How to Use An Employer of Record in
Egypt

Egypt's Labour Law No. 12 of 2003 requires foreign companies to register employees with the General Organization for Social Insurance (GOSI) within seven days of hire, maintain Arabic-language contracts with 15 mandatory clauses, and navigate collective bargaining agreements that set industry-specific minimums beyond the statutory wage floor of EGP 6,000 per month (2026). An Employer of Record lets you hire compliant Egyptian employees in as few as 10 business days without incorporating a local legal entity, while the EOR handles payroll, tax withholding under Law No. 91 of 2005, and all statutory filings. This removes the risk of penalties for late GOSI registration, miscalculated severance under Article 122, or non-compliant termination procedures that can trigger labour court disputes and reinstatement orders.

What Is an Employer of Record in Egypt?

An Employer of Record in Egypt is a third-party organisation that becomes the legal employer of your staff under Egyptian law, taking on all statutory obligations including payroll, tax withholding, social insurance contributions, and compliance with Labour Law No. 12 of 2003 while you retain full operational control over day-to-day work, performance management, and role responsibilities.

Under Egypt's employment law framework governed by Labour Law No. 12 of 2003 and its Executive Regulations, the EOR must issue written contracts in Arabic within the first week of employment, register employees with GOSI within seven days, withhold income tax under Law No. 91 of 2005 at progressive rates from 0% to 27.5%, and comply with sector-specific collective bargaining agreements that may impose higher wage floors, additional allowances, or stricter termination procedures than the statutory baseline. The EOR also ensures adherence to maximum working hours of 8 per day and 48 per week, mandatory annual leave accrual, and severance calculation rules under Article 122.

You retain complete control over hiring decisions, job responsibilities, performance reviews, promotion, and daily management of your team. The EOR owns the legal employment relationship, meaning they issue the contract, run monthly payroll in Egyptian pounds, remit income tax and social insurance to the Egyptian Tax Authority and GOSI, manage statutory leave entitlements, and execute termination procedures including notice and severance payment when employment ends.

How Does an Employer of Record Work in Egypt?

Using an Employer of Record in Egypt follows a structured process that begins with defining the role and ends with the EOR managing all ongoing compliance obligations. Each step involves specific legal requirements under Egyptian labour law, government registrations, and payroll procedures that the EOR handles on your behalf while you maintain operational control over your employee's work.

Step 1: Define Role and Terms

You identify the candidate you want to hire and agree on the employment terms including job title, salary, benefits, and start date. The salary must meet or exceed the statutory minimum wage of EGP 6,000 per month and any applicable collective bargaining agreement minimums for the sector or region where the employee will work. If the role falls under a unionised sector such as manufacturing, construction, or textiles, the EOR verifies compliance with the relevant collective agreement which may require additional allowances such as meal stipends, transport allowances, or profit-sharing provisions.

Step 2: EOR Compliance Check

The EOR reviews the proposed terms against Egyptian Labour Law No. 12 of 2003, Ministry of Manpower and Migration regulations, and GOSI contribution requirements. This includes confirming the salary meets the 2026 minimum wage of EGP 6,000, verifying the role classification aligns with Egyptian Standard Classification of Occupations used by the Ministry, and ensuring working hours do not exceed 8 per day or 48 per week without overtime provisions. The EOR also checks whether the role qualifies for fixed-term contracts under Article 106, which permits fixed terms for project-based work, seasonal activity, or replacement of absent employees, or whether an indefinite contract is required.

Step 3: Employment Contract Issuance

The EOR prepares a written employment contract in Arabic as required by Article 32 of Labour Law No. 12 of 2003, which is the only legally binding version even if a parallel English translation is provided. The contract must include: job title and description, salary and payment method, place of work, start date, contract type (indefinite or fixed-term with justification and duration not exceeding five years), probation period not exceeding three months (or six months for managerial roles), working hours and weekly rest day, annual leave entitlement starting at 21 days, notice period for indefinite contracts (minimum two months as standard practice), applicable collective agreement if any, and GOSI registration details. The probation period cannot exceed 90 days for standard employees or 180 days for senior or specialised roles, and the employee may be terminated without notice or severance during this period under Article 37.

Step 4: Government Registrations

The EOR registers the employee with the General Organization for Social Insurance within seven business days of the start date as mandated by Social Insurance Law No. 148 of 2019, submitting Form 1 (employer registration if first employee) and Form 6 (individual employee registration). Late registration triggers administrative fines starting at EGP 5,000 per employee and potential penalties of up to EGP 20,000 for wilful non-compliance, plus the employee may lose social insurance coverage for medical treatment and future pension rights. The EOR also registers the employee with the Egyptian Tax Authority for income tax withholding purposes, obtaining a tax file number if the employee does not already hold one, and notifies the Ministry of Manpower and Migration through the national labour inspection database.

Step 5: Payroll in Local Currency

The EOR processes monthly payroll in Egyptian pounds on a fixed cycle, typically paying salaries by the last business day of each month as is standard practice in Egypt. The EOR withholds income tax at progressive rates under Law No. 91 of 2005: 0% on the first EGP 40,000 annually (EGP 3,333 per month), 10% on income from EGP 40,001 to EGP 55,000, 15% from EGP 55,001 to EGP 70,000, 20% from EGP 70,001 to EGP 200,000, and 27.5% on income above EGP 200,000, applying the annual personal exemption of EGP 15,000 and any dependent deductions. The EOR remits withheld income tax to the Egyptian Tax Authority by the 15th of the following month and pays employer and employee social insurance contributions to GOSI by the same deadline.

Step 6: Ongoing Compliance Management

The EOR manages recurring statutory obligations including monthly submission of salary schedules and contribution payments to GOSI by the 15th, monthly income tax withholding and remittance to the Egyptian Tax Authority, quarterly wage protection system filings if applicable under Ministry of Manpower regulations, annual income tax reconciliation (Form 3) and employee tax certificates by March 31, and annual review of minimum wage updates announced by the Cabinet each year. The EOR also tracks and administers statutory leave including 21 days paid annual leave increasing to 30 days after 10 years of service, paid public holidays (13 days in 2026 including Eid al-Fitr, Eid al-Adha, and national holidays), paid sick leave up to 90 days per year at full pay for the first 90 days and 75% thereafter, maternity leave of 90 days at full pay (expanded in 2026 under amended Labour Law provisions), and any additional leave mandated by collective agreements.

Step 7: Termination Procedures

When employment ends, the EOR manages the termination process in compliance with Labour Law No. 12 of 2003. Termination without cause requires notice periods typically ranging from two to three months depending on the employee's length of service and the terms in the employment contract or applicable collective agreement, though the law does not mandate a statutory minimum notice period. Severance pay under Article 122 is mandatory for employees with at least two years of continuous service and is calculated as one month of final basic salary for each of the first five years plus 1.5 months for each year beyond five years, paid in a lump sum within seven days of the termination date. Termination for just cause under Article 69 (serious misconduct such as assault, theft, disclosure of trade secrets, or repeated absence without justification) requires documented evidence, a written warning process for all but the most serious offences, and approval from the labour office or risk of the termination being deemed unfair, which can result in reinstatement orders or compensation of up to two years' salary awarded by labour courts.

Employment Laws and Compliance an Employer of Record Handles in Egypt

When you hire through an Employer of Record in Egypt, they assume full responsibility for compliance with Egyptian labour and tax law so you do not need to build an in-country legal, HR, or payroll function.

• Employment Contracts and Registration: The EOR issues written contracts in Arabic as required by Labour Law No. 12 of 2003 and registers each employee with the General Organization for Social Insurance within seven business days using Form 6, ensuring inclusion of all 15 mandatory clauses. Non-compliance results in fines starting at EGP 5,000 per employee and potential labour court disputes if contracts are deemed invalid.
• Income Tax Withholding and Remittance: The EOR withholds income tax monthly at progressive rates under Law No. 91 of 2005 (0% to 27.5%) and remits it to the Egyptian Tax Authority by the 15th of the following month. Failure to withhold or late remittance triggers penalties of 2% per month on the outstanding amount plus potential criminal liability for the responsible party under Article 136 of the Tax Procedures Law.
• Social Insurance Contributions: The EOR calculates and pays employer contributions to GOSI at 26% of gross salary (covering pension, disability, death, employment injury, and unemployment insurance) plus employee contributions of 14%, remitting both by the 15th of each month under Social Insurance Law No. 148 of 2019. Late payment incurs interest charges of 1.5% per month and can result in suspension of social insurance coverage for the employee.
• Statutory Leave Entitlements: The EOR administers annual leave starting at 21 working days per year (increasing to 30 days after 10 years), 13 paid public holidays in 2026, sick leave up to 90 days at full pay, and maternity leave of 90 days at full pay under amended provisions effective 2026. Denying statutory leave exposes the employer to labour inspection fines and employee claims for unpaid leave compensation.
• Termination and Severance: The EOR manages termination procedures under Articles 69 and 122, ensuring proper notice periods (typically two to three months), calculation of severance pay (one month salary per year for the first five years, 1.5 months thereafter, for employees with at least two years' service), and compliance with just-cause requirements. Unfair dismissal can result in labour court awards of up to 24 months' salary or reinstatement orders.
• Working Time and Overtime: The EOR ensures compliance with maximum working hours of 8 per day and 48 per week under Article 83, mandatory weekly rest of 24 consecutive hours (typically Friday), and overtime payment at 135% for daytime hours and 170% for night work (9pm to 6am). Violations trigger Ministry of Manpower fines and potential liability for unpaid overtime claims plus 5% annual interest.
• Health and Safety Obligations: The EOR ensures compliance with workplace health and safety requirements under Chapter 5 of Labour Law No. 12 of 2003, including provision of safe working conditions, mandatory health insurance registration under Law No. 2 of 2018, and reporting of workplace injuries to GOSI within 24 hours. Non-compliance can result in Ministry closure orders, fines up to EGP 50,000, and criminal liability for serious safety violations.
• Data Protection and Employee Privacy: The EOR handles employee personal data in compliance with Law No. 151 of 2020 on Personal Data Protection, which requires written consent for data processing, secure storage of employee files, and restrictions on cross-border data transfers without Data Protection Centre authorisation. Violations trigger fines from EGP 100,000 to EGP 3 million depending on severity and whether sensitive data such as health records is involved.
• Collective Agreements and Union Relations: The EOR ensures compliance with applicable collective bargaining agreements negotiated by the Egyptian Trade Union Federation, which may impose wage floors, allowances, and termination procedures beyond statutory minimums in sectors such as manufacturing, construction, textiles, and public utilities. Failure to comply with a binding collective agreement can result in labour court orders for back pay, penalties, and union-led work stoppages.
• Work Permits and Visa Compliance: If you hire foreign nationals in Egypt, the EOR manages work permit applications through the Ministry of Manpower and Migration and residence permit filings with the Mogamma administrative complex, ensuring compliance with quotas limiting foreign workers to 10% of a company's workforce in most sectors. Working without a valid permit exposes both the employer to fines of EGP 50,000 per employee and potential deportation and bans for the foreign worker.

How Much Does It Cost to Use an Employer of Record in Egypt?

The total cost of using an Employer of Record in Egypt has two components: the EOR service fee and statutory employer costs. Statutory costs are fixed by Egyptian law and include social insurance contributions, health insurance, and any other mandatory employer obligations. Playroll's EOR service fee starts from $399 per employee per month, billed separately from the statutory costs and employee salary. The service fee covers all employment administration, contract preparation, payroll processing, tax and social insurance filings, ongoing compliance monitoring, and employee support.

Let's look at an example that includes a base salary and the EOR service fee.

The EOR service fee covers all employment administration including contract drafting in Arabic, GOSI and tax authority registration, monthly payroll processing in Egyptian pounds, statutory filing and remittance, ongoing compliance updates when Egyptian labour law changes, employee onboarding and offboarding, and dedicated support for both you and your employee.

Employer of Record vs Setting Up an Entity in Egypt

The choice between using an Employer of Record or setting up your own legal entity in Egypt depends on your hiring timeline, budget, and long-term commitment. Foreign companies typically establish a Limited Liability Company (Sherka Zat Masauleya Mahdouda) or a branch office, which requires registration with the General Authority for Investment and Free Zones (GAFI), minimum capital deposit of EGP 1 million for most sectors (higher for regulated industries), lease of physical office space with a notarised rental contract, appointment of a resident legal representative, and registration with the Commercial Registry, tax authority, and GOSI. The full incorporation process realistically takes 12 to 16 weeks and costs between $15,000 and $30,000 in legal, notarisation, and registration fees.

For companies hiring fewer than 10 to 12 employees in Egypt, an Employer of Record is almost always the faster and more cost-effective route.

Playroll also supports your long-term growth through its Global Entity Setup product, which handles entity incorporation and local payroll in 120+ countries, so you can transition from EOR to your own compliant entity in Egypt when the time is right, without switching providers or rebuilding your HR processes.

How Long Does It Take to Hire Someone in Egypt Through an Employer of Record?

The total timeline to hire an employee in Egypt through an Employer of Record typically ranges from 10 to 15 business days from the moment you confirm the candidate and employment terms to the employee's first day on payroll.

• Stage 1: Contract preparation and signing (2 to 3 business days): The EOR drafts the Arabic-language employment contract incorporating all mandatory clauses under Labour Law No. 12 of 2003, reviews it with you and the employee, and collects signatures. The timeline depends on how quickly you and the candidate review and return the signed contract.
• Stage 2: Government registrations (5 to 7 business days): The EOR registers the employee with the General Organization for Social Insurance using Form 6, which must be submitted within seven business days of the start date, and registers the employee with the Egyptian Tax Authority for income tax withholding. Missing the seven-day GOSI registration deadline triggers fines starting at EGP 5,000 and delays the employee's social insurance coverage for medical treatment and future pension.
• Stage 3: Payroll configuration and first cycle (2 to 3 business days): The EOR configures the employee in the payroll system, sets up direct deposit to the employee's Egyptian bank account, and schedules the first payslip. Egyptian payroll runs monthly, typically paying by the last business day of the month, so if the employee starts mid-cycle they receive a prorated payment in the first month.
• Stage 4: Egypt-specific requirements (1 to 2 business days, often parallel): If the role falls under a collective bargaining agreement, the EOR verifies sector-specific terms such as additional allowances or longer notice periods, which can add 1 to 2 business days but usually runs in parallel with contract preparation. If the employee is a foreign national, work permit and residence permit processing adds 6 to 10 weeks and must be completed before the start date.

The timeline can extend if the employee does not hold an Egyptian national ID or tax file number, which delays tax registration by 3 to 5 business days, or if the employee's bank account details are incomplete or incorrect, which delays payroll setup. Collective agreement verification in highly regulated sectors such as construction or textiles can add 2 to 3 business days if the EOR must consult the relevant union or Ministry of Manpower records.

In comparison, setting up your own legal entity in Egypt takes 12 to 16 weeks before you can legally hire and pay your first employee, making the EOR route roughly 20 times faster.

How Playroll's Employer of Record Process Works in Egypt

Playroll makes it straightforward to hire compliant employees in Egypt without setting up a local entity.

1. You Define the Role and Candidate

You provide the candidate details, job title, salary, benefits, and start date. Playroll reviews the terms to ensure they meet the statutory minimum wage of EGP 6,000, comply with any applicable collective bargaining agreement, and align with Labour Law No. 12 of 2003 requirements.

2. Playroll Prepares a Compliant Contract

Playroll drafts the employment contract in Arabic as required by Article 32, including all mandatory clauses such as job title, salary, working hours, probation period (maximum 90 days for standard roles or 180 days for senior positions), notice periods, and GOSI registration details. You and the employee review and sign the contract electronically.

3. Employee Onboarded and Payroll Goes Live

Once the contract is signed, Playroll registers the employee with the General Organization for Social Insurance within seven business days using Form 6 and registers them with the Egyptian Tax Authority for income tax withholding. The entire onboarding process takes 10 to 15 business days, and the employee receives their first payslip on the last business day of the month or prorated for mid-month starts.

4. Playroll Manages Ongoing Compliance

Playroll handles all recurring obligations including monthly payroll in Egyptian pounds, income tax withholding and remittance, GOSI contributions, statutory leave tracking, and annual tax reconciliation. If your team in Egypt grows to a size where establishing your own entity becomes cost-effective, Playroll supports that transition through its global entity setup service, incorporating your LLC and transitioning payroll without disrupting operations.