Egypt End-of-Service Gratuity 2026: Law 14/2025 Guide

What is end-of-service gratuity in Egypt, and who pays it?

End-of-service gratuity (مكافأة نهاية الخدمة, mukafaa nihayat al-khidma) is a lump sum an Egyptian employer may owe an employee when the employment relationship ends — calculated from the employee's years of service and last wage, and paid by the employer, not by social insurance. It is a separate entitlement from the social-insurance pension or lump sum administered by the national insurance authority (NOSI), and under Labour Law 14/2025 (in force since 1 September 2025) the rules on termination, notice and end-of-service were reshaped.

This is one of the most misunderstood numbers in Egyptian payroll — and one of the most expensive to get wrong, because it surfaces at the emotional, high-stakes moment when someone leaves. HR is going AI and automated; doing end-of-service by memory and a spreadsheet is a risk that compounds quietly until a labour dispute makes it loud. This 2026 guide explains, in plain terms, what gratuity is, when it is owed, how the calculation works in principle, how it differs from a pension, the mistakes that cost employers the most, and how payroll software keeps the number correct. One firm rule throughout: the new law's exact statutory multipliers are reported inconsistently and are still being clarified by executive regulations, so we teach the framework and tell you to confirm the precise figure with a lawyer. Figures are current for 2026 — confirm with your accountant and lawyer before you pay.

What exactly is the end-of-service gratuity (مكافأة نهاية الخدمة)?

The end-of-service gratuity is a severance-type lump sum that rewards length of service. Conceptually it answers a simple question: when this person leaves, what does the employer owe them on top of their final salary, purely for the time they gave the company? It is built from two ingredients:

• Years of service — total continuous tenure with the employer, including partial years.
• The wage base — typically the last wage the employee received, though which components of pay count (basic only, or basic plus regular allowances) is exactly the kind of detail you must confirm, because it changes the result materially.

The Arabic term mukafaa nihayat al-khidma literally means "reward for the end of service." In day-to-day Egyptian HR conversation people also say "end of service" or "EOS" in English, and sometimes loosely call the whole final payout "the settlement" (التسوية النهائية, al-taswiya al-niha'iya) — but the settlement is the container; gratuity is one item inside it. Treating them as the same thing is where errors begin.

When is end-of-service gratuity owed in Egypt?

Whether gratuity is owed — and how much — depends heavily on why the employment ended. Under Labour Law 14/2025 the reason for separation is the single biggest driver of the number. The reported framework distinguishes several situations, and the multiplier per year of service is reported to differ between them. Because those exact multipliers are inconsistently reported across legal commentaries and are still subject to executive-regulation clarification, the table below maps the scenarios and the direction of entitlement, not a guaranteed statutory figure. Confirm the precise multiplier for your scenario with a lawyer before paying.

The critical takeaway: you cannot pick one formula and apply it to every departure. A redundancy and a resignation are not the same calculation, and the new law's compensation for dismissal-without-misconduct can be substantial. Get the reason for leaving documented accurately first; the number follows from it.

How is end-of-service gratuity calculated — in principle?

We will not state a precise statutory multiplier as fact, because under Law 14/2025 it is reported inconsistently and is being settled by executive regulations. What we can teach you is the durable calculation framework that every correct EOSB number follows, so you know exactly what to assemble and what to ask your lawyer to confirm:

1. Fix the leaving reason. Retirement, dismissal-without-misconduct, fixed-term expiry, resignation, or for-cause — this selects which rule and multiplier apply.
2. Measure total service precisely. Count continuous tenure to the day, including partial years, because gratuity is usually pro-rated. A few months rounded the wrong way is a real cost.
3. Define the wage base. Confirm which pay components count (basic wage only, or basic plus regular allowances) and that you are using the correct "last wage" — not an outdated figure.
4. Apply the confirmed per-year multiplier. Some scenarios are reported to use a different rate for the first years of service than for later years; your lawyer confirms the exact rates and breakpoints for your case.
5. Add the rest of the final settlement. Gratuity sits alongside unpaid wages, the cash value of any unused annual-leave balance, and any contractual end-of-service benefits — they are added, not merged.

Think of it as service × wage base × (confirmed multiplier for this reason), then + final settlement items. The structure is stable; only the multiplier is the variable you must verify. This is also why a manual one-off calculation is fragile: change the leaving reason or the wage base and the whole number moves.

A worked illustration of the method (not of any specific legal rate): an employee with 7 years of service leaving in a redundancy would have their gratuity built from 7 years of tenure, their confirmed last-wage base, and the per-year compensation rate your lawyer confirms for non-misconduct termination — then you add their unpaid days worked and the cash value of leave days they never took. If your lawyer confirms a different rate for the first five years than for the years after, you split the tenure accordingly. The framework tells you exactly which questions to ask; it does not invent the answer.

End-of-service gratuity vs the social-insurance pension: what's the difference?

This is the distinction that causes the most damage when missed. Gratuity and the social-insurance pension are two completely separate things, from two different payers, under two different laws.

An employer who thinks "I've been paying social insurance every month, so I don't owe a separate gratuity" is making a costly error: the monthly insurance contribution funds the state pension system, while the gratuity is a separate labour-law obligation you owe out of your own pocket at exit. Both can apply to the same departing employee. Your employee's full picture at the end of service can therefore include: the gratuity from you, the cash value of unused leave, any final unpaid wages, and their separate entitlement from social insurance. Confirm the social-insurance side with NOSI and your accountant — the labour-law gratuity is the part you, the employer, control and must compute correctly.

What are the most common employer mistakes with end-of-service?

Across Egyptian SMEs, agencies and growing teams, the same avoidable errors recur — and almost all of them are bookkeeping failures, not legal-interpretation failures:

• Confusing gratuity with the pension — assuming social-insurance contributions discharge the gratuity obligation. They don't.
• Using the wrong wage base — calculating on basic salary when allowances should count, or using a stale wage instead of the correct last wage. This single error can swing the number by a wide margin.
• Mismeasuring service — losing track of the exact start date, ignoring partial years, or mishandling breaks in service. Gratuity is pro-rated; sloppy tenure data means a wrong number.
• Ignoring service before 1 September 2025 — Law 14/2025 replaced the previous law, but employees' accrued rights from earlier service don't vanish. How pre-law service is treated is a key lawyer question; don't simply zero it out.
• Forgetting the rest of the settlement — paying gratuity but skipping the cash value of unused annual leave (15 days in year one, 21 from year two, 30 after 10 years or age 50 under the new law) or final unpaid wages.
• Paying late or undocumented — a delayed or unreceipted settlement is the fuel for a labour complaint. Pay promptly and keep a signed final-settlement record.
• Wrongly withholding gratuity as a "penalty" — forfeiting gratuity requires legally valid for-cause grounds and due process; using it as leverage in a dispute usually backfires.

Notice the pattern: most of these are caused by not having clean, continuous records of tenure, wage history and leave balances — exactly what a real payroll system is for.

How does payroll software keep end-of-service correct?

End-of-service is where good record-keeping pays off, because the calculation reaches back across the entire employment relationship. Manual settlements fail not because the math is hard but because the inputs are scattered across old spreadsheets, WhatsApp messages and someone's memory. Payroll software fixes the inputs:

• It tracks exact tenure from the verified start date, so service (including partial years) is computed to the day — no rounding guesses.
• It keeps full wage history, so you apply the correct, current wage base and can show how it was derived.
• It carries the live annual-leave balance, so the unused-leave cash value drops straight into the final settlement instead of being forgotten.
• It separates the social-insurance line from the labour-law obligation, so you never mistake one for the other — contributions on the capped insurable wage are tracked distinctly from the gratuity you owe at exit.
• It produces a documented, repeatable final settlement — a record you can sign, store and defend if a dispute arises.

The Five Hr is built for this Egyptian reality: a bilingual (Arabic + English) workspace that runs Egyptian payroll with social insurance and tax handled correctly, keeps the tenure, wage and leave records that an end-of-service settlement depends on, and gives your AI HR assistant the clean data to flag what a departure will cost before it becomes a dispute. It doesn't replace your lawyer on the exact statutory multiplier — it makes sure that when your lawyer confirms the rule, every input you feed it is already correct. For the numbers that sit next to gratuity in a payslip, our guide on Egypt net salary, income tax and social insurance for 2026 walks through the deductions in detail.

Sources

• Andersen Egypt — Egypt's New Labour Law No. 14 of 2025
• PwC Worldwide Tax Summaries — Egypt (income tax and social insurance)
• Egyptian Social Insurance Authority (NOSI)
• Egyptian Tax Authority (ETA)
• Mercans — Egypt payroll and labour law guidance