Egypt has one of the largest and fastest-growing workforces in the Middle East and North Africa, and its payroll system reflects that scale: multi-tiered income tax brackets, a national social insurance framework, a workweek that runs Sunday through Thursday, and labour law updates that took effect in 2025. This guide covers everything a foreign employer needs to run compliant payroll in Egypt, from tax withholding obligations to end-of-service calculations.
How payroll in egypt works
Egypt runs on a monthly payroll cycle. Salaries are typically paid by the 25th of each month, and all wages must be transferred via bank. Cash payments do not meet compliance requirements under Egyptian labour law, so a local bank account for your employees is a practical necessity, not just a formality.
The standard working week runs Sunday through Thursday, not Monday through Friday. If you are used to a Western calendar, this is the detail most likely to create confusion in your first payroll cycle. The maximum working hours are 8 hours per day and 48 hours per week. All payroll calculations use EGP (Egyptian Pound) as the base currency, and pro-rating for partial months uses a 30-day divisor regardless of the actual calendar month.
Key payroll facts at a glance
| Item | Detail |
|---|---|
| Payroll cycle | Monthly |
| Typical payment date | By the 25th of each month |
| Payment method | Bank transfer only |
| Currency | EGP (Egyptian Pound) |
| Working week | Sunday–Thursday |
| Max working hours | 8 hours/day, 48 hours/week |
| Pro-rate divisor | 30 days |
Egypt labour laws affecting payroll
Egypt updated its core labour legislation with Labour Law No. 14 of 2025. The law made substantive changes to sick leave, maternity leave, and termination provisions that directly affect payroll obligations. Employers hiring in Egypt for the first time should treat the 2025 law as the operative reference, not older summaries.
Employment contracts
Contracts must be written, bilingual (Arabic and English), and signed with physical signatures. The Arabic text controls in any dispute. Vague compensation language is not accepted by the Ministry of Manpower. Contracts must state exact figures in EGP. A contract that says “competitive salary” or “salary to be agreed” will create compliance problems at registration.
Working hours and overtime
Standard hours are 8 per day and 48 per week. During Ramadan, Muslim employees are entitled to a reduced schedule of 6 hours per day. Overtime rates are:
- Standard overtime: 125% of the hourly rate
- Night shifts or work on Fridays and public holidays: 175% of the hourly rate
The hourly rate for overtime purposes is calculated by dividing the monthly salary by 30 (days) and then by 8 (hours).
Probation
Egyptian labour law permits a probation period of up to 3 months. The contract must state that the employee is on probation. During probation, either party can terminate without the standard notice requirements.
Income tax withholding
The employer acts as the withholding agent for income tax in Egypt. You deduct the employee’s income tax from their gross salary each month and remit it directly to the Egyptian Tax Authority (ETA). The employee does not pay this separately.
How taxable income is calculated
Start with gross salary. Subtract the personal exemption of EGP 20,000 per year. The result is the net taxable income on which the brackets below apply. Certain items are fully exempt: pensions, end-of-service gratuities, and qualifying allowances.
Income tax brackets (2026)
| Annual net taxable income (EGP) | Tax rate |
|---|---|
| Up to 40,000 | 0% |
| 40,001 – 55,000 | 10% |
| 55,001 – 70,000 | 15% |
| 70,001 – 200,000 | 20% |
| 200,001 – 400,000 | 22.5% |
| 400,001 – 600,000 | 25% |
| Above 1,200,000 | Up to 27.5% |
The brackets are progressive, so only the income within each band is taxed at that rate. For monthly payroll, divide the annual tax liability by 12 to get the monthly withholding amount.
Remittance and filing
Employers remit the withheld tax to the ETA on a monthly basis. For employees with no income outside of employment, the employer’s monthly remittance and the end-of-year reconciliation typically cover all obligations. Employees who earn non-employment income must file their own annual return by March 31.
Social insurance contributions
Egypt’s social insurance system is administered by the National Organisation for Social Insurance (NOSI). Contributions are mandatory for all employees and are calculated on the employee’s insured salary, which has both a floor and a ceiling.
The insured salary ceiling increases by 15% on January 1 each year through 2027, so budget accordingly when modelling multi-year compensation packages.
Nosi contribution rates
| Contributor | Rate |
|---|---|
| Employee | 11% of insured salary |
| Employer | 18.75% of insured salary |
| Total | 29.75% of insured salary |
Insured salary ceiling and floor (2026)
| Monthly amount (EGP) | |
|---|---|
| Minimum insured salary | 2,700 |
| Maximum insured salary | 16,700 |
If an employee earns more than EGP 16,700 per month, contributions are still capped at the ceiling. If they earn less than EGP 2,700, contributions are calculated on the floor.
Registration requirement
New employees must be registered with NOSI within 15 days of their start date. Missing this window is one of the most common compliance failures for foreign employers who are still setting up local processes.
Salary structure and minimum wage
Egyptian compensation packages typically split into three components: base salary, housing allowance, and transport allowance. This structure is not just convention. It has practical implications for social insurance and tax, since certain allowances (meals, housing) may be excluded from the insured salary calculation, subject to a cap of 30% of total compensation.
The minimum wage in Egypt is currently EGP 7,000 per month, effective from March 1, 2025. This rises to EGP 8,000 per month from July 2026. If you are issuing contracts now for employees who will still be employed after July 2026, the upcoming increase is worth flagging.
Common salary package structure
| Component | Notes |
|---|---|
| Base salary | Core compensation; fully included in insured salary calculation |
| Housing allowance | May be excluded from NOSI base up to 30% cap |
| Transport allowance | May be excluded from NOSI base up to 30% cap |
Minimum wage timeline
| Date | Minimum monthly wage |
|---|---|
| March 1, 2025 | EGP 7,000 |
| July 2026 | EGP 8,000 |
Gross-to-net calculation
The gross-to-net calculation in Egypt combines income tax withholding, employee NOSI contributions, and any other authorised deductions. The examples below illustrate how this works in practice.
Example 1: egyptian national earning egp 10,000/month
Gross monthly salary: EGP 10,000
NOSI (employee, 11% of insured salary): EGP 10,000 is within the insured salary ceiling (EGP 16,700), so: 11% x EGP 10,000 = EGP 1,100
Annual taxable income: EGP 10,000 x 12 = EGP 120,000 gross Less personal exemption: EGP 20,000 Less annual NOSI contribution: EGP 13,200 Net taxable income: EGP 86,800/year
Annual income tax (progressive):
- 0% on first EGP 40,000 = EGP 0
- 10% on EGP 40,001–55,000 (EGP 15,000) = EGP 1,500
- 15% on EGP 55,001–70,000 (EGP 15,000) = EGP 2,250
- 20% on EGP 70,001–86,800 (EGP 16,800) = EGP 3,360 Total annual tax: EGP 7,110 Monthly tax withholding: EGP 592.50
Net monthly take-home: EGP 10,000 – EGP 1,100 (NOSI) – EGP 592.50 (tax) = approximately EGP 8,307.50
Employer cost: EGP 10,000 + (18.75% x EGP 10,000) = EGP 10,000 + EGP 1,875 = EGP 11,875/month
Example 2: expatriate earning egp 25,000/month
Expatriates working in Egypt are subject to the same income tax obligations as Egyptian nationals on Egyptian-sourced income. The NOSI contribution structure also applies, but the insured salary is capped at EGP 16,700.
NOSI (employee, 11% of EGP 16,700 ceiling): EGP 1,837/month NOSI (employer, 18.75% of EGP 16,700 ceiling): EGP 3,131.25/month
For income tax, the full EGP 25,000 monthly gross applies (EGP 300,000/year), pushing the employee into the 22.5% bracket on the upper portion. The exact withholding depends on other deductions and allowances. The key point is that high earners face materially higher effective rates, so model this carefully before confirming offer letters.
Leave entitlements and payroll impact
Leave under Egyptian law is fully paid in all cases where it applies. The 2025 Labour Law updated several provisions, particularly on sick leave and maternity leave.
Annual leave
| Service length | Annual leave entitlement |
|---|---|
| First year of service | 15 days |
| 1–10 years | 21 days |
| 10+ years or age 50+ | 30 days |
Annual leave is paid at full salary. Unused annual leave must be paid out on termination and cannot be forfeited.
Sick leave
Under Labour Law No. 14 of 2025, sick leave pay is tiered based on duration:
| Period | Pay rate |
|---|---|
| Months 1–3 | 100% of salary |
| Months 4–9 | 85% of salary |
| Months 10–12 | 75% of salary |
The maximum sick leave period is 12 months over any 3-year period. A medical certificate is required throughout. After 12 months, the employer may end the employment relationship, but the payroll obligation runs for the full duration of the leave taken.
Maternity leave
Maternity leave is 120 calendar days, fully paid. Payments are funded through social insurance rather than directly from the employer’s payroll budget, but the employer manages the process and the employee must remain on payroll during the leave period. Maternity leave is available a maximum of 3 times in an employee’s career.
Paternity leave
Fathers are entitled to 1 paid day per child, up to 3 children. This is a modest entitlement by regional standards, but it is a legal obligation and must be paid.
Public holidays
Egypt observes 14 public holidays per year. If an employee works on a public holiday, they are entitled to double pay for that day. Public holidays are not included in annual leave calculations.
End-of-service benefits
Egyptian law provides for end-of-service benefits (EOSB) on termination, calculated on the basis of years of service. The rate depends on both the length of service and the reason for termination.
EOSB for fair termination (redundancy or similar)
| Service period | Benefit |
|---|---|
| First 5 years | 0.5 months’ salary per year |
| After 5 years | 1 month’s salary per year |
EOSB for unlawful termination
If a court or labour authority finds the termination unlawful, the minimum entitlement rises to 2 months’ salary per year of service. This is a significant exposure for employers who skip proper process.
Resignation
Employees who resign voluntarily are not entitled to EOSB under the standard framework, though contractual provisions may create additional obligations. Confirm the specific contract terms before assuming a clean exit.
Final settlement
The final settlement, including any outstanding salary, unused annual leave payout, and EOSB, must be paid within 15 days of the termination date. Missing this deadline creates liability for delay penalties.
Payroll options for foreign employers
Foreign companies without an Egyptian legal entity cannot run payroll directly in Egypt. The Egyptian Tax Authority and NOSI require a registered local entity as the payroll payer. That leaves two viable options.
| Option | How it works | Key considerations |
|---|---|---|
| Set up an Egyptian entity | Register a company (LLC or branch office) with the General Authority for Investment and Free Zones (GAFI); open local bank accounts; register with the Tax Authority and NOSI | Takes several months; requires ongoing corporate compliance, local accounting, and annual filings |
| Use an Employer of Record (EOR) | The EOR employs the worker legally in Egypt on your behalf; handles payroll, NOSI, tax withholding, and contracts | Faster to launch; lower administrative overhead; no need for a local entity |
For companies hiring a small team or testing the Egyptian market before committing to a full entity setup, an EOR is the more practical starting point. For companies with significant headcount and long-term presence plans, entity setup eventually makes sense, but the compliance burden is real and should not be underestimated.
Common egypt payroll mistakes to avoid
Egypt’s payroll system has several specific areas where foreign employers consistently run into problems. These are the ones worth addressing before you run your first payroll cycle.
1. Paying in cash. Bank transfer is a legal requirement. Cash payments expose you to compliance failure regardless of whether the employee is happy to accept them.
2. Missing the NOSI registration window. New employees must be registered within 15 days of their start date. Late registration can result in penalties and backdated liability. Build this step into your onboarding checklist from day one.
3. Using vague compensation language in contracts. The Ministry of Manpower requires exact EGP figures. “Competitive salary” or “to be agreed” is not compliant. Get the numbers into the contract before signing.
4. Ignoring the Ramadan hour reduction. Muslim employees are entitled to a 6-hour working day during Ramadan. If your payroll system does not account for this, overtime calculations for that period will be wrong.
5. Miscalculating the insured salary base. Not all allowances are included in the NOSI calculation. Housing and meal allowances can be excluded up to 30% of total compensation. Mis-classifying these drives incorrect contributions in both directions.
6. Missing the 15-day final settlement deadline. When an employee leaves, the clock starts immediately. A 15-day window is tight if you are managing approvals across time zones. Build the process so the final payrun can be approved quickly.
7. Not modelling the July 2026 minimum wage increase. If you have contracts in place now that pay close to the current EGP 7,000 minimum, you will need to increase them before July 2026. Budget for this now rather than absorbing it as a surprise.
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FAQs
What is the minimum wage in Egypt in 2026? The minimum wage is EGP 7,000 per month, effective from March 1, 2025. It rises to EGP 8,000 per month from July 2026.
Does Egypt have a 13th month salary requirement? No. Egyptian law does not mandate a 13th month salary payment. Some employers offer a bonus tied to the annual calendar or specific periods such as Eid, but this is a contractual choice, not a statutory requirement.
Can a foreign company hire employees in Egypt without a local entity? Not directly. Without a registered Egyptian entity, a foreign company cannot legally run payroll or register employees with NOSI and the Tax Authority. Using an Employer of Record (EOR) is the standard route for foreign employers who want to hire in Egypt without establishing their own entity.
How is overtime calculated in Egypt? Standard overtime is paid at 125% of the hourly rate. Work on night shifts, Fridays, or public holidays is paid at 175% of the hourly rate. The hourly rate is derived by dividing monthly salary by 30 days and then by 8 hours.
What happens to unused annual leave when an employee is terminated? Unused annual leave must be paid out in cash as part of the final settlement. It cannot be forfeited. The full settlement, including accrued leave, outstanding salary, and any end-of-service benefit, must be paid within 15 days of the termination date.
What currency must Egyptian payroll be paid in? All payroll must be paid in Egyptian Pounds (EGP) via bank transfer. There is no provision for paying employees in foreign currency through a local payroll, though certain expatriate packages may involve cross-border components handled separately.
How does social insurance work for expatriates in Egypt? Expatriates employed by a registered Egyptian entity are generally subject to NOSI contributions under the same rules as Egyptian nationals, with contributions calculated on the insured salary up to the ceiling of EGP 16,700 per month. Bilateral social security agreements between Egypt and the employee’s home country may modify this, so check the specific treaty if applicable.
