Egypt End of Service Gratuity Calculator
Calculate statutory end-of-service severance indemnity and retirement gratuity under Article 126 of Egyptian Labor Law No. 12 of 2003. Computes 0.5 month's wage per year for the first 5 years, 1.0 month's wage per year for subsequent service, and exact pro-rata fractional periods.
Service & Compensation Inputs
Microsecond EngineStatutory Indemnity Settlement
Article 126 SpecEquivalent to 5.0 Months Total Comprehensive Salary
Legal Compliance: Calculated pursuant to Article 126 of Labor Law No. 12 of 2003. Disputes regarding terminal benefits are within the jurisdiction of the Egyptian Labor Court (المحكمة العمالية).
Article 126 Labor Law 12/2003 Gratuity Accrual Schedule
Statutory severance entitlement schedule per completed year of employment:
| Service Period Tier | Statutory Accrual Rate | Monthly Equivalent | Multiplier at 10 Years | Example (EGP 15k Wage) |
|---|---|---|---|---|
| Years 1 through 5 | 0.5 Month's Wage per Year | 15 Days / Year | 2.5 Months Wage | EGP 37,500 for first 5 yrs |
| Years 6 and Beyond | 1.0 Month's Wage per Year | 30 Days / Year | 5.0 Months Wage (Y6-10) | + EGP 15,000 per extra yr |
| Total at 10 Years Service | Tiered Aggregate | Cumulative | 7.5 Months Wage | EGP 112,500 Total |
| Total at 20 Years Service | Tiered Aggregate | Cumulative | 17.5 Months Wage | EGP 262,500 Total |
Comprehensive Guide to End of Service Gratuity in Egypt
In Egyptian employment law, terminal compensation is anchored in Article 126 of Labor Law No. 12 of 2003. While public sector and social-insured private sector employees also accumulate pension entitlements with the National Organization for Social Insurance (NOSI), Article 126 provides an indispensable baseline severance and retirement indemnity.
1. The Two-Tiered Accrual Formula
The statutory formula divides an employee's tenure into two distinct longevity brackets:
- First Five Years (السنوات الخمس الأولى): Half a month's wage (15 days) for each full year of service.
- Subsequent Years (السنوات التالية): One full month's wage (30 days) for each additional year of service after year five.
- Pro-Rata Application: For employees who complete fractions of a year (such years and 6 months), the six months in year 8 are credited at exactly
0.5 × 1.0 = 0.5 month's wage.
2. Interplay with Social Insurance Law No. 148 of 2019
Under Egyptian labor doctrine, Article 126 is specifically mandated for service periods not covered by social insurance pension laws, or when private sector collective bargaining agreements or employment contracts provide end-of-service gratuities superior to standard statutory benefits. In parallel, Law No. 148 of 2019 funds an independent End of Service Reward Account (حساب المكافأة) through a monthly 1% employee contribution and 1% employer contribution, payable additional lump sum upon retirement.
📊 Egyptian Tax Authority (ETA) & Social Insurance (NOSI) Matrix
| Statutory Component / Legal Deduction Item | Calculated Amount (EGP) |
|---|---|
| Primary Net / Statutory Payable Amount | 0.00 EGP |
Frequently Asked Questions (Egypt End of Service Gratuity)
How is end-of-service gratuity calculated in Egypt under Article 126?
Under Article 126 of Egyptian Labor Law No. 12 of 2003, an employee is entitled to a retirement indemnity equal to: half a month's wage (15 days) for each of the first five years of service, and one full month's wage (30 days) for each year of service thereafter, calculated upon the employee's last drawn wage.
Which wage is used to calculate end of service gratuity in Egypt?
Gratuity is calculated on the employee's last drawn gross monthly comprehensive wage (الأجر الشامل), including basic salary and regular contractual cash allowances, unless the contract or internal company policy provides a more favorable calculation basis.
Does an employee who resigns qualify for Article 126 gratuity in Egypt?
Article 126 specifically guarantees this gratuity upon reaching statutory retirement age (60 years) for periods not covered by social insurance pension entitlements. For voluntary resignation prior to retirement, gratuity depends on whether the contract stipulates a private severance scheme, or whether the employee claims their accumulated NOSI End of Service Reward under Law 148/2019.
How are fractions of a year calculated in Egyptian end-of-service indemnity?
Under Egyptian jurisprudence, fractional service periods (extra months and days) are calculated on a strict pro-rata basis. For example, 6 months in year 3 earns exactly 0.25 month's wage, while 6 months in year 7 earns 0.50 month's wage.
What is the relationship between Article 126 gratuity and the NOSI pension?
Article 126 of Law 12/2003 establishes that the statutory gratuity is payable for service periods where the worker does not have accrued pension rights under the Social Insurance Law, or for service prior to age 18. Additionally, the NOSI Reward System (نظام المكافأة under Law 148/2019) pays a complementary lump-sum financed by the 1% worker + 1% employer monthly contributions.