Payroll Processing in Egypt: What Employers Need to Know

Payroll processing in Egypt requires employers to keep track of income tax, social insurance, overtime, leave, and minimum wage requirements, all while ensuring employees are paid accurately and on time. For employers, the challenge is knowing what to calculate, what to deduct, and what to report under Egypt’s payroll framework.

In this article, we’ll cover the key payroll requirements in Egypt, from salary calculations and statutory deductions to payslips and payroll reporting.

Key Laws Governing Payroll in Egypt

Egyptian Labor Law No. 14 of 2025

The law establishes employment requirements, including wages, working hours, overtime, leave, and other employment-related matters that can affect payroll.

Egyptian Tax Authority 

The Egyptian Tax Authority (ETA) administers personal income tax requirements. Employers are responsible for calculating and withholding applicable income tax from employee salaries, remitting the tax, and submitting the required payroll tax returns and reports. 

National Organization for Social Insurance (NOSI)

NOSI administers Egypt’s social insurance system. Employers must register eligible employees, calculate employee and employer social insurance contributions based on the applicable insurable wage, remit contributions within the required deadlines, and maintain the necessary records. These requirements form an important part of payroll compliance in Egypt. 

Core Components of Payroll in Egypt

Payment Frequency and Currency in Egypt

Most salaried employees in Egypt are paid monthly, while daily, weekly, or other wage based employees may follow a different payment schedule. Egypt’s official currency is the Egyptian pound (EGP), represented by E£.

Minimum Wage

The minimum wage is EGP 7,000 per month for private-sector employees, effective from 1st March 2025. For private-sector employees, the minimum wage is EGP 8000 per month, effective July, 2026. Employers should apply the rate relevant to their sector.

Social Insurance and Income Tax

Employers must register eligible employees with the National Organization for Social Insurance (NOSI) and remit the required employee and employer contributions within the prescribed deadlines.

Social Insurance 

Income Tax

• Progressive income tax system: Egypt applies progressive personal income tax rates of 0% to 27.5%, depending on taxable annual income. 

• Taxable income: Tax is calculated on an employee’s taxable income after applying the deductions and exemptions allowed under Egyptian tax rules. Certain benefits, allowances, and reimbursements may be taxable. 

• Tax exemptions/allowances where applicable: Employees may benefit from applicable tax allowances and exemptions. Certain in-kind benefits provided to all employees, such as workplace meals, group transportation, healthcare, and work-related tools and uniforms, may be exempt subject to applicable conditions. 

• Employer withholding and reporting: Employers are responsible for withholding income tax from employees’ salaries, remitting it to the Egyptian Tax Authority, and submitting the required payroll tax returns and reports. 

Leave, Benefits and Final Settlements in Egypt

• Annual leave: Employees are entitled to paid annual leave based on their length of service. The entitlement generally increases with years of service. 

• Sick leave: Employees may be entitled to paid sick leave subject to medical certification and the applicable social insurance rules. 

• Maternity leave: Female employees are entitled to four months of maternity leave, with at least 45 days taken after childbirth. 

• Paternity leave: Employees are entitled to one paid day of paternity leave for the birth of a child. 

• Public holidays/rest days: Employees are entitled to statutory holidays and weekly rest periods. Work during these periods may require additional compensation or a rest day. 

• 13th-month payments: A 13th-month salary is not generally mandatory and may depend on the employment contract or company policy. 

Termination, Notice Period and Severance Pay

Egypt’s Labor Law No. 14 of 2025 sets requirements that employers should consider when processing an employee’s final settlement.

Notice Period

For an indefinite-term employment contract:

• Less than 10 years of service: 2 months’ notice
• 10 years or more: 3 months’ notice

If the employer does not require the employee to serve the notice period, termination pay in lieu of notice is due for the unserved period based on the employee’s full wage, including regular allowances and the cash value of in-kind benefits. For a fixed-term contract terminated early by the employer, compensation may be due for the remaining contract period, depending on the circumstances and contract terms.

Severance Pay

For termination due to economic, technological, or structural reasons, severance is calculated as follows:

• First 5 years: 1 month’s wage for each year of service
• After 5 years: 1.5 months’ wage for each additional year
  

The calculation uses the employee’s most recent monthly wage, including regular allowances and the cash value of in-kind benefits. Partial years are calculated proportionately.

Final Settlement

When processing an employee’s final payroll, employers should account for applicable notice-period pay, termination pay, severance, accrued leave, and other outstanding employee payments, including applicable end of service benefits. 

Step-by-Step Payroll Processing in Egypt

1. Collect and verify employee information

• Employee details, Tax ID, and social insurance registration
• Bank details and employment contract

2. Gather payroll inputs

• Attendance, leave, and overtime
• Bonuses and commissions
• New hires, terminations, and other employee changes

3. Calculate gross salary and statutory deductions

• Calculate gross salary based on payroll inputs
• Deduct income tax, social insurance, and other applicable deductions
• Calculate applicable employer contributions

4. Calculate net salary and review payroll

• Calculate employees’ net salary
• Review and approve payroll

5. Process payments and generate payslips

• Process salary payments
• Generate and distribute payslips

6. Complete post-payroll reporting and record-keeping

• Remit applicable income tax and social insurance contributions
• Submit required payroll reports to the Egyptian Tax Authority and NOSI
• Maintain payroll records and supporting documents

How Empxtrack Payroll Software Helps with Payroll Processing in Egypt

With country-specific payroll capabilities, Empxtrack brings employee data, salary calculations, statutory deductions, payroll inputs, and payroll outputs into one integrated system for Egypt payroll processing. The software helps in the following ways:

Automated salary calculations: Process basic salary, allowances, overtime, bonuses, deductions, arrears, and other payroll components.

Configurable salary structures: Configure salary structures based on the organization’s pay policies and employee requirements.

Tax and social insurance calculations: Calculate applicable income tax, employee deductions, and employer social insurance contributions based on configured payroll rules.

Integrated payroll inputs: Bring attendance, leave, overtime, and other variable payroll inputs into the payroll process to reduce manual data entry.

Payroll validations and approvals: Review payroll inputs and calculations, identify errors, and route payroll through configurable approval workflows before processing.

Payslips and payroll reports: Generate detailed employee payslips, payroll summaries, and other payroll reports required for payroll administration and record-keeping.

Payroll records and audit trails: Maintain employee payroll records and track payroll activities through audit trails for better visibility and accountability.

Reduced manual work: Automate repetitive calculations and payroll tasks to reduce manual effort and simplify the payroll process.

Conclusion

Payroll processing in Egypt requires businesses to accurately manage salary calculations, income tax, social insurance contributions, leave, overtime, and other payroll requirements while maintaining accurate employee records.

As payroll involves multiple calculations and recurring administrative tasks, an integrated HR and payroll system can help automate salary calculations, deductions, payslip generation, payroll reporting, and payroll workflows. Empxtrack helps businesses streamline these processes, reduce manual effort, and maintain accurate payroll records across each pay cycle.

Businesses can also start with Empxtrack’s free payroll offering and use the platform for core payroll and HR processes.

Frequently Asked Questions