Egypt

The Egypt Payroll localization package enables payroll processing that fully complies with Egyptian labor laws. It calculates progressive income tax, employee- and employer-paid social security, and core salary components, including housing and transportation allowances.

Configuration

Install the following modules to get all the features of the Egypt Payroll localization:

Name	Technical name	Description
Egypt - Payroll	l10n_eg_hr_payroll	Payroll module includes all salary rules, leave logic, and compensation rules compliant with Egyptian Labor Law.
Egypt - Payroll with Accounting	l10n_eg_hr_payroll_account	Adds account mappings related to payroll calculations.

See also

Egypt fiscal localization documentation

Egyptian employee contracts

Once an employee has been created in the database, a contract must be created.

To check if the user already has a contract, navigate to the Employees app, then click on the employee’s Kanban card. The Contracts smart button displays a red zero when no contract exists. Otherwise, it displays In contract since (contract start date) in green.

Note

Contracts can also be found by navigating to Employees app ‣ Employees ‣ Contracts. All contracts appear in a list view, grouped by status.

Populate the following contractual information in the Salary Information tab of the contract:

• Social Insurance Reference Amount: Used as the base amount for calculating the social insurance employee and employer portions.

• Number of Leave Days: Used for calculating the provision amount for the annual leave for the employee.

• Provision Number of Days: Corresponds with the number of days used in the calculation of the provision value of the end of service for the employee.

• Total Number of Days: Refers to the number of days used to calculate the end-of-service benefit paid to the employee when their employment with the company ends.

Social insurance

Social insurance rules calculate the contribution amounts that are to be paid by the employer and employee to the NOSI. This is only available for Egyptian employees.

The employer contributes 18.75% of the social insurance reference amount for the employee. On the other hand, the employee contributes 11% of their insurance reference amount, and that amount gets deducted from the payslip amount.

Important

The social insurance reference amount is set per employee in their contracts.

Leaves

The following leave types are available to employees working in Egypt: Annual leave, Sick leave, Unpaid leave, and Other leave types.

Annual leave

Employees are eligible for 21 days of annual leave, and if the employee requires more days, they have to be requested from HR managers accordingly.

Important

Since the annual leave is fully paid, it is not connected to a salary rule, but it will appear on the worked days on the payslip form and on the PDF printout.

Sick leave

Three cases exist for sick leaves in terms of the amount to be deducted from the employee:

• Fully paid: first 30 calendar days each year (affects only working entries; no payroll deduction).

  Payroll computation =(Daily Wage)

• 75% paid: next 60 days; payroll rule deducts 25% of an employee’s salary.

  Payroll computation =(Daily Wage * 0.25)

• 0% paid: after 90 days; payroll rule deducts 100% of an employee’s salary.

  Payroll computation =(Daily Wage * 0.00)

Unpaid leave

Deductions are applied on the employee’s salary based on the number of unpaid leave days taken, and it is calculated by dividing the monthly salary for the employee by 30 to get the daily salary and then multiplying it by the number of unpaid leave days taken.

Other leave types

These are leave types considered fully paid and do not affect the end payslip, but are tracked in the working entries:

• Maternity leave

• Hajj leave

• Death leave

Income tax

In Egypt, employees are subject to a progressive income tax system, where tax rates increase with higher annual income brackets.

Tax brackets

Depending on the annual income of the employee, the following rates apply:

Taxable Amount	<600k	600k - 699k	700k - 799k	800k - 899k	900k - 1.2M	>1.2M
0%	1-40k
10%	More than 40k to 55k	1 - 55k
15%	More than 55k to 70k	More than 55k to 70k	1 - 70k
20%	More than 70k to 200k	More than 70k to 200k	More than 70k to 200k	1 - 200k
22.5%	More than 200k to 400k	More than 200k to 400k	More than 200k to 400k	More than 200k to 400k	1 - 400k
25%	More than 400k	More than 400k	More than 400k	More than 400k	More than 400k	1 - 1.2M
27.5%						More than 1.2M

Exemptions

Employees are eligible to an EGP 20,000 personal exception on their gross income.

Overtime

Depending on the time of day and the time at which the overtime is recorded in, the additional amount to be paid to the employee can be as follows:

• During daytime hours on working days, the amount is 1.35x times the employee’s hourly wage.

• During nighttime hours on working days, the amount is 1.70x times the employee’s hourly wage.

• On rest days and public holidays: The amount is 2.0x times the employee’s hourly wage.

Note

Overtime hours are registered as other inputs directly on payslips.

Provisions

Provisions are the amounts computed by the employer to account for the payments made to the employee for EOS benefits or annual leave. And it is computed on a monthly basis.

End of service benefit provision

It is computed by dividing the end of service Provision Number of Days by 12 and multiplying the result by the daily salary for the employee.

\[\text{Payroll computation} = \frac{\text{Provision Number of Days}}{12} \times \frac{\text{Wage} + \text{Allowances}}{30}\]

Annual leave provision

It is computed by dividing the number of leave days by 12 and multiplying the result by the daily salary for the employee.

\[\text{Payroll computation} = \frac{\text{Number of Leave Days}}{12} \times \frac{\text{Wage} + \text{Allowances}}{30}\]

End of service

At the end of the service slip that is generated for the employee, there are the following points that are unique only to the payslip:

Unused leaves compensation

The number of available annual leaves is shown on the employee’s record. It is based on the annual leave type defined in the Payroll settings. It is calculated as the total remaining allocations for that specific leave type assigned to the employee.

That number is then multiplied by the daily rate for the employee and added as an allowance on their payslip.

End of service benefit

It is calculated by multiplying the daily wage of the employee by the number of days for the end of service that is set in the employee’s contract.

\[\text{Payroll computation} = \frac{\text{Wage + Allowances}}{30} \times \text{End of Service Number of Days}\]

Out of contract

Out-of-contract days are the days that fall within the payslip period but are not included in the employee’s contract period. The corresponding amount is added as a deduction on the payslip and is calculated by multiplying the number of out-of-contract days by the employee’s daily wage.

\[\text{Payroll computation} = \frac{\text Wage + Allowances}{\text{Days in the Month}} \times \text{Out of Contract Days}\]