By Malak Mohamed, Corporate Lawyer | Beans Consult | 28/10/2026
An employee's pay in Egypt's private sector is governed by three laws, and each defines "wage" differently: the Labour Law (Law 14 of 2025), the Social Insurance and Pensions Law (Law 148 of 2019) and the Income Tax Law (Law 91 of 2005). Mixing these definitions up is the most common payroll error, and the most expensive one at inspection.
Three definitions of wage
| Item | Labour Law wage | Insurance contribution wage | Payroll tax base |
|---|---|---|---|
| Law | Labour Law 14 of 2025 | Social Insurance Law 148 of 2019 | Income Tax Law 91 of 2005 |
| What it covers | Everything the employee receives for the work, in cash or in kind | The cash pay the insured receives from the employer, except listed allowances | All wages and similar income |
| 2026 limits | Minimum EGP 7,000 a month, no ceiling | EGP 2,700 to 16,700 a month | No ceiling, with a personal exemption and a zero band |
| What is excluded | In-kind benefits the work requires | A closed list of allowances, capped at 30% of the contribution wage | In-kind benefits the work requires, and the employee's insurance share |
Minimum wage: EGP 7,000
- In February 2025 the National Wages Council set the private-sector minimum wage at EGP 7,000 a month from 01/03/2025. No decision raising it has been issued as of the date of this article.
- The minimum is measured on the total wage as the Labour Law defines it: basic pay, allowances, commissions and incentives together, not basic pay alone. The Labour Law requires that what the employee receives is never below the minimum wage (Article 108).
- The decision says the figure is "inclusive of the employer's share of social insurance contributions", wording that can be read more than one way. We recommend the safer reading: a gross wage of at least EGP 7,000 to the employee, with the employer's insurance share paid on top.
- The EGP 8,000 minimum from 01/07/2026, set by Prime Minister's decree, covers state employees only. It is a separate track and does not apply to private companies.
- Prime Minister's Decree 3165 of 2026, issued in October 2026, regulates how the National Wages Council works and requires it to review the minimum wage at least once a year. It does not change the current figure, but a new review can come at any time. We will update this page when it does.
Annual increment
An annual increment of at least 3% of the insurance wage (Labour Law, Article 12), with a floor of EGP 250 a month under the National Wages Council decision. It falls due one year after each employee's hiring date or last increment, so on a different date for each employee, not on one common review date. If the company cannot pay it for economic reasons, the matter goes to the National Wages Council, which decides within 30 days.
Example: insurance wage EGP 7,000; 3% of it is EGP 210, so the increment due is EGP 250.
The contribution wage: the costliest error
The minimum contribution wage (EGP 2,700 in 2026) is a floor the employer cannot go below, not a wage the company chooses. The contribution wage is the cash pay the employee receives from the employer: functional wage, basic wage, complementary wage, incentives, commissions and allowances. The only exclusions are the allowances listed in item 9 of Article 1 of the Executive Regulation of the Social Insurance Law:
- Transport, travel, session attendance and similar allowances paid against costs the job requires.
- Housing, clothing, car and similar allowances paid against in-kind benefits.
- Allowances due for part-time secondment inside or outside the original employer.
- Allowances paid to meet the cost of living abroad.
The regulation expressly keeps the representation allowance in the contribution wage. A cash meal allowance and a phone allowance are not named in the list. They are excluded only if they are actually paid against costs the job requires, and the safer course is to treat them as part of the contribution wage.
In all cases excluded allowances may not exceed 30% of the contribution wage (Executive Regulation, Article 53): 30% of the contribution wage itself, not of gross pay. The exclusion is not automatic. The allowances must actually be granted and named on the payroll.
So registering an employee paid EGP 7,000 at a contribution wage of EGP 2,700 is a violation. It is insurance on less than the real wage, fined EGP 20,000 to 100,000, doubled on repeat (Social Insurance Law, Article 168).
Worked example: total wage EGP 7,000 in 2026
| Case | Contribution wage | Employee 11% | Employer 18.75% |
|---|---|---|---|
| No excluded allowances | 7,000.00 | 770.00 | 1,312.50 |
| EGP 500 transport allowance against job costs (below the cap) | 6,500.00 | 715.00 | 1,218.75 |
| Excluded allowances above the cap | 5,384.62 | 592.31 | 1,009.62 |
| Employee registered at EGP 2,700 | Violation |
The third case is the maximum possible exclusion: 7,000 ÷ 1.30 = EGP 5,384.62 contribution wage and EGP 1,615.38 excluded allowances, which equals 30% of the contribution wage. The contribution wage cannot fall below this figure, whatever the allowances.
In governorates covered by Comprehensive Health Insurance the employer pays an additional contribution. The system does not yet apply in Cairo or Giza.
Note: from 01/01/2027 the employee share rises to 11.5% and the employer share to 19.25%, and the contribution wage limits change.
Payroll tax
- The 30% rule belongs to social insurance only. It does not apply to tax.
- Cash allowances are part of the taxable base. Benefits given in kind that the work requires are exempt, such as meals at the workplace, group transport, work clothing and housing the work requires.
- The employee's insurance share is deducted from the base, then the personal exemption of EGP 20,000 a year, then the first EGP 40,000 is taxed at zero, and the progressive brackets apply to the rest (Law 91 of 2005 as amended by Law 7 of 2024).
- Tax withheld is remitted monthly within the first 15 days of the following month, with an annual settlement.
Cost of getting it wrong
| Violation | Fine |
|---|---|
| Paying below the minimum wage, or withholding wages without legal basis | EGP 2,000 to 20,000, multiplied by the number of employees and doubled on repeat (Labour Law, Articles 108 and 287) |
| Annual increment not paid | EGP 500 to 5,000, multiplied by the number of employees and doubled on repeat (Labour Law, Articles 12 and 288) |
| Not insuring an employee, or insuring on less than the real wage | EGP 20,000 to 100,000, doubled on repeat (Social Insurance Law, Article 168) |
A retroactive correction also brings the contribution differences on both shares with late charges, and the payroll tax differences.
Payroll checklist
- [ ] No employee's total wage is below EGP 7,000.
- [ ] The contribution wage on Form 1 is the actual cash pay less the excluded allowances actually granted, and not below total wage ÷ 1.30.
- [ ] The contribution wage is between EGP 2,700 and 16,700 in 2026.
- [ ] Every excluded allowance is named in the contract and on the payroll, is of a type listed in the regulation, and is paid against a real cost or in-kind benefit.
- [ ] The annual increment is paid on each employee's due date: 3% of the insurance wage, at least EGP 250.
- [ ] Cash allowances are included in the payroll tax base.
Calculate your payroll
To find each employee's net pay and cost to the company, use the free salary calculator at salary.afifi.consulting. It computes employment income tax and both insurance shares, applies the 30% cap on excluded allowances, and converts gross to net and back.
This article is accurate as of 28/10/2026.
Need help applying this to your company?
Beans Consult handles incorporation, accounting, tax, payroll and social insurance.
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General guidance only; not tax or legal advice for a specific case.
