As more Chinese and multinational companies enter the Egyptian market, understanding local employment costs has become a critical task for HR and finance teams. Egypt's social insurance system, in particular, requires contributions from both employers and employees, and not knowing the details can easily lead to payroll miscalculations.

In this article, we’ll break things down as clearly as possible to help you understand:

1. Egypt’s social insurance contribution rates
2. How to calculate the real employment cost for a company
3. How to estimate an employee’s take-home pay

Social Insurance Rates in Egypt

According to Egyptian social insurance law, contributions are shared between employers and employees. The system mainly covers the following:

1. Pension Insurance (Employer): 18%
2. Unemployment Insurance (Employer): 3%
3. Work Injury Insurance (Employer): 3%
4. Pension Insurance (Employee): 11%

In total:

1. Employers pay 24%
2. Employees pay 11%

Salary & Social Insurance Example (Assuming a Gross Salary of EGP 10,000)

Let’s say you hire a local employee in Egypt with an agreed gross monthly salary of EGP 10,000. Here’s how the costs and actual take-home pay break down:

Employer Contributions:

1. Pension: 18% × 10,000 = 1,800 EGP
2. Work Injury: 3% × 10,000 = 300 EGP
3. Unemployment: 3% × 10,000 = 300 EGP
4. Total employer contribution: 2,400 EGP

Total employer cost = Salary + Employer contributions = 10,000 + 2,400 = 12,400 EGP

Employee Contributions:

1. Personal pension contribution: 11% × 10,000 = 1,100 EGP
2. Take-home salary = Gross salary − Employee contribution = 10,000 − 1,100 = 8,900 EGP

Summary:

1. Gross salary: EGP 10,000
2. Employer’s social insurance contribution: EGP 2,400
3. Total employer cost: EGP 12,400
4. Employee’s social insurance deduction: EGP 1,100
5. Employee’s take-home salary: EGP 8,900

Special Notes:

1. These calculations are based on standard salaries. If the employee's salary exceeds the cap for social insurance, adjustments should be made according to the latest regulations. For specific calculations, feel free to contact Remoly's customer support.
2. Foreign employees are currently not required to contribute to Egypt’s social insurance system. However, some Chinese companies choose to contribute voluntarily as a way to enhance employee benefits.
3. If bonuses, allowances, or subsidies are involved, it’s important to clarify which components are included in the social insurance base to avoid potential tax disputes.

???? Remoly supports companies operating in Egypt and the MENA region with:

1. Local payroll compliance design
2. Bilingual (Arabic + English) employment contract templates
3. Guidance on social insurance compliance and reporting
4. Custom employment cost simulation reports for local hires

???? Visit us at: www.remoly.net