HR and Payroll Software Egypt Guide: WPS, Gratuity and Compliance

Choosing HR and payroll software in Egypt is less about payslip design and more about getting three things right every month: a valid WPS salary file, correct leave and gratuity accruals, and a clean journal into your accounts. This guide explains how each works, what the software should automate, and how to roll out a system without a messy first payroll, whether you are on the mainland or in a free zone.

Who must use WPS and who does not

The Wage Protection System is run by the Ministry of Labour (the Ministry of Labour). It was introduced so the ministry can see that workers are paid the right amount, on time, through regulated channels. Salaries go from the employer to an approved WPS agent (a bank or licensed exchange house), which passes the data to the Ministry of Labour and credits each employee’s account or card.

Mainland companies

If your establishment is licensed on the mainland and your staff hold the Ministry of Labour work permits, WPS applies to you. Late or missing WPS payments can lead to fines, a block on new work permits and escalation for repeat cases. Under the Labour Law, wages are generally treated as late if they are not paid within 15 days of the due date.

Free zone companies

Most free zones run their own employment registration, and many are outside the Ministry of Labour’s WPS. Some free zone authorities still expect salaries to be paid through a bank and may ask for evidence, and a few have their own wage monitoring rules. special economic zones have their own employment laws entirely, and Smart Village replaced traditional gratuity with the DEWS savings scheme for most employees.

That is why a business running HR and payroll software in Cairo across two entities (say, a mainland trading licence plus a the SCZone or DMCC company) needs a system that can handle different rules per company: WPS for one, plain bank transfers for the other, and possibly different gratuity treatment.

How a payroll system in Egyptian companies works, month by month

A well-run payroll system in Egypt follows the same cycle every month. The software’s job is to make each step quick and auditable.

The monthly cycle

1. Cut-off. Attendance, overtime, leave and unpaid absence are locked for the period.
2. Variable inputs. Commissions, bonuses, deductions and loan instalments are added.
3. Calculation. Gross, deductions and net pay per employee, plus gratuity and leave accruals.
4. Review. HR and finance investigate large variances against last month.
5. SIF generation and release. The WPS file is uploaded to the agent, the account is funded and salaries are credited.
6. Accounting. A payroll journal posts to the ledger by cost centre.
7. Payslips. Issued through self-service, ideally in English and Arabic.

Pay structure matters

Egyptian salaries are usually split into basic plus allowances such as housing, transport and phone. The split is not cosmetic. Gratuity and several leave payments are calculated on basic salary, so the structure in your contracts has a direct effect on long-term liabilities. Good software stores each component separately and lets you mark which ones count towards gratuity, leave pay and overtime.

Overtime

The law sets overtime premiums, higher for night hours and rest days. The system should apply the right multiplier per type and respect daily caps.

Inside the WPS salary file (SIF)

The Salary Information File is a fixed-format text (CSV-style) file that you upload to your WPS agent. Get one field wrong and the whole file, or that employee’s line, can be rejected.

What the file contains

Record	What it holds	Where the data comes from
Employee Detail Record (EDR)	One line per employee: the Ministry of Labour personal (labour card) number, agent routing code, IBAN or card number, pay period start and end, days paid, fixed pay, variable pay, days of leave	Employee master, bank details, payroll run
Salary Control Record (SCR)	One line per file: employer establishment ID, routing code of the employer’s bank, file creation date and time, salary month, number of EDRs, total salary, currency	Company setup, payroll totals

Exact formats follow the Ministry of Labour and Central Bank WPS specification. Test a sample file with your bank before go-live.

Where SIF files go wrong

• Wrong personal number. The the Ministry of Labour personal number is not the National ID number. Mixing them up is the single most common rejection.
• Mismatched totals. The control record’s total must equal the sum of the employee lines to the fils.
• Stale bank details. An employee changed banks but HR was not told.
• Manual edits. Excel can strip leading zeros from account numbers. Upload the system file untouched.

WPS payroll cards for unbanked staff

Not every employee has a bank account. Many blue-collar and junior staff, especially new arrivals, are paid through a WPS payroll card: a prepaid card issued by a bank or exchange house that is linked to the employee’s the Ministry of Labour record.

How payroll cards work

The employer opens a payroll card arrangement with an agent. Each employee gets a card with an account or card reference number. In the SIF, that reference replaces the IBAN and the agent’s routing code is used. Once salaries are released, employees can withdraw cash at ATMs, pay by card and, with some providers, send money home through an app.

What your software must support

• Separate payment methods per employee (IBAN, payroll card, or cheque/cash for exceptional cases where allowed).
• Multiple agents in one month, for example most staff via your main bank and site workers via an exchange house, with a separate SIF per agent.
• Tracking card issue and closure, so a leaver’s last salary reaches a card they still hold.

For a 300-person facilities company in 6th of October City, this decides whether payroll takes two hours or two days.

End-of-service gratuity: how software should calculate it

Gratuity is the lump sum owed to eligible employees when employment ends. For mainland employees under the federal law, the general rule is:

• Eligibility after one year of continuous service for full-time staff.
• 21 days’ basic wage for each of the first five years.
• 30 days’ basic wage for each year after five.
• A total cap of two years’ wages.
• Calculated on the last basic wage, with unpaid absence days excluded from service.

Under the 2021 law, the old reductions for resignation were removed for limited and unlimited contracts alike, now that all contracts are fixed-term. Part-time and free zone staff may follow different rules, and an alternative voluntary end-of-service savings scheme has been introduced for private-sector employers who opt in.

Accrual vs settlement

Your software should do two separate jobs:

1. Monthly accrual. A provision is posted every month so the balance sheet reflects the true liability. Auditors and the Corporate Tax return both rely on this.
2. Final settlement. When someone leaves, the system calculates the actual payable amount, adds unused leave encashment, notice pay and any other dues, subtracts recoverable amounts (loans, advances) and produces a settlement statement for the employee to sign.

Before go-live, ask the vendor to show the working for a few test cases: 11 months’ service, exactly five years, eight years with a mid-service raise, and someone with unpaid leave.

Leave types and how they affect payroll

Egyptian leave rules feed directly into payroll, gratuity and final settlements. The main entitlements for mainland private-sector employees are summarised below. Free zones and company policies can be more generous, and some entitlements have conditions.

Leave type	Typical entitlement under federal law	Payroll effect
Annual leave	2 days per month after 6 months’ service; 30 calendar days per year after one year	Paid at basic plus housing in some interpretations; unused leave encashed on exit at basic
Sick leave	Up to 90 days per year after probation: 15 full pay, 30 half pay, then unpaid	Pay reduces in stages; system must track days used per year
Maternity leave	60 days: 45 full pay, 15 half pay, with additional unpaid options in specific cases	Pay split across two rates
Parental leave	5 working days within six months of birth	Fully paid
Bereavement	5 days (spouse); 3 days (parent, child, sibling, grandparent)	Fully paid
Study leave	10 working days per year for eligible employees	Fully paid
Unpaid leave	By agreement	Excluded from gratuity service and pay

What to look for in the leave module

Rules should be configuration, not code: accrual rate, probation behaviour, carry-forward, encashment and public holidays (which shift with lunar dates). Employees should apply from a phone, and Ramadan hours should flow into attendance and overtime.

Documents, visas and expiry alerts

In Egypt, HR teams spend a surprising share of their time chasing renewals. An employee with an expired visa, National ID or labour card is a compliance problem, and an expired health insurance card can leave staff without cover.

Documents to track per employee

☐ Passport (number, issue and expiry dates)

☐ Residence visa and entry permit

☐ National ID

☐ the Ministry of Labour work permit / labour card and contract

☐ Health insurance card and policy dates

☐ ILOE unemployment insurance status

☐ Driving licence and vehicle permits (for drivers)

☐ Professional licences (MOHP/DOH for healthcare, engineering registrations, trade certifications)

☐ Educational certificate attestations where needed for visa class

Alerts and workflows

Set alerts at 90, 60 and 30 days before expiry. Better systems open a renewal task automatically and record the new expiry once renewed. For Egyptian nationals, the system should also hold pension registration details and the contribution basis used by GPSSA or the Alexandria Pension Fund, and for larger companies support localisation reporting.

Why integrated HR and payroll software beats spreadsheets

Excel payroll beside separate attendance and accounting tools works at 20 people. At 80, it breaks.

What “integrated” actually means

Integrated HR and payroll software keeps the employee record, attendance, leave, payroll, gratuity and documents in one database, and posts directly to accounting. A change in one place (say, a salary revision effective mid-month) flows through to pro-rated pay, gratuity accrual and the ledger without anyone copying numbers.

There are two common routes:

• HR and payroll inside an ERP. The module shares employees, departments, cost centres and approvals with finance, purchasing and projects. Our overview of ERP software in Egypt explains how these modules fit together.
• A standalone HR system integrated with your accounts. Useful when finance is already settled on a package and you only need HR. The integration must be reliable, with payroll journals mapped to your chart of accounts in your accounting software (Egypt).

The accounting link

Whichever route you choose, insist on these outputs: a payroll journal by department and cost centre; separate liabilities for net salaries, gratuity provision, leave provision and employee loans; and a reconciliation report between the WPS file total and the bank debit. Salaries and end-of-service provisions are generally deductible for Egypt Corporate Tax, subject to the usual rules, so clean records help at return time. For more on the finance side, see our guide to VAT-compliant accounting software.

Choosing HR and payroll software Egyptian businesses can rely on

When you shortlist HR and payroll software in Egypt, the Egypt-specific features matter more than the generic HR feature list. Most systems can store employee records; far fewer can produce a SIF your bank accepts first time.

Must-have features

☐ WPS SIF generation for each agent, tested with your bank

☐ Payroll card support alongside IBAN payments

☐ Gratuity accrual and settlement under federal law, with configurable rules for free zone entities

☐ Egyptian leave types and public holiday calendar

☐ Multi-company and multi-entity payroll (mainland plus free zone)

☐ Document and visa expiry alerts

☐ Arabic and English payslips and letters

☐ Employee self-service on mobile

☐ Payroll journal posting to your general ledger by cost centre

☐ Role-based access, so only authorised staff see salaries

☐ Audit trail of every change to pay data

Nice-to-haves include geo-fenced mobile attendance, recruitment, appraisals and expense claims.

Platform options

ERP suites such as Odoo ERP include HR, attendance, leave and payroll modules, with Egyptian payroll localisation and WPS export available in recent Enterprise versions. Specialist Egypt HR systems also exist, and some businesses outsource payroll entirely. If you are comparing routes for HR payroll in Cairo, our HRMS software Cairo page sets out the options we implement and how they connect to finance.

Cost model, not price

Most cloud HR systems are licensed per employee or per user per month, while ERP suites usually charge per user (often only for staff who log in, not for every employee on payroll). Factors that drive the total include headcount, number of entities, attendance hardware, integrations, data migration and ongoing support. Ask for a written breakdown of each.

Rolling out a new payroll system step by step

A payroll go-live has no margin for error: staff notice instantly if their salary is wrong. Follow a structured plan.

Step 1: Document your current rules

List every pay component, overtime rule, leave policy and gratuity treatment per entity, including unwritten exceptions.

Step 2: Clean the employee master data

Check the Ministry of Labour personal numbers, IBANs, card numbers, joining dates, basic salary history and leave balances. Joining dates and unpaid leave history drive gratuity, so errors here become expensive liabilities later. Specialist ERP data migration services help when records are spread across spreadsheets and an old system.

Step 3: Configure and test

Set up salary structures, leave rules and WPS settings. Run a sample SIF through your bank’s validation tool before anything else.

Step 4: Run parallel payrolls

Run at least two months in both old and new systems and compare every employee line. Investigate every difference, even small ones.

Step 5: Train HR, finance and managers

Short role-based sessions work better than one long demo.

Step 6: Go live and hold back support

Go live at the start of a month, not mid-cycle. Keep your implementation team on hand for the first two payroll runs. An experienced ERP implementation company will plan this hypercare period from the start. Our ERP implementation guide covers the wider project steps.

If you do not have in-house capacity

Smaller companies sometimes keep the software but outsource the monthly processing or system administration. IT outsourcing services can cover system administration, user management and updates, while your HR team keeps control of pay decisions.

Common mistakes

• Treating the SIF as an afterthought. Teams test payslips but not the WPS file, then hit rejections on salary day.
• Shrinking basic salary without legal advice. It lowers gratuity on paper but invites disputes.
• Not accruing gratuity monthly. A large unexpected settlement hits cash flow.
• Migrating balances without history. Leave balances without joining dates and unpaid leave history break gratuity.
• One rule set for every entity. Mainland, free zone and special economic zones staff may need different rules.
• Shared admin logins. Every pay change should trace to a named user.
• Skipping the parallel run. It is the cheapest insurance against a bad first payroll.

Frequently asked questions

Conclusion

The right HR and payroll software in Egypt produces a WPS file your bank accepts first time, calculates gratuity and leave exactly as the law and your contracts require, tracks every visa and National ID expiry, and posts a clean journal to your accounts. Everything else is secondary.

Start by writing down your rules and cleaning your employee data, choose a system that handles your mix of mainland and free zone entities, and never skip the parallel run. For more practical ERP and IT guides, browse our guides library.