Egypt: Operating a Business

Legal Forms of Companies | The Active Population in Figures | Working Conditions | The Cost of Labor | Management of Human Resources

Legal Forms of Companies

Types of Companies and Capital (Max/Min)	Number of Partners/Shareholders and Liability
The Limited Liability company Minimum 50,000 EGP, fully paid up when formed.	Minimum 2 partners Their responsibility is limited to their contribution amount.
Joint Stock Company is a public limited company (Incorporated) 250,000 EGP of which half is fully paid up when formed. 500,000 EGP in case of initial public offering. (1/4 fully paid up)	Minimum 2 partners Their responsibility is limited to the contribution amount.
General Partnership Minimum 5,000 EGP	Unlimited number of partners General partner liability is unlimited
Limited Partnership Minimum 5,000 EGP	One general partner, unlimited number of limited partners Limited partner liability is limited to the extent of his share

Enterprises Federation: Association of Egyptian Businessmen

Business Setup Procedures

Setting Up a Company	Egypt	Middle East & North Africa
Procedures (number)	6.00	8.10
Time (days)	7.00	20.00

Source: Doing Business.

For Further Information: Consult Doing Business Website, to know about procedures to start a Business in Egypt.
General Authority for Investment
The Competent Organization: GAFI has a role in guiding and promoting foreign and Egyptian investments. It helps the investors in their administrative steps. GAFI has created a one-stop shop counter and the formalities for setting up a company are done in this counter. The One-stop Shop counter thus provides useful documents on law no. 8 of 1997 for encouraging investments, guarantees, exemptions, company creation procedure, the different zones with special statutes to the investors. For speeding up the setting up process, GAFI is authorized to grant temporary licenses for starting the project. The ITIDA (Information Technology Industry Development Agency) was established by law no. 15 of 2004. It is attached to the Ministry of Information Technology and Communication. ITIDA guides investors for executing their projects with a single counter which helps them with various relevant administrative authorities. The IDA (Industrial Development Authority) which comes under the Ministry of Commerce and Industry has been given charge since 2006 to develop and facilitate industrial establishments. In connection with the governing bodies the IDA recovers, prepares and puts up for sale lands for developing industrial zones by foreign and Egyptian promoters. The State develops the road network and other networks for these lands. The IDA also offers a one-stop shop for industrial investors to give them information on the available lands and help them get the permits for industrial operations.

Recovery Procedures

Principle: The procedure is to put the company under supervision, which does not necessarily lead to bankrupcy.
Bankruptcy Laws: The main problem of the law on bankrupcy is the length of the administrative procedure. The average length of time it takes to finish the procedure is 4 months. The cost is considerable, approximately 20% of the goods. The recovery rate is 16.8 cents on the dollar.

The Active Population in Figures

	2010
Labor Force	26,100,000

Source: CIA - The world factbook

	2009	2010
Total activity rate	-	48.80%
Men activity rate	75.30%	-
Women activity rate	22.40%	-

Source: UN - United Nations

Working Conditions

Opening Hours
Legal Weekly Duration: The length work is 8 hours per day, 6 days per week with a maximum of 48 hours per week, and a rest obligation of a minimum of 24 consecutive hours in a week. There is a minimum 1 hour of rest for a day of work. If an employee works for more than 8 hours per day, he has a right to a 35% bonus for day work and 70% bonus for night work.
Maximum Duration: The maximum length of work is 48 hours per week.

Working Rest Day: 24 consecutive hours per week of compulsory rest. Week-ends are Fridays and Saturdays, if the 24 hours are not given during those days, they have to be compensated by another day.
Paid Annual Vacation: 21 days minimum paid holidays, of which 6 are consecutive. 30 days if the employee has been in employement for more than 10 years, and/or if he is aged more than 50 years. Additionally, there are 16 days of public holidays per year.
Retirement Age: 60 years.
Child Labor and Minimum Age For Employment: Officially, 3 to 15% of children work. According to observers, in reality, children are an important part of the active population, most of the time in the informal sector, therefore difficult to quantify (selling in the streets, seasonal agricultural work). According to the Human Rights Watch, the conditions are difficult, between 9 and 11 hours of daily work in precarious sectors.
Informal Labor Market: Nearly 6.5 million people work in the informal sector, that is to say 40% of the active population. These people's work conditions (timetable and health) are generally very bad.

The Cost of Labor

Pay

Minimum Wage: The government-mandated minimum wage in the public sector is approximately EGP 176 (USD 33) a month. The minimum-wage law is also observed in the private sector.
Average Wage: The average Egyptian salary is about 100 EUR per month.
Other Forms of Pay
Pay For Overtime: 30% of the normal salary.
Pay For Rest Days Worked: If it is a normal annual vacation day (not a week-end), the salary is doubled.
Pay For Overtime at Night: 70% of the normal salary.

Social Security Costs

The Areas Covered: An average of 25% of the salary goes to social security. It covers the following areas: unemployment, health, old age and sometimes life insurance.
Contributions: Contributions Paid By the Employer: For salaries between 0 and 750 EGP: 26%
For salaries between 751 EGP and 1,250 EGP: 24%
Contributions Paid By the Employee: For salaries between 0 and 750 EGP:14%
For salaries between 751 EGP and 1,250 EGP: 11%
Competent Organization: Ministry of Social Solidarity (in Arabic)

Management of Human Resources

Recruitment

Recruitment Agencies: Recruitment agencies or head-hunters are private companies commissioned by employers. They often have their own rules. They require registration in their database first, before being able to submit candidacy. They often have their own websites for classifieds and job announcements and can insist upon their own job interviews.
Recruitment Websites: Jobs in Egypt
Arabo Egypt: advertisement site
American Chamber of Commerce in Egypt
Egyrec.com

The Contract

Type of Contract: The work contracts are governed, in the order of importance, by the legal provisions, collective agreement and individual negotiation. The two types of contract frequently used are the limited duration contract and the open-ended contract. There is also the temporary work contract which is used with the purpose of giving the employee a well-specified assignment. There is no maximum duration. The occasional work contract exists in the case of a specific assignment and its duration cannot exceed 6 months. The seasonal work contract highly used in the tourism sector is concluded for a work which is required to be repeated every year at around the same fixed date. This type of contract cannot be renewed. Dismissal / layoff criteria are also very rigid compared to the employment conditions which are very flexible.

Breach of Contracts
Retirement: 70 to 90% of active workers have access to retirement benefits. It is possible (even compulsory) to retire at the age of 60, depending on the sectors:
- Pension is paid automatically on a monthly subscription booklet;
- The active worker saves through out the years a sum of his choosing, for his retirement, which is paid to him afterwards;
- The active worker opens an investment fund managed by a private company. He could therefore possibly benefit from an additional percentage;
- From the age of 65 years, the State pays an additional EGP100.
Dismissals: The constraints of dismissal are very rigid unlike the conditions of hire which are extremely flexible.
Other Possible Methods: Expiration of the contract, resignation, collective dismissal...

Dispute Settlement

Conciliation Process

Legal Framework: Labor Law no 12 of 2003 governs all employment relationships.
Procedure: In the case of a dispute between employer and employee, the State Labor Office first tries to resolve the matter amicably. If no agreement is concluded, the two parties can resort to an arbitration committee and file a complaint within 45 days or more.

Judicial Structures

Legal Framework: See the International Labor Organization.
Competent Legal Body: It is a committee made up of two judges, a representative of the Ministry of Labor and Immigration and two members of the Federation of Egyptian Unions. The compensation determined by the committee cannot be less than two months salary. However, matters normally take two to four years to be resolved. In effect, these are complicated undertakings.

Social Partners

Social Dialogue and Involvement of Social Partners: There are 23 trade unions (labor unions) which are represented by the ETUF (Egyptian Trade Union Federation).
Unionization Rate: Union membership is around 20%.
Unions: Egyptian Trade Union Federation
Regulation Bodies: Ministry of Labor (in Arabic)

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