Egypt saw more than its share of political and social turmoil after former president, Hosni Mubarak, was forced out of office. After many unstable years, Egypt has stabilized under current President Abdel Fattah el-Sisi, and the country’s economy has leveled out.
Like many developing countries, Egyptian lawmakers are working to liberalize the economy to encourage investment and growth. While growth hasn’t been as rapid as expected, Egypt shows just above 4% growth in GDP for the last two years.
Economic reforms and consistent growth make Egypt a likely target for expansion. For businesses thinking of expanding into Egypt—or any new country—it can be a predicament to hire contractors versus regular employees. When hiring contractors in Egypt, here are some things you need to know.
Hiring Contractors in Egypt
An independent contractor comes without all the standard employment benefits that most countries protect through labor statutes. Egyptian law guarantees these benefits to employees:
- Minimum wage
- Income taxes withholdings from employee salaries
- Social insurance contributions and withholding employee’s contribution
- Overtime pay of an additional 35% for daytime hours or an additional 70% for nighttime hours
- At least 21 days of annual leave
- Paid maternity leave
- Severance pay of two months’ salary for each year of service plus accrued leave
- 14 paid public holidays
- Dismissal protections
Using a contractor can simplify finding workers and make them more affordable. This route can also make entering and testing Egyptian markets easier. Since they have fewer restrictions, it can be easier for a company to establish and end contractor relationships—without legal challenges.
Risks of Contractors in Egypt
Hiring contractors, however, doesn’t come without risk. Countries around the world are cracking down on employers who misclassify their workers as contractors, but they are functioning as employees. Misclassifying workers means you can be liable for all employee benefits during their term of service—plus additional penalties. It also means spending time and money on legal battles and lawyers rather than focusing on growing your business.
There is no specific contract language that can guarantee a contractor is truly a contractor. The substance of the work relationship means more than just language on paper. Be sure to assess your relationship with the contractor to classify them properly and avoid costly mistakes.
Ask these questions about your working relationship to ensure accurate classification:
- Do you have control over day-to-day operations of the worker such as process, discipline, or work rules?
- Do you set the worker’s schedule and work hours?
- Do you provide an office, supplies, and support staff?
- Do you give paid vacation, sick leave, or benefits?
- Do you have non-compete clauses in the contract or keep the worker from getting other clients?
- Do you bear the risk of profit or loss for the worker?
If you answer “no,” to all these questions, your worker is probably a contractor. This relationship, however, gives away a lot of control over how your worker functions in the country. Hiring a contractor gives the worker control over how he or she does the job, and that can affect how the local market views your brand and your company.
Easily Expand into Egypt with an Employer of Record
For some businesses, contractors carry too much risk for the financial rewards. One way to expand into Egypt without using contractors is to create your own entity in-country. However, this can be a lengthy and expensive process, slowing down your entry into the Egyptian market.
An Employer of Record solution (also known as International PEO) provides flexibility to hire anywhere in the world—without the legal risks. Working with a trusted global expansion partner ensures that your employees are compliant with country-specific labor laws, payroll follows the right procedures, and your employees receive the benefits specific to Egypt’s law requirements. Get in touch with us to learn about the benefits of an Employer of Record and how it can simplify the hiring process.