Social insurance inspection in Egypt: how it works and how to prepare

Executive summary

• Employees delegated by the National Organization for Social Insurance (NOSI) may enter workplaces during normal working hours and examine records, books and financial documents (article 143 of Social Insurance and Pensions Law No. 148 of 2019).
• Private-sector contributions are computed on the data in Forms 1, 2 and 6; where data or records are missing they are computed on the findings of NOSI's inspection bodies, and in a dispute between employee and employer over the wage NOSI may be guided by the wage for comparable work (articles 64 and 66 of the executive regulations).
• An objection to NOSI's claim is filed within 30 days of receiving the notice, with a fee of EGP 100, followed by the disputes committee and then the court within 30 days of the committee's decision (article 120).
• NOSI's rights are time-barred after fifteen years, but for an employee who was never insured time runs only from the date NOSI learns that they joined (article 147).
• Preventing NOSI staff with judicial police powers from entering or examining records, or giving incorrect data: a fine of EGP 30,000 to 100,000, doubled for a repeat offence (article 165).

Legal basis and inspectors' powers

Article 143 of the Law provides that "those of its employees whom the Organization delegates shall have the right to enter workplaces, including establishments located in free zones ... during normal working hours, to carry out the necessary investigations and to examine the records, books, papers, documents, files and financial documents relating to the implementation of this Law"; the Minister of Justice, in agreement with the President of NOSI, designates the employees who hold judicial police powers.

Article 67 of the executive regulations, issued by Prime Ministerial Decree No. 2437 of 2021, adds the right to examine accounting books, balance sheets and employee files, and requires the employer, at NOSI's request, to provide a statement certified by the Egyptian Tax Authority (ETA) of the wage cost and number of employees for previous years. Government bodies, including the ETA, and banks must provide NOSI with the data it requests, and doing so is not a breach of professional secrecy (article 145).

This guide covers the rules in force since the Law took effect on 1 January 2020 and its regulations on 29 September 2021; periods before 2020 are outside its scope.

What is examined

• Registration: private-sector contributions are computed on Forms 1, 2 and 6 (article 64 of the regulations); their deadlines are in Egypt's social insurance Forms 1, 2 and 6 and Registering a new employer for social insurance.
• Wages: a private-sector employer must keep a wage register on Form 17 (article 75 of the regulations), showing each employee's actual wage and, month by month, the insurable wage, the deductions for NOSI and the net pay. The components and limits of the insurable wage are in Egypt's insurable wage.
• Payment: each month's contributions are payable on the first day of the following month, and late payment attracts a monthly additional amount, waived if payment is made within fifteen days of the due date (article 121); the rates are in Egypt's social insurance contributions.
• Regularity certificate: NOSI issues a certificate, renewed annually, that the employer is up to date for all their employees, and the employer must display it in a visible place at their premises (article 136).

Assessing contributions when data is missing

If the employer files their employees' data and wages late, contributions are computed on their last statement until the actual amount is established; if the data is not filed or the records the employer must keep do not exist, contributions are computed on the findings of NOSI's inspection bodies, and the report must state the sources of the findings and the basis on which it rests (article 120 of the Law and article 64 of the regulations). The findings rest on interviews with the employee, the employer and others, and on records and documents; both parties sign the forms and the inspector records the source of each entry.

A dispute between employee and employer over proof of the employment relationship is investigated with the help of the labour offices; if the dispute is over the wage, NOSI may be guided by the wage for comparable work in light of prevailing wage levels, unless the employer proves otherwise (article 66 of the regulations). The employer's signature has consequences: signing the census sheet drawn up by the inspector, where it states an employee's end-of-service date, stops the additional amount for a late Form 6 (article 20 of the regulations).

The period claimed can be long: NOSI's rights are time-barred fifteen years after they fall due if the debtor invokes the bar; time does not run for a debtor who uses fraud or evasion, nor for an employer who has not insured all or some of their employees until NOSI learns that they joined (article 147). If an insured event such as death or disability occurs before the employee was insured, NOSI pays the benefits and the employer must pay the capital value of the pension and the other entitlements arising from proof of the employment relationship (article 141 of the Law and article 304 of the regulations).

Objecting and the deadlines

The account becomes final and the amounts payable if either of the last two deadlines passes without action (article 120 of the Law and article 65 of the regulations). The disputes committees are formed by decision of the President of NOSI with the approval of its board, and a request to put the dispute to them must be made before going to court (article 148).

Amounts due to NOSI carry a privilege over all the debtor's assets, and NOSI may collect them by administrative seizure (article 132). A private-sector employer may pay in instalments only after an administrative seizure on assets sufficient to cover the debt or against a bank guarantee for the amount, and the additional amounts keep running until payment (article 79 of the regulations).

Penalties

The penalty is doubled for a repeat offence under all three articles, and the penalties in articles 167 and 168 fall on the person actually responsible for management at the employer.

What this requires

• Keep the Form 17 wage register, proof of filing Forms 1, 2 and 6 with their dates, payment receipts and employment contracts.
• Reconcile the payroll each month with the employees insured with NOSI: a Form 1 for every employee, a Form 6 for every leaver.
• Reconcile January wages in the register with the insurable wages on Form 2, and contributions computed with contributions paid and their payment dates.
• Reconcile the wage cost in the accounts and in the data filed with the ETA with the insured wages.
• Appoint someone to receive the inspector and give access, and check every form and sheet the inspector draws up before signing it.
• Diarise the 30 days from receipt of the notice, and support the objection with the records, paying the fee with it.
• Regularise any uninsured employee without waiting for an inspection, since time does not start to run for that employee until NOSI learns of them.

The firm's Social Insurance & Labour Department reviews employers' social insurance position and reconciles wage registers and contributions before an inspection, and prepares objections to NOSI claims where needed, as part of its payroll and social insurance services.

Mahmoud Nassef, Founder Partner
Chartered Accountant, Ministry of Finance, Egypt

Member, Egyptian Society of Accountants & Auditors
Member, Egyptian Tax Society
Member, Egyptian Society for Public Finance and Taxation

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Disclaimer: This bulletin is prepared for general information on the legislation in force at the date of its publication. It does not constitute a professional opinion or tax or legal advice on any particular matter, and it should not be relied upon in place of advice based on an examination of the circumstances of each case. Nassef & Partners International accepts no responsibility for any action taken, or refrained from, in reliance on its contents. The positions stated remain subject to subsequent legislation and decisions.