Legal and compliance checklist for Employer of Record (EOR) services in Egypt
- Gegidze • გეგიძე | Marketing
- Jun 14
- 11 min read
Table of contents:
Introduction
A German company tries to hire its first engineer in Egypt.
They find the perfect candidate, fluent in Python and Arabic, ready to start next week.
But the paperwork?
It reads like a bad translation of Kafka.
Labor office filings, mandatory Arabic contracts, obscure social insurance rules, income tax brackets that shift like desert sand, and let’s not even start on what happens if you “accidentally” pay your employee as a freelancer.
Here’s the thing:
Hiring in Egypt isn’t hard because talent is hard to find.
It’s hard because compliance isn’t forgiving.
That’s where EOR comes in.
If you’re trying to scale in the MENA region without getting tangled in red tape, an Employer of Record (EOR) isn’t just helpful, it’s your legal lifeline.
In this guide, we’ll walk you through the real compliance checklist for using an EOR in Egypt.
No fluff. No vague “strategic benefits.” Just the facts you need to hire safely, legally, and without surprises.
Because in Egypt, surprises usually come with fines.
And in business, that’s a terrible plot twist.
Why legal compliance matters when hiring in Egypt
You don’t want to find out you’ve broken the law because of a lunch receipt.
But in Egypt, sometimes that’s all it takes.
Hiring in Egypt sounds simple on paper, until the paper turns into a government document written in Arabic legalese, triple-stamped, and filed in triplicate with the Ministry of Labor. And if it isn’t?
Well, you might have just hired a full-time engineer and called them a “contractor,” which in Egypt could land you with retroactive taxes, lawsuits, or even restrictions on your future operations.
Here’s what’s actually at stake:
Labor inspections are real — and not rare. The Egyptian authorities do check contracts, payroll records, and tax payments. Especially if you’re foreign.
Misclassification fines are painful — hire someone as a freelancer, control their hours and tasks like an employee? Congrats, you just broke the law.
Invalid contracts mean zero protection — if you don’t issue a compliant Arabic contract with all required clauses, you don’t just lose legal protection… You might owe back pay and severance.
It gets messier:
You're responsible for registering with Egypt’s Social Insurance Organization. You have to deduct personal income taxes and remit employer contributions (~18.75%). You need local HR procedures that match Egyptian working hour rules, leave entitlements, and termination laws. And that’s just Monday.
This is why EORs aren’t just a “nice-to-have.”
They’re your get-out-of-jail card.
A good Employer of Record (EOR) becomes your legal shield—employing staff on your behalf, managing compliant contracts, handling taxes in EGP, and ensuring nobody forgets to enroll in social security.
It’s the difference between launching fast or accidentally ghosting the Ministry of Labor.
Core employer obligations under Egyptian labor law
Hiring someone in Egypt? Congrats. Now get ready to sign your name on a long list of responsibilities, because being a legal employer here means more than sending out a contract and hoping for the best.
Let’s break it down.
1. Employment contracts must be in Arabic
This isn’t optional.
Every employment contract must be written in Arabic, even if you and your employee speak perfect English. It must include the job title, work location, salary, working hours, and whether the role is for a fixed or indefinite term. Oh, and it needs to be issued in triplicate:
One copy for the employee
One for you (the employer)
One filed with the Egyptian Ministry of Labor
2. Probation periods are capped
You don’t get to “try before you buy” forever.
Egyptian law allows a maximum probation period of three months, and only once per employee. If you terminate during probation, you still need to do it in writing.
3. Payroll must be compliant, and in EGP
You can’t pay in USD or EUR. Employees in Egypt must be paid in Egyptian Pounds, processed through local payroll systems. Employers must deduct:
Income tax (based on progressive brackets)
Social insurance contributions And yes, that includes employer contributions too—around 18.75% of the employee’s gross salary.
4. Social Insurance registration is mandatory
No, you can’t “skip it for now.”
The Social Insurance Organization (SIO) requires immediate registration of employees. Employers are legally required to file contributions monthly and provide proof of compliance.
5. Leave entitlements are protected by law
The minimum annual leave is 21 working days, rising to 30 after 10 years of service or if the employee is over 50 and has 5+ years of tenure.
There are also paid public holidays, sick leave, and maternity leave provisions you must respect.
6. Terminations aren’t casual
You can’t fire someone by email and call it a day.
Dismissals require written notice, proper cause, and severance in many cases. If the case reaches labor courts (which it often does), poorly handled exits get expensive fast.
What EORs in Egypt are legally responsible for
If you think an EOR is just a glorified payroll processor, let’s reset that expectation—fast. In Egypt, an Employer of Record doesn’t just assist with compliance. It becomes legally accountable for it.
That means every mistake, every missing form, miscalculated tax, or poorly written contract lands squarely on their desk, not yours. Or at least it should.
Here’s what a real EOR provider in Egypt is on the hook for:
1. Drafting fully compliant employment contracts
This is where it starts, and where many trip up.
An EOR must draft contracts in Arabic, not just out of courtesy but because it’s the only version that holds up in court.
And it’s not just about language, each contract must clearly spell out:
Job title and duties
Work location
Salary (in Egyptian Pounds)
Working hours and probation period
Termination clauses and notice periods. Oh, and three copies: one for the employee, one for the employer (your EOR), and one filed with the Ministry of Labor.
2. Tax and social security registration
The EOR becomes the legal employer. That means it handles:
Registering employees with the Egyptian Tax Authority
Enrolling them in the Social Insurance Fund
Submitting Form One (for social insurance) and Form 111 (proof of medical exam)
Withholding and remitting income taxes
Paying employer contributions to social security, pensions, and health insurance. This is non-negotiable. If your EOR doesn’t file properly, you’re not technically employing anyone.
3. Payroll processing, no delays, no excuses
You can’t afford late payments or incorrect deductions.
Your EOR must:
Pay employees on time and in full, in EGP
Handle progressive income tax brackets correctly
Stay aligned with evolving minimum wage laws or contribution thresholds
Provide payslips and monthly reporting
4. Managing hours, leave, and benefits
An EOR enforces Egypt’s legal work schedule:
Max 8 hours per day, 48 hours per week
At least one full day off weekly
21 paid annual leave days, minimum
Leave adjustments based on seniority or age
They also ensure maternity leave, sick leave, and public holidays are honored correctly, with no corner-cutting.
5. Offboarding and terminations
This is where things often go sideways.
An EOR must:
Follow proper probation periods (30–90 days max)
Respect notice periods
Pay severance where applicable
Execute disciplinary actions according to labor law
Avoid wrongful dismissal claims (yes, labor courts are real—and slow)
6. Ongoing labor law compliance
Labor Law No. 12 of 2003 is no joke.
A good EOR is:
Up-to-date on amendments
Filing annual labor reports
Providing mandatory benefits
Protecting IP and employee data under Egyptian privacy laws
Interfacing with ministries and state agencies on your behalf
So, when you choose an EOR in Egypt, you’re choosing your legal bodyguard. Pick the wrong one, and you’re back on the hook—this time with fines, audits, and sleepless nights.
Immigration & work permits via EOR
Let’s say you’ve found the perfect hire in Egypt, but they’re not Egyptian. Maybe they’re a Palestinian backend developer, a Sudanese QA lead, or a French marketing manager already living in Cairo.
Now you’ve got a different problem: immigration.
Hiring non-citizens in Egypt requires proper work authorization. There’s no workaround, no “they’ll be fine,” and certainly no “freelancer with a local SIM card” trick.
If your company, or your EOR, gets caught employing someone without valid permits, the fine isn’t your only concern. Your employee could get deported. You could lose the ability to sponsor future hires. And forget government contracts or clean audit trails.
So, when are work permits required?
Any non-Egyptian national needs a work permit unless they qualify for rare exemptions (diplomatic staff, select NGO workers, etc.). This includes:
Long-term residents
Spouses of Egyptian citizens
Foreigners working remotely from Egypt
Yes, even if they’re not touching the Egyptian market, they still need a permit if they’re on the ground.
What does a compliant EOR handle?
A real Employer of Record doesn’t leave you to figure this out.
Here’s what they’re supposed to do:
Act as the sponsor for the employee’s work permit
Coordinate with the Ministry of Manpower to submit applications
Handle the back-and-forth on approvals, corrections, and renewals
Liaise with Egyptian embassies abroad, if the hire isn’t already in-country
Provide official employer documentation, including:
Valid commercial registration
Tax card
Proof of compliance with national quotas (typically, 90% of staff must be Egyptian)
What’s required from the employee?
The foreign hire will need to provide:
A valid passport
Authenticated academic/professional certificates
Clean criminal record
Medical clearance
Copy of their employment contract in Arabic
And yes, all documents must be certified and translated—no half-baked PDFs from LinkedIn.
A solid EOR walks you and your employee through every step. A bad one? They’ll tell you, “It’s probably fine.” Until it isn’t.
Employee rights and protections under EOR
Hiring through an Employer of Record in Egypt doesn’t mean you bypass labor law; it means your EOR is legally required to enforce it. And if they don’t, you’re still at risk. Misclassification, unpaid benefits, or a shady “freelancer workaround” won’t just spark one lawsuit; they can shut down your hiring altogether.
Let’s break down what employees are entitled to under Egyptian law when hired via a legitimate EOR:
1. Written contracts (in Arabic)
Every employee must have a signed, Arabic-language contract that includes:
Job title and responsibilities
Work location
Salary (in EGP)
Working hours and rest days
Term of employment (definite or indefinite)
Notice period and termination clauses
If your EOR doesn’t provide this, or worse, gives you a dual-language doc where English contradicts Arabic, you’ve got a compliance time bomb.
2. Paid leave and time off
Under Egyptian labor law, EOR employees get:
21 working days of paid annual leave
30 days after 10 years of service or for workers over age 50
Official public holidays, including Eid, Revolution Day, and more
Sick leave, with wage coverage per social insurance rules
Maternity leave: 90 days, with at least 45 post-delivery and employer-paid insurance coverage
A proper EOR tracks leave balances, files government documentation, and ensures your employee is paid on time while out.
3. Social insurance coverage
Employers must enroll employees in Egypt’s Social Insurance Organization (SIO) system.
That includes:
Retirement pensions
Disability coverage
Death benefits
Work injury protection
Health insurance
EORs must register employees, file monthly reports, and pay both employer and employee contributions. If they skip or delay these filings, your employee is legally uncovered, and your brand reputation takes the hit.
4. Termination safeguards
You can’t just “fire and forget” in Egypt. Proper offboarding requires:
Advance notice (based on contract terms and service duration)
Severance, if applicable
Documentation of cause, if termination is performance- or behavior-based
Labor bureau filings
Your EOR is expected to manage this whole process—paperwork, exit interviews, and compliance filings included.
When done right, EOR hiring in Egypt means full employee protection without the bureaucratic mess. When done wrong? You’re liable, your employee is unprotected, and the whole thing falls apart fast.
Common compliance gaps with non-EOR hiring
Remote hiring in Egypt without a registered Employer of Record might feel faster, cheaper, or easier, but it’s often a slow-motion car crash waiting to happen.
Especially if you’re hiring contractors off-the-books, wiring salaries from abroad, or relying on a PEO setup that isn’t actually legal in Egypt.
Let’s break down the most common gaps international companies fall into:
1. No contracts for contractors
Some companies treat “independent contractors” like temp employees, giving orders, setting fixed hours, and calling it freelance. But if there’s no legal contract in Arabic, signed and archived, that’s a violation.
And when the contractor sues (because they always do), a labor court will probably classify them as a full-time employee, and guess who owes back pay, benefits, and taxes?
2. International salary payments (minus the taxes)
You might think you’re helping by paying Egyptian employees in USD via Wise or Payoneer. But if you’re skipping Egyptian income tax withholdings and social insurance, that’s illegal employment.
There’s no “foreign exemption” loophole. Egypt’s tax authority can, and does, trace these transactions, especially if the employee later applies for government services and has no social record.
3. No social insurance registration
Every employee must be registered with Egypt’s Social Insurance Organization (SIO). If they’re not:
They can’t access state healthcare or pension
You risk fines and legal penalties
Your local contractor may report you to authorities out of frustration
And yes, even part-time workers are covered under this rule.
4. PEO confusion
Egypt doesn’t support PEO (Professional Employer Organization) models the way some Western countries do. A co-employment structure only works if you have a local legal entity, and most foreign companies don’t.
Trying to use a PEO as a workaround usually fails legal audits, especially when audited by the Labor Office or the Tax Authority.
How to vet a compliant EOR in Egypt
Here’s the part nobody likes to admit: Not every “EOR provider in Egypt” is actually in Egypt.
Some outsource to third parties. Some operate from abroad with no local legal presence. And some… well, they say they’re compliant but can’t show a single payroll record that matches Egyptian law.
If you're planning to hand over legal liability, taxes, and employee contracts, don’t you want to know who’s actually doing the job?
Here’s how to spot the real players from the resume-padding middlemen:
1. Are they registered with Egyptian authorities?
A legit EOR will be registered with:
The Egyptian Tax Authority
The Social Insurance Organization (SIO)
The Ministry of Manpower
Ask for proof. If they can’t provide registration documents or licenses, that’s a red flag. You don’t want your team tied to a shadow company.
2. Can they prove actual operations in Egypt?
Do they have an office address? Local staff? Can they legally sign contracts in Arabic and represent your company with authorities?
You’re not just hiring an intermediary, you’re trusting them to be your local employer of record. If they’re rerouting work through another partner, you lose control and visibility.
3. Is local legal counsel involved?
Egyptian labor law changes fast. A compliant EOR will work with Egyptian lawyers (not generic legal templates from a shared Dropbox).
They’ll also know how to:
Draft bilingual contracts (Arabic-first, legally binding)
Handle disputes in the labor court
Navigate updates to tax or social security contributions
4. Are payroll filings done locally and monthly?
Payroll in Egypt must be filed monthly, in EGP, and submitted to the proper authorities. If your EOR doesn’t show:
Monthly tax receipts
Social insurance slips
Payroll records in Arabic
…then they’re probably not actually compliant.
Final checklist before hiring via EOR
Hiring in Egypt through an Employer of Record might feel like an easy win. But under the hood, it’s still full of legal wires you don’t want to trip over.
If you’re outsourcing your hiring infrastructure, make sure you’re not also outsourcing risk to your future self.
Here’s what to double-check before anything gets signed:
Are they registered with Egypt’s Labor and Tax authorities?
No registration = no legal hiring. Ask for proof of tax ID and Social Insurance registration, not just a verbal “yes.”
Do they issue Arabic contracts with all required clauses?
Egyptian law demands Arabic contracts in triplicate. Bilingual is fine, but Arabic must be the legal version. Get a sample contract and verify its clauses match labor code expectations.
Are monthly payroll taxes and social contributions filed properly?
This includes withholding income tax, paying employer/employee contributions, and filing all paperwork on time, every month. Ask for sample compliance reports.
Do they handle onboarding, offboarding, and terminations legally?
It’s easy to start a team. Ending a contract without severance or notice compliance? That’s where things go wrong fast.
Do they have a physical presence in Egypt or is everything outsourced?
Many global EORs subcontract local operations. That’s fine, until it’s not. If they’re not on the ground, you might be the one holding the bag.
Is pricing flat or based on a percentage of salary?
The latter might look affordable, until it isn’t. Flat fees give you predictability. Percent pricing scales with headcount and compensation.
Do they support your employees?
You don’t want your team waiting days for a response about health insurance, sick leave, or payroll errors.
Have you verified Arabic contract templates?
Request a real template. Don’t just take their word for it.
Is GDPR/data security covered?
Especially for remote teams handling IP or sensitive data. Confirm encryption standards, access control, and data location.
Are they insured for liability and employment mistakes?
Accidents happen. When they do, make sure your provider, not you, is the one liable.
