Fund. The 2026 salary caps for this fund are EGP 440 (minimum) and EGP 2,720 (maximum). From April 2026, the calculation methodology changed: the basic salary for 2026 is now derived by adding 3% of the actual insurance salary (2026) to the prior year's basic salary, replacing the previous 7% annual increase formula.

The Martyrs Fund, established under Law No. 4 of 2021, requires a monthly deduction of 0.05% of gross salary from all private and public sector employees. Per-diem workers are exempt. The employer withholds the amount and remits it to the fund account.

Leave Entitlements Under Egyptian Labor Law

Labor Law No. 12 of 2003 governs all statutory leave in Egypt, covering annual, sick, and maternity leave. Public holidays are separate and do not reduce an employee's leave balance. Entitlements vary by tenure and, in some cases, employer size.

Annual Leave

Under Labor Law No. 12 of 2003, employees with fewer than 10 years of service receive 21 days of paid annual leave per year. Employees with 10 or more years of service, counting insured years with any employer, receive 30 days.

Employees must complete three months of service before taking their first leave. This waiting period applies regardless of contract type.

Egyptian law also allows employees to convert accrued annual leave into sick leave. Employers should reflect this option explicitly in leave policy documentation to avoid disputes.

Sick Leave and Annual-to-Sick Leave Conversion

Employees in Egypt are entitled to up to six months of paid sick leave covered by social insurance. For the first 90 days, employees receive 75% of their regular salary. For the following 90 days, the rate rises to 85%. A certified medical certificate is required to qualify.

Egyptian law also allows employees to convert accrued annual leave into sick leave. When this applies, payroll must reflect the correct pay rate for whichever leave type is active. This conversion option is not common in most other jurisdictions.

Maternity Leave and Nursing Breaks

Maternity leave entitlement in Egypt depends on tenure with the same employer. Employees with 10 or more months of service receive 90 days of fully paid maternity leave at 100% of their comprehensive wage. Employees with less than 10 months of service receive 45 days. A medical certificate confirming the delivery date is required, and the entitlement applies per child for up to three children.

Nursing breaks are also a statutory right. Employees are entitled to two 30-minute breaks or one combined hour per day for 24 months after birth. Employers with 100 or more employees must provide an in-house nursery or arrange nursery placement for children until school age.

Employers with 50 or more employees must grant up to 24 months of unpaid leave after childbirth if the employee requests it. The employee's position must be held open during this period.

Public Holidays in Egypt

Egypt observes 11 to 13 public holidays each year. Fixed-date holidays are listed below. Islamic calendar holidays shift annually, and the government may adjust dates by decree.

Employees required to work on a public holiday receive double their daily wage plus an additional day off the following week. Employers should publish the holiday calendar at the start of each year.

Employment Contracts, Termination, and Severance in Egypt

Labor Law No. 12 of 2003 governs employment contracts and termination in Egypt. All contracts must be in writing and specify salary, working hours, and responsibilities.

Either party may end the relationship with proper notice. Cases of gross misconduct allow summary dismissal without notice. The sub-sections below cover probation periods, notice requirements, and severance pay calculations.

Probation Period and Notice Requirements

Egyptian law allows a probation period of up to three months. During this period, either party may end the employment relationship without notice or reason.

Once probation ends, a minimum of two months' notice is required from either the employer or the employee. An employer may terminate without notice if the employee commits gross misconduct or a serious breach of contract. An employee who resigns must submit a written resignation, and the employer must formally acknowledge it.

End-of-Service Severance Pay

Employees with ten or more years of service are entitled to severance pay equal to one month's salary for each year worked. The formula is: monthly salary multiplied by total years of service.

Termination without just cause triggers severance regardless of tenure. For example, an employee earning EGP 25,000 per month with 12 years of service is owed EGP 300,000. One company offered EGP 250,000 in a similar case; the employee pursued legal action and the employer paid the full EGP 300,000 plus compensation for the delay. Track employee tenure in your payroll system to avoid this outcome.

Payroll Compliance Obligations and Reporting

Running payroll in Egypt is a continuous monthly obligation, not a one-time setup. Employers must file reports with both the Egyptian Tax Authority and the Social Insurance Authority each month. Penalties for late or missing submissions range from EGP 5,000 to EGP 50,000 per month, and records must be retained for at least five years.

Monthly Reporting Deadlines and Penalties

Each monthly payroll report must include total salaries paid, taxes deducted, social insurance contributions, and all allowances and deductions. Reports are submitted to both the Egyptian Tax Authority and the Social Insurance Authority. The deadline is the end of the month following the payroll period.

Missing a submission carries a penalty of EGP 5,000 to EGP 50,000 per month. Three consecutive missed months can result in cumulative penalties of up to EGP 150,000, plus the risk of a formal audit. Automating filings reduces the likelihood of missing these deadlines.

E-Tax Mandatory Digital Reporting System

Law No. 386 of 2023 requires employers to file monthly wage and salary tax reports through the Egyptian Tax Authority's electronic system, which automates wage and salary tax calculation. The rollout ran in phases from October 2023 through December 2024.

By December 2024, all Egyptian Tax Authority offices were included. Covered employers must file monthly through the e-tax portal. Failing to register on the e-tax system is a separate compliance risk from submitting a late filing. Confirm your e-tax registration is active before the next monthly filing deadline.

Training Fund Contribution (Labor Law No. 14 of 2025)

Employers with 30 or more employees must contribute to the Training Fund under Labor Law No. 14 of 2025, effective September 1, 2025. The rate is 0.25% of the minimum social insurance wage per employee, subject to a floor of EGP 10 and a ceiling of EGP 30 per employee per month.

This replaces the method under the previous Labor Law No. 12 of 2003, which required 1% of net profits. The new per-employee calculation is straightforward to apply at payroll run time. Add it as a separate line item in your payroll records from September 2025 onward.

Record Retention Requirements

Egyptian law requires employers to retain payroll records for at least five years. Records that must be kept include salary payments, income tax deductions, social insurance contributions, and any payroll adjustments. Cloud-based storage is strongly recommended to prevent data loss.

Missing records carry real consequences. One documented case involved a company that lost three years of payroll data in a system crash. Auditors imposed fines on top of taxes already paid. Maintain both digital and physical backups.

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Hiring Foreign Employees in Egypt

Hiring a foreign national in Egypt creates two distinct compliance obligations. Every foreign employee must hold a valid work permit at all times. Social insurance registration applies equally to foreign nationals under Decree No. 2437 of 2021.

Companies that want to employ foreign talent without setting up a local entity can use EOR services to manage both obligations. The sub-sections below cover each requirement in detail.

Work Permit Requirements and Penalties

All foreign nationals working in Egypt, whether employed or self-employed, must hold a valid work permit at all times. Employing a foreign worker without one carries a fine of up to EGP 50,000 per worker. A lapsed permit triggers the same penalty.

One startup hired three foreign developers without permits and faced a total fine of EGP 150,000. All three employees had to leave the country. Apply for permits before the hire date, not after.

Social Insurance for Foreign Nationals

Decree No. 2437 of 2021, issued under the executive regulations of Law No. 148 of 2019, mandates social insurance coverage for all foreign nationals working in Egypt. The same contribution rates and insurable salary caps that apply to Egyptian employees apply equally to foreign hires.

Register foreign nationals with the Social Insurance Authority at the same time as the Form 1 submission. Do not wait for work permit approval before initiating registration.

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Common Egypt Payroll Compliance Mistakes to Avoid

Three categories of risk account for most enforcement actions against employers in Egypt: worker misclassification, late or incorrect filings, and cross-border payroll errors. Each sub-section below includes a documented penalty example. Gloroots managed payroll reduces exposure across all three categories.

Employee Misclassification Risk

Under Labor Law No. 12 of 2003, a worker is an employee when the relationship involves a fixed salary, company-supplied equipment, direct supervision, and set working hours. A contractor, by contrast, works independently, uses their own tools, and serves multiple clients.

The Egyptian Tax Authority and labor authorities assess actual working conditions, not contract labels. If the facts match employment, authorities will reclassify the relationship regardless of what the written agreement says.

Reclassification triggers retroactive social insurance contributions, income tax, and statutory benefits for the full period of misclassification. In one documented case, a company that had classified half its workforce as contractors was reclassified and paid EGP 2 million in back social insurance, taxes, and benefits covering two years of employment. Misclassification is not a minor administrative error. Understanding how does EOR work can help employers structure compliant engagements from the start.

Late Filings and Incorrect Tax Brackets

Missing a monthly payroll tax filing costs between EGP 5,000 and EGP 50,000 per month. Three consecutive missed months can reach EGP 150,000 and trigger a tax audit.

Automating filings through payroll software or an outsourced provider removes the manual dependency that causes most late submissions.

Egypt's income tax brackets were last updated by the Ministry of Finance in 2024. Applying 2023 brackets to 2024 or 2025 payroll creates underpayment, which exposes the employer to penalties, or overpayment, which reduces the employee's net pay incorrectly.

Update payroll software at the start of each tax year and after any Ministry of Finance gazette notice to keep bracket calculations current.

Remote Work Payroll and Cross-Border Tax Considerations

The Egyptian Tax Authority taxes employees based on where work is performed, not where the employer is registered. A remote employee physically working in Egypt is subject to Egyptian income tax and social insurance, regardless of the employer's country.

A Cairo-based company that employs remote workers outside Egypt must verify whether Egyptian social insurance still applies to those individuals. The rules differ depending on the worker's country of residence and any applicable bilateral agreement.

Paying Egyptian income tax on a Dubai-based remote worker creates a double taxation risk if the UAE also asserts a tax claim. Check whether a tax treaty exists between Egypt and the employee's country before processing payroll. For cross-border remote arrangements, consult a tax specialist. Understanding employer of record cost can also help when evaluating compliant hiring structures for international remote workers.

Frequently Asked Questions About Payroll in Egypt

The questions below cover minimum wage, payroll frequency, penalties, and foreign employee rules. Each answer links back to the relevant section for full detail.

What is the current minimum wage in Egypt?

The minimum wage in Egypt is EGP 7,000 per month for private sector employees, effective March 1, 2025. The National Wages Council, chaired by Minister Al-Mashat, set this rate. Egypt also introduced its first-ever part-time minimum wage: EGP 28 net per hour.

How often must payroll be processed in Egypt?

Payroll in Egypt is processed monthly. Salaries must be paid by the 5th of the following month. A bi-monthly schedule is permitted but monthly is the standard practice employers are expected to follow.

What are the penalties for late payroll tax submissions in Egypt?

Missing a monthly payroll tax submission carries a fine of EGP 5,000 to EGP 50,000 per month. Three consecutive missed months can result in cumulative penalties of up to EGP 150,000, plus audit risk. Penalties apply separately to Egyptian Tax Authority and Social Insurance Authority filings.

Are foreign employees subject to Egyptian social insurance?

Yes. Decree No. 2437 of 2021 mandates social insurance for all foreign nationals working in Egypt. The same contribution rates apply: 11% for employees and 18.75% for employers. Employers must register foreign nationals with the Social Insurance Authority before the first payroll run.