End-of-service pay in Egypt depends on why it ended

Ask a manager in Cairo what an employee is owed when they leave, and you'll often hear a Gulf answer: so many days of basic pay per year, the classic gratuity. It's a clean formula. It's also the wrong country. Egypt doesn't settle exits with a single length-of-service gratuity the way the UAE or Saudi do. Under Labor Law No. 14 of 2025, what you owe is decided first by how the relationship ended, and only then by how long it lasted. Get the trigger wrong and every downstream number is wrong — which is exactly why this is the calculation people dread.

The number is set by the trigger, not the tenure alone

There isn't one payout. There are a few, and picking the right one is half the job:

• Indefinite contract ended without a legitimate reason — compensation is at least two months' total wage for each year of service (Article 165) — on top of the three months' notice the contract requires.
• Fixed-term contract ended early by the employer — one month's pay for each year (or part) of service. A fixed-term contract that simply runs to its end date owes nothing extra — but if work carries on past that date without a new written agreement, the contract turns indefinite (Article 88), and the indefinite-contract rules apply from then on.
• Dismissal for misconduct — you can't simply declare it anymore. A disciplinary dismissal now needs a judicial ruling; deciding it yourself and skipping the court is how a "for cause" firing turns into an unlawful one, with the two-months-a-year bill attached.

Same employee, same salary, same six years — the amount owed swings widely depending on which of these actually happened. That's the part a flat "gratuity" mindset misses entirely.

What "one month" is a month of

Two variables sit under every formula, and both are easy to get wrong.

The first is the wage base. The compensation runs on total wage — the last full salary including the fixed components that count, not a stripped-down basic figure. Use the wrong base and a correct multiplier still produces a wrong number.

The second is service length, counted properly — including partial years, since the fixed-term rule says "or part thereof." An employee who served six years and four months isn't a clean six. Start the clock on the wrong hire date, or round the tail off, and the error rides through the whole calculation.

Put it together with a worked case: an indefinite-contract employee on a total wage of EGP 20,000, six years in, let go without a legitimate reason. Two months per year × six years = twelve months = EGP 240,000 — plus the three-month notice she was owed (or EGP 60,000 in lieu of it). Someone with only a year behind them is still owed at least two months — plus the same three months' notice.

The other exits: redundancy, retirement and resignation

Unlawful dismissal and early termination of a fixed-term contract aren't the only routes out. Law No. 14 of 2025 prices the rest separately — same employee, same wage, very different numbers:

• Economic redundancy or closure (Article 241) — one month per year for the first five years, one and a half months per year after that, and only after the formal committee process the law requires (its ruling is due within 45 days, Article 237). For our EGP 20,000, six-year employee: 5 × 1 + 1 × 1.5 = 6.5 months = EGP 130,000 — roughly half the unlawful-dismissal figure.
• Retirement or work past 60 (Article 172) — half a month per year for the first five years, one month per year after that, and only where the employee isn't already covered by a pension or insurance scheme. Six years: 2.5 + 1 = 3.5 months = EGP 70,000.
• Ordinary resignation (Article 167) — no compensation from the employer. The employee owes three months' notice on an indefinite contract, which the employer may choose to waive.
• Resignation the employer caused (Article 168) — if the employee leaves because the employer failed its fundamental obligations, or because of violence against the employee or their family, the law treats it as an unlawful dismissal: the Article 165 rate of at least two months per year applies.
• Deemed resignation (Article 166) — more than 20 non-consecutive days of unexcused absence in a year, or more than 10 consecutive days, counts as a resignation — but only after written warnings at the 10-day and 5-day marks. No warnings on file, no deemed resignation.
• Death or incapacity (Articles 169–170) — on death in service the family receives two months' wages for funeral costs (at least EGP 1,000) plus a grant equal to the wages for the month of death and the two months after it. Total incapacity ends the contract; for partial incapacity, the employer must move the employee to suitable work if they ask in writing.

Notice has its own mechanics across all of these: sick leave taken during notice pauses the countdown (Article 159), an employee under notice from the employer gets one paid day or eight paid hours a week to look for work (Article 162), and releasing someone from work during notice doesn't release you from paying for it (Article 163).

The pension is the other half of "end of service"

Here's why the Gulf model doesn't fit: in Egypt, a worker's long-term security on leaving isn't a lump-sum gratuity — it's the social insurance pension under Law No. 148 of 2019, funded by the monthly contributions we walked through in the social insurance guide. The labour-law compensation above sits on top of that, for the specific event of a termination. Two different systems, two different triggers. Treating either as a substitute for the other is how employers either underpay on exit or assume the pension "covers it" when it doesn't.

Where the manual calculation breaks

None of the individual numbers are hard. The mistakes come from the seams:

• Wrong trigger — booking a "for cause" dismissal that a court would call unlawful, and owing two months a year you thought you'd avoided.
• Wrong start date — a service clock that began at the wrong hire date, or ignored a renewal history, quietly mis-sizing every year.
• Wrong base — running the multiplier on basic instead of total wage.
• Notice mistaken for compensation — treating the three months' notice as if it were the payout, and shorting the two-months-a-year compensation that sits on top of it.
• The notice trap — three months' notice on an indefinite contract regardless of tenure; skip it and you owe pay for the unserved period on top of everything else.

Each one is a spreadsheet cell a tired person edits at the worst possible moment — the day someone is leaving.

Make it a calculation the system owns

Exits are stressful enough without recomputing the labour law by hand. With HRMira the service clock runs from each employee's real start date, the right multiplier attaches to the actual termination reason, the notice rules apply themselves, and the total wage base is the one already in payroll. The number that comes out is the number the law asks for — produced on the day you need it, not reconstructed under pressure. Set the rules once. Let the calculation be the calm part of a hard day.