Employment Contracts in Egypt

A Comprehensive Guide to Employment Contracts in Egypt
Employment contracts in Egypt are governed by the Egyptian Labor Law, and understanding the key elements is essential for a smooth and compliant hiring process. Whether you’re hiring directly or through an Employer of Record in Egypt, it’s important to draft contracts that meet local legal requirements.

1. When Does the Employment Contract Start?
An employment contract in Egypt becomes effective once the employee signs it and officially starts work. Contracts should be formalized before the commencement of the employee’s duties.
💡 Pro Tip: Ensure the contract is clearly written and signed by both parties to avoid disputes later.

2. Key Components of an Egyptian Employment Contract
The standard components of an employment contract in Egypt include:
Job Title and Description: The role and responsibilities must be clearly defined.
Workplace Location: Specify where the employee will be based, as it affects their tax obligations.
Contract Type: The contract may be permanent, fixed-term, or project-based.
Working Hours: Typically 8 hours a day, with a maximum of 48 hours per week.
Compensation and Benefits:
Salary: The salary must comply with Egypt’s minimum wage laws, if applicable.
Allowances: These can include transportation, housing, and other relevant allowances.
Mandatory Benefits: Include social insurance and other statutory contributions.
Leave Policies:
Annual Leave: Employees are entitled to 21 days of paid leave annually after one year of service.
Sick Leave: Employees are entitled to 90 days of sick leave with full pay, followed by reduced pay.
Maternity Leave: Female employees are entitled to 90 days of maternity leave, with full pay for the first 45 days.
Termination Terms: Includes notice periods, which typically range from one to three months depending on the length of employment. Severance payments are also required by law.
💡 Why This Matters: A well-drafted employment contract ensures compliance with local laws and protects both the employer and employee.

3. Salary Structure in Egypt
Salaries in Egypt generally include:
Base Salary: The primary taxable income.
Allowances: Common allowances include transportation and housing, depending on the role.
Bonuses: May be performance-based, either individual or company-wide.
💡 Key Takeaway: Ensure that the salary structure is clearly outlined to prevent any misunderstandings.

4. Legal Considerations: Protecting Your Business
a. Non-Compete and Confidentiality Clauses
Egypt allows non-compete clauses, but they must be reasonable in scope and duration. Confidentiality clauses are also common for protecting company secrets.
b. Statutory Obligations
Employers must adhere to mandatory contributions such as:
Social Insurance: Employers and employees must contribute to social insurance for pensions, health, and other benefits.
Severance Pay: Employees are entitled to severance payments based on the length of their employment.
💡 Tip: Compliance with statutory obligations ensures that your business avoids penalties.

5. Background Checks and Employee Protections
Background checks are standard in Egypt but must be conducted within the bounds of the law. Employers must obtain written consent from the employee before conducting checks, which can include criminal history and employment verification.

6. The Importance of Written Contracts
Written employment contracts are mandatory in Egypt. These contracts help clarify the terms and conditions of employment, ensuring that both parties understand their rights and responsibilities.

7. Why Partner with GlobainePEO?
Hiring in Egypt can be complex, given the country’s labor laws. By partnering with GlobainePEO, you can:
Streamline the hiring process and contract creation.
Ensure compliance with local labor laws and regulations.
Focus on expanding your business while we handle the legal aspects.

💡 GlobainePEO Advantage: As your trusted Employer of Record in Egypt, we manage everything from creating legally compliant contracts to overseeing employee benefits and statutory obligations.

Drafting compliant employment contracts is crucial for a successful business expansion into Egypt. Partnering with an Egypt EOR, like GlobainePEO, allows you to focus on your business objectives while ensuring legal and administrative compliance is taken care of.