HR and payroll compliance in Egypt: the 2026 guide

Egypt's HR compliance landscape changed fundamentally on 1 September 2025, when Labor Law No. 14 of 2025 replaced the previous code that had governed employment since 2003. Running compliant HR here in 2026 means getting five things right: applying the new severance and termination rules, calculating NOSI social insurance correctly, withholding progressive income tax and the mandatory Martyrs' Fund deduction, staying under the 10% foreign-worker quota, and paying salaries through the bank-transfer channel the law requires once you cross a size threshold. Unlike the UAE, Egypt has no blanket end-of-service gratuity — its safety net runs primarily through the pension system, which trips up employers who assume the two markets work the same way.

What changed with Labor Law No. 14/2025?

The new code, in force since 1 September 2025, is a full replacement of Labor Law No. 12/2003 — not an amendment. Two structural changes matter most for HR operations: the law formally recognizes electronic employment contracts and digital personnel files (Articles 92 and 99) for the first time, which removes the legal ambiguity that used to sit around paperless HR systems in Egypt, and it moves disciplinary dismissal exclusively into the labor courts — a company can no longer terminate for misconduct unilaterally; a specialized labor court (operating since 1 October 2025) has to rule on it, a process that typically runs around three months from the first hearing. The full severance and termination matrix — what's owed depending on who initiates termination and under what contract type — is broken down in End-of-Service Pay in Egypt; what the new law changed for leave and working hours is in Egypt's New Labor Law (2025), and what it means for digital files in Is Egypt Ready for Paperless HR?.

How is NOSI social insurance calculated?

Egypt's social insurance runs under Law No. 148 of 2019, administered by the National Organization for Social Insurance (NOSI). The combined contribution rate is 29.75% of insured salary — 11% from the employee, 18.75% from the employer — with a separate flat rate of 21% on a maximum base for company directors and board members listed in the commercial registry.

The insured salary base is bounded, and the bounds move every year: for 2026, the range is EGP 2,700–16,700/month (up from EGP 2,300–14,500 in 2025). This isn't arbitrary — a Prime Ministerial Resolution (No. 2473/2021) mandates a 15% increase every 1 January, running for seven years starting from 2021, which means the next scheduled increase lands on 1 January 2027. A payroll system that hardcodes this year's base instead of treating it as a versioned, date-effective rule will silently miscalculate contributions the moment the calendar turns. Note that the insured-salary minimum (EGP 2,700) is a different number from Egypt's general minimum wage (EGP 7,000/month) — the two aren't interchangeable, and conflating them is a common source of payroll error.

A worked example of what the 2026 caps do to a real paycheck — and how foreign staff are treated — is in Egypt Social Insurance in 2026.

What is the Martyrs' Fund deduction, and does it apply to your company?

Every private-sector employer covered by Egypt's labor law must deduct 0.05% (5 out of every 10,000 EGP) of eligible salary as a mandatory monthly contribution to the Martyrs and Victims Fund — a solidarity fund honoring victims of combat and terrorist operations, established under Law No. 4 of 2021 (amending Law No. 16/2018). The employer withholds and remits it; the deduction applies across both public and private sectors, with an exemption only for irregular, daily-wage, or seasonal workers.

The calculation base is basic salary plus all taxable allowances; unpaid absence at hiring or termination reduces the base, while unpaid leave doesn't. On a EGP 10,500 base (10,000 basic + 500 taxable allowance), the deduction works out to EGP 5.25 — small per employee, but a mandatory line item that has to appear on every payslip, every month, for every eligible employee. It's worth noting Law No. 4/2021 also introduced a separate EGP 5/document stamp duty for government transactions — a different obligation entirely, and easy to confuse with the payroll deduction if you're reading the law for the first time.

How does progressive income tax work in 2026?

Egypt applies a progressive annual scale to salary income (figures in EGP): 0% up to 40,000 · 10% from 40,001–55,000 · 15% from 55,001–70,000 · 20% from 70,001–200,000 · 22.5% from 200,001–400,000 · 25% from 400,001–1,200,000 · 27.5% above 1,200,000. A personal exemption of EGP 20,000/year applies to both residents and non-residents (raised from EGP 15,000 under Law No. 7/2024, effective 21 February 2024) — separate from the zero-rate bracket, meaning the first EGP 20,000 is exempt before the bracket calculation even begins. Higher earners face a phase-out of the lower brackets, so the effective rate curve isn't a simple bracket lookup at the top end.

The brackets, the exemption and the Martyrs' Fund levy are worked through line by line in Egyptian Payroll Tax Without a Spreadsheet.

What's the foreign-worker quota, and what happens if you exceed it?

Under Article 28 of Labor Law 14/2025, implemented through Ministerial Decree No. 279 of 2025, foreign employees may make up no more than 10% of total headcount — commonly summarized as "9 Egyptians for every 1 foreign hire." The quota is counted at the company level, based on nationality and headcount, not payroll value — a widely repeated claim that foreign payroll is separately capped at 20% of total wage cost doesn't hold up against the text of the implementing decree, which specifies only the 10%-by-headcount rule. Free zones (under Investment Law No. 72/2017), small establishments like shops and restaurants, and other specific cases can secure exceptions through a dedicated exceptions committee, but there's no blanket "25% for skilled roles" carve-out in the text, despite that figure circulating informally.

Does Egypt require bank-transfer salary payments?

Egypt has no WPS-equivalent for all companies, but Law No. 18 of 2019 creates a mandatory bank-transfer requirement for a specific segment: companies with more than 25 employees, or a monthly payroll exceeding EGP 100,000, must pay salaries through bank transfer rather than cash. Non-compliance carries a fine of 2–10% of the value of cash payments made — a penalty structure tied directly to the amount paid incorrectly, not a fixed fee, so exposure scales with company size and payroll value in a way that punishes larger non-compliant companies proportionally harder.

A quick compliance checklist

1. Termination: confirm your HR team understands that disciplinary dismissal now requires a labor court ruling — it can't be executed unilaterally under Labor Law 14/2025.
2. NOSI: verify your insured-salary base matches the current year's range (EGP 2,700–16,700 for 2026) and that your system is set up to update it on the next scheduled increase (1 January 2027).
3. Martyrs' Fund: confirm the 0.05% deduction appears on every eligible payslip, calculated on basic salary plus taxable allowances.
4. Foreign-worker quota: if you employ non-Egyptian staff, confirm your headcount ratio stays under 10%, and check whether your company qualifies for a free-zone or exceptions-committee carve-out.
5. Bank-transfer mandate: if you have more than 25 employees or a monthly payroll above EGP 100,000, confirm salaries are paid by bank transfer, not cash.

Operating in the UAE as well? See HR & Payroll Compliance in the UAE — Complete 2026 Guide and Running HR Across UAE + Egypt.