Hiring in Egypt: A Comprehensive Guide for US Companies

Egypt is fast becoming a key destination in the global talent market. With a large, educated workforce and a strategic location bridging Africa, the Middle East, and Europe, Egypt offers significant advantages for international hiring. The country’s robust educational infrastructure produces skilled professionals in fields like technology, engineering, finance, and more.

For US-based companies, hiring in Egypt means access to a cost-effective talent pool, English proficiency, and a business environment that is increasingly supportive of foreign investment. 

Egypt’s growing tech sector and government incentives further enhance its appeal for companies looking to expand globally.

How to Hire Employees in Egypt

Assess Your Hiring Needs

Before starting the hiring process in Egypt, it’s important to clarify your business objectives:

• Full-time vs. Project-Based Support: Decide if you need permanent employees for ongoing roles or contractors for specific projects. Egypt’s labor market supports both models, but legal requirements differ.

• Local Compliance Requirements: Egyptian labor law requires written contracts, social security contributions, and adherence to statutory benefits. Understanding these is crucial to avoid compliance risks.

• Onboarding Speed vs. Long-Term Control: Using an Employer of Record (EOR) allows for quick onboarding, while setting up a local entity offers more direct control but takes longer and involves more complexity.

Hiring Options in Egypt

You have two main options for hiring in Egypt:

• Set Up a Legal Entity: Establishing a branch or subsidiary gives you full control over employment, payroll, and compliance. However, this process is time-consuming and requires significant investment in legal, administrative, and HR infrastructure.

• Partner with an Employer of Record (EOR): An EOR acts as the legal employer on your behalf. They handle compliance, payroll, benefits, and HR administration, allowing you to focus on managing your team and business outcomes.

EOR vs. Legal Entity: Side-by-Side Comparison

Feature	Employer of Record (EOR)	Setting Up a Legal Entity
Setup Time	Days to weeks	Months
Compliance Management	Handled by EOR	Your responsibility
Payroll & Benefits	Managed by EOR	Managed in-house
Cost	Pay per employee/service fee	High upfront and ongoing costs
Onboarding Speed	Fast	Slow
Long-Term Control	Limited (EOR is legal employer)	Full (you are legal employer)
Best For	Fast entry, pilot teams, scaling	Large teams, long-term presence

Ready to simplify hiring in Egypt? Learn how Tarmack’s EOR solutions can help you expand quickly and compliantly.

Understanding Worker Classification

Employees vs. Contractors in Egypt

Correctly classifying your workers is critical to compliance and cost management. Here’s how employees and contractors differ in Egypt:

Aspect	Employee	Contractor
Legal Status	On payroll, subject to labor law	Self-employed, operates independently
Contract Type	Fixed-term or indefinite, written required	Service agreement or project contract
Social Security	Employer must contribute	Contractor responsible for own taxes
Benefits	Entitled to statutory benefits	Not entitled to statutory benefits
Termination	Protected by labor law, notice required	Based on contract terms
Control	Employer sets hours, duties, tools	Contractor controls how work is performed

Legal Implications and Risks of Misclassification

Misclassifying employees as contractors can lead to:

• Fines and penalties from Egyptian authorities
• Back payment of social security and benefits
• Legal disputes and reputational risk
• Retroactive reclassification of contracts

Egyptian law now recognizes flexible work arrangements, but employers must ensure proper classification and documentation to avoid costly compliance issues. Always formalize employment terms in writing and consult local experts when in doubt.

Hiring Costs and Payroll

Hiring Costs Overview

Hiring in Egypt involves several direct and indirect costs:

• Salaries: Generally lower than in Western markets, but vary by role and sector.
• Mandatory Benefits: Social security, health insurance, paid leave, and end-of-service benefits.
• Recruitment Expenses: Job ads, agency fees, and onboarding costs.
• Legal and Administrative Costs: Drafting contracts, work permits, and compliance management.
• Workplace Setup: Office space, equipment, and other operational needs.

For a deeper dive into cost management, see Understanding Total Cost of Employees: Calculation & Management Factors.

Payroll Setup Steps

To set up payroll in Egypt:

1. Register your business or partner with an EOR.
2. Collect employee documents (ID, tax forms, bank details).
3. Enroll employees in social security.
4. Calculate gross salary, deduct income tax and social security.
5. Issue monthly payslips and submit payroll reports to authorities.

Income Tax Rates

• Residents: Progressive tax rates from 0% to 22.5% based on income brackets.
• Non-residents: Flat 20% tax on Egyptian-source income.
• Employers: Must withhold and remit taxes monthly.

Payment Methods

• Direct Deposit: Most common for local employees.
• Bank Transfers: Used for both employees and contractors.
• EOR Payroll: EORs handle all payments, deductions, and filings on your behalf.

For international payroll best practices, see How to Pay International Employees.

Using Global Payroll Services

A global payroll provider or EOR streamlines:

• Multi-country payroll processing
• Compliance with local tax and labor laws
• Benefits administration and reporting
• Currency conversion and cross-border payments

Learn more about EOR payroll advantages in Employer of Record: Complete Guide for Global Employers.

How to Properly Hire and Pay Contractors

• Draft a clear service agreement outlining scope, deliverables, and payment terms.
• Ensure contractors invoice for services rendered.
• Pay via bank transfer or international payment platforms.
• Confirm contractor registration for tax compliance.

For more on contractor management, see Freelancers, Independent Contractors, Consultants: Exploring Opportunities & Challenges.

Compliance Risks

Incorrect Payroll Contributions

Failing to withhold or remit correct social security and tax contributions can result in:

• Fines and penalties
• Back payments and interest
• Audits by Egyptian authorities

Permanent Establishment Risk

Hiring employees directly without a local entity may create a “permanent establishment,” triggering corporate tax and compliance obligations. Using an EOR helps mitigate this risk.

For more, see Compliance Challenges in Establishing an Entity Overseas: Tips to Overcome.

Statutory Benefits

Employers must provide:

• Social security coverage
• Paid annual, sick, and maternity/paternity leave
• End-of-service benefits

Non-compliance exposes you to legal claims and financial liabilities.

Misclassification Risks

Improperly classifying employees as contractors can lead to:

• Retroactive benefit and tax obligations
• Legal action and reputational harm

Provincial/Regional Law Variances

Egypt’s labor laws are largely national, but some sectors or free zones may have additional requirements. Always verify local rules for your industry.

Intellectual Property Rights

Key IP rights for employers include:

• Copyright: Protects original works created by employees.
• Patents: Inventions developed during employment may belong to the employer if stipulated in the contract.
• Trade Secrets: NDAs and confidentiality clauses safeguard proprietary information.

For a global perspective, see Managing Intellectual Property (IP) Through EOR: Key Considerations for Businesses.

Onboarding Process

Before Their First Day

• Prepare employment contracts and offer letters.
• Collect ID, tax forms, and bank details.
• Register for social security and, if needed, work permits.
• Send welcome materials and company policies.

On Day 1

• Conduct orientation on company culture, policies, and safety.
• Provide equipment and system access.
• Introduce team members and assign a mentor or buddy.

During Their First 90 Days

• Deliver job-specific training and performance expectations.
• Schedule regular check-ins and feedback sessions.
• Monitor integration and address any challenges early.

For onboarding best practices, see Top Eight Best Practices for Onboarding International Employees: How EOR Can Help.

Offer Letter Essentials

• Job title and description
• Compensation and benefits
• Working hours and location
• Start date and probation period
• Termination and notice clauses

NDAs and Confidentiality

• Require employees to sign NDAs to protect company data and IP.
• Clearly outline confidentiality obligations in contracts.

Running Background Checks

• Obtain candidate consent before conducting checks.
• Verify education, employment history, and references.
• Comply with Egyptian data protection regulations.

Remote Employee Management

Managing remote teams in Egypt requires clear processes and secure systems:

• Computer and App Access: Provide secure laptops and use VPNs for data protection. Set up user accounts with appropriate permissions.
• IP Protection: Use NDAs, IP assignment clauses, and regular security training. Monitor for unauthorized data sharing.
• Best Practices:
  • Set clear expectations and KPIs.
  • Schedule regular video check-ins.
  • Offer local support for IT and HR issues.

For more on global remote management, read How to Manage Employees Remotely and Globally.

Labor Law Compliance

Working Condition Requirements

• Hours: Standard workweek is 48 hours (typically six days).
• Leave: Annual, sick, maternity, and paternity leave are mandatory.
• Contracts: Written contracts are strongly recommended for all employees.

Working Conditions by Employment Type

• Full-Time: Entitled to full statutory benefits and protections.
• Part-Time/Remote/Flexible: Covered by labor law if classified as employees.

No At-Will Employment

Egypt does not recognize at-will employment. Termination must follow legal procedures and valid grounds.

Trade Unions and Collective Bargaining

Employees have the right to join unions and engage in collective bargaining. Employers must respect these rights and negotiate in good faith.

Termination Guidelines

Acceptable Termination Reasons

• Mutual Agreement: Both parties consent to end the contract.
• End of Contract: Expiry of a fixed-term contract.
• Misconduct or Poor Performance: With documented evidence and due process.
• Redundancy/Economic Reasons: Must follow legal procedures.
• Force Majeure: Circumstances beyond control.

Egyptian law requires valid reasons and documentation for all terminations.

Notice Periods and Legal Protections

• Notice Period: Usually 1-3 months, depending on contract and tenure.
• Severance Pay: Required for terminations without cause.
• Due Process: Disciplinary procedures and employee response opportunities are mandatory.
• Documentation: Written notice and record-keeping are essential.

For more, see Suggested Script for Terminating an Employee Professionally & Respectfully.

Start building your Egypt team with confidence. Discover Tarmack’s global hiring solutions today.

Benefits of Hiring in Egypt

• Skilled Talent Pool: Large, diverse workforce with strong technical and language skills.
• Cost Efficiency: Lower salaries and operational costs compared to Western markets.
• Time Zone Alignment: Overlaps with Europe, Middle East, and parts of Asia for real-time collaboration.
• Strategic Location: Gateway to Africa, Middle East, and Europe.
• Government Incentives: Tax breaks and supportive policies for foreign investment.
• Growing Tech Sector: Dynamic startup ecosystem and digital talent.
• Strong Educational Infrastructure: Steady supply of qualified graduates.
• Cultural Compatibility: High adaptability and strong work ethic.

Hire Top Talent and Streamline Compliance with Tarmack

Hiring in Egypt offers US companies a unique opportunity to tap into a vibrant, skilled, and cost-effective talent market. With the right approach—choosing between EOR or local entity, ensuring compliance, and leveraging Egypt’s strategic advantages—you can build a successful team that drives your global growth. 

Understanding local labor laws, benefits, and onboarding processes is essential for a smooth expansion and long-term success.

Ready to hire in Egypt? Talk to Tarmack about fast, compliant hiring and payroll solutions.