1. Social Security Contributions: Pension and Insurance

Overview: Social security contributions in Egypt are aimed at providing retirement and social insurance benefits for employees. Both employers and employees contribute to Egypt’s national pension fund, which is managed by the Social Insurance Organization (SIO). The system covers Egyptians as well as certain expatriates, although exemptions may apply depending on the nationality and bilateral agreements between Egypt and other countries.

Details: Employers must deduct social security contributions from employee wages and submit them to the SIO. The contributions cover pension, disability, and survivor benefits for Egyptian nationals. Expatriates, while generally exempt, may still require social security coverage through their home country’s system, depending on international agreements. Employers should ensure proper compliance with these regulations to avoid penalties.

Outcome: These contributions provide a safety net for employees, ensuring that they have financial security post-retirement, while employers minimize legal risks by adhering to Egypt’s mandatory social security laws.

2. Paid Annual Leave

Overview: Egyptian employees are entitled to a minimum of 21 days of paid annual leave after completing one year of service with an employer. As employees continue to work with the same employer, they accrue more leave days. This benefit promotes work-life balance and contributes to employee well-being.

Details:

• Employees are eligible for 21 days of paid leave after one year of employment.
• The leave entitlement increases after more than 10 years of service.
• Employers must ensure that leave is properly documented and employees are allowed to take time off as per the law.
• Employers should also ensure that the annual leave is granted without detriment to the employee’s position or job security.

Outcome: Paid annual leave allows employees to rest and rejuvenate, which in turn boosts productivity and reduces burnout. The benefit also demonstrates an employer’s commitment to the well-being of their workforce, leading to higher job satisfaction.

3. Maternity and Paternity Leave

Overview: Egyptian labor law includes provisions for maternity and paternity leave to support employees during significant family events. These policies are in place to ensure that employees can manage family responsibilities without sacrificing income.

Details:

• Maternity Leave: Female employees are entitled to 90 days of paid maternity leave, which is split between 45 days pre-birth and 45 days post-birth. After the first 45 days, the employee is paid half of their salary for the remaining leave.
• Paternity Leave: Fathers are entitled to 3 days of paid leave at the time of the birth of their child.

Outcome: These leave policies support employees through family transitions, fostering a more family-friendly workplace environment. By offering paid leave, companies help employees balance professional and personal life, which contributes to employee retention and satisfaction.

4. Sick Leave

Overview: Under Egyptian labor law, employees are entitled to take sick leave for up to six months per year, with varying pay rates depending on the length of the leave.

Details:

• For the first 3 months of sick leave, employees receive full pay.
• After the first 3 months, employees are entitled to 75% of their salary for the following 3 months.
• After six months of illness, employees are entitled to 50% of their salary.

Outcome: Sick leave ensures that employees can take the time needed to recover from illness without financial hardship. It contributes to a healthy workforce and reduces absenteeism by giving employees the opportunity to fully recover before returning to work.

5. End of Service Benefits (Gratuity)

Overview: End-of-service benefits, or gratuity, are provided to employees when they leave the company after completing a minimum of one year of continuous service. The benefits are a financial cushion to assist employees during their transition out of employment.

Details: The severance payment is calculated based on the employee’s final monthly salary and their length of service. Employers must provide gratuity payments upon termination or resignation to ensure legal compliance. The payment is typically made in a lump sum at the end of employment.

Outcome: Gratuity payments provide a safety net for employees when they transition out of the company, offering financial support during their job search or retirement. Employers should ensure they are prepared to meet these obligations when an employee exits.

6. Public Holidays

Overview: Egypt observes several public holidays each year, during which employees are entitled to paid leave. If an employee works on a public holiday, they are typically compensated with premium pay, usually double the regular hourly rate.

Details: Employers are required to grant employees time off on public holidays, and employees who work on these days must receive compensation. Companies should ensure that public holidays are observed according to the law, with premium pay applied when necessary.

Outcome: Public holidays offer employees opportunities for rest and cultural observances, fostering a positive work environment. Premium pay for holiday work incentivizes employees to comply with operational needs during holidays.

7. 13th Month Salary (End-of-Year Bonus)

Overview: Although not legally required, many employers in Egypt offer a 13th-month salary, also known as an end-of-year bonus, which is typically paid during the holiday season.

Details:

• The 13th-month salary is generally equivalent to one month’s salary, offered as a bonus at the end of the year.
• It’s a common practice in industries such as banking, education, and government services.

Outcome: The 13th-month salary helps improve employee morale, fosters loyalty, and supports retention. This benefit is often seen as a way for companies to show appreciation for employees’ hard work throughout the year.

8. Additional (Extra-Legal) Benefits

Overview: In addition to mandatory benefits, many employers in Egypt offer extra benefits to attract and retain top talent. These benefits may include health insurance, performance bonuses, transportation allowances, and meal subsidies.

Details:

• Health Insurance: Some companies provide comprehensive health insurance coverage as part of their benefits package.
• Performance Bonuses: Employers may offer bonuses based on employee performance or company profitability.
• Transport Allowances: To support employees’ commute, transportation allowances or company-provided transportation may be offered.

Outcome: These extra benefits are not required by law but can significantly enhance the attractiveness of a company. They play a key role in improving employee engagement, reducing turnover, and establishing a competitive advantage in the labor market.

Streamlining Compliance with EOR/PEO Services

Partnering with an Employer of Record (EOR) or Professional Employer Organization (PEO) can help businesses streamline compliance with Egypt’s mandatory benefits laws. GlobainePEO offers solutions that ensure accurate payroll management, benefit administration, and full regulatory compliance. With EOR/PEO services, companies can focus on core business operations while leaving complex employee benefits and compliance management to experts.

Final Thoughts

Incorporating Egypt’s mandatory benefits into your company’s HR policies is essential for maintaining a legally compliant and employee-friendly work environment. By understanding these benefits and utilizing EOR/PEO services, companies can ensure compliance, enhance employee satisfaction, and foster a positive corporate culture, all while reducing administrative burdens. This approach will allow businesses to thrive while supporting the well-being of their employees.