Algeria Payroll Outsourcing, Payroll Software and Employer Of Record (EOR) services.
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ALGERIA
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Algeria Payroll and Employer of Record: Employment Contracts
For visitors to Algeria, many types of visas are available. Foreign nationals from Libya, Mali, Morocco, Tunisia, the Seychelles, and Malaysia do not need a visa to visit Algeria for tourist or business purposes for up to 90 days.
In Algeria, the most common forms of work visas are:
- Business Visa: Granted to foreign citizens visiting Algeria for business purposes. This visa does not allow foreign citizens to work in Algeria and be paid by an Algerian employer.
- Diplomatic Visa: Provided to government officials or diplomats who are traveling for official purposes.
- Work Visa: Provided to foreign nationals who are authorized to work in the country for an extended period of time.
Probation Periods
- Permanent Contracts: The probationary period may not exceed 6 months. However, that period may be extended to 12 months in the case of a highly skilled job.
- Fixed-term Contracts: Probation may not exceed one-third of the duration, with a maximum of 3 months. This also applies to part-time and apprenticeship contracts.
Notice Periods
- The notice period depends on the length of service in the company:
- Service of less than 8 days = 5 days notice
- Service of less than 3 months = 1 month notice
- Service of less than 1 year = 3 months notice
- Service of more than 1 year = 4 months notice
- Service of more than 3 years = an increase of 2 days per year of service within the total limit mentioned above
- Service of more than 5 years = 6 months notice
Minimum Wage
- The minimum wage in Algeria is 20,000 Algerian dinars (DZD) per month.
- The minimum wage includes the basic wage as well as any allowances or bonuses, with the exception of allowances granted as expense reimbursement.
- Civil and military national defense personnel, magistrates, state officials, and personnel of public establishments of an administrative nature have separate legislation with regards to minimum wages.
Working Hours
- According to Algerian labor rules, the usual working duration for employees is 40 hours per week, and employees must be granted one full day (paid) of rest each week.
Overtime
- All work above the standard weekly working hours is to be paid overtime, is regulated by employment contracts and collective agreements, and may only be requested by the employer in exceptional circumstances.
- The maximum working hours in Algeria, inclusive of overtime, are 12 hours a day and 64 hours a week.
- Where an employee is required to work additional hours, they are entitled to overtime pay of a minimum of 150% of the normal hourly rate.
Non Compete
- In the employment agreement, employers may include a non-competition provision.
Severance
- Mandatory for employees who are terminated due to redundancy or the closure of the enterprise. Employees must have at least 2 years of service.
- There is no severance pay at the time of resignation.
- The amount payable is equivalent to one month’s salary for each year of service, with a maximum of 24 months’ salary.
Termination
Contracts with fixed terms expire. Unlimited-term employment contracts may be terminated only for the following reasons:
- There must be substantial wrongdoing in order for an employee’s employment contract to be terminated for reason, and dismissal is only permissible when a disciplinary procedure has been completed.
- Failure to follow a disciplinary procedure will result in the dismissal being declared ‘abusive,’ which will have ramifications for the employer, who will be obliged to pay termination compensation.
- According to the Algerian Labor Law and Legislative Decree No. 94-09 of May 26, 1994 (the Algerian Redundancy Law), an employer may terminate employment on the basis of redundancy only if economic considerations justify such a step and after all efforts to avoid redundancy have been exhausted.
- A redundancy is subject to a necessary procedure that is determined through collective bargaining. The procedure necessitates the participation of the local labor administration. If the necessary procedure is not followed, the termination of an employment contract on the basis of redundancy is considered ‘abusive.’ Employment termination for reasons other than those listed above, or termination without following the proper procedures, is considered ‘abusive,’ giving the right to compensation of no less than six months’ salary (where reinstatement is not possible), as well as uncapped damages as determined by the court.
Collective Bargaining
- Unless the latter is more favorable to the worker, the provisions of an established collective bargaining agreement take precedence over the terms of any contract, and it makes no difference whether the contract was concluded before the collective bargaining agreement.
- Hours of work, earnings and salaries, rest intervals, overtime work and compensation, dispute resolution methods, promotion and training, holidays, punishment, dismissal and termination procedures, and many other employment-related concerns are all included in a typical collective agreement.
Enforcement
- A Supreme Court, three Courts of Appeal, and a system of lesser tribunals organized into civil, criminal, and commercial courts comprise the Judiciary. Armed tribunals’ authority was originally confined to trials involving members of the military forces but has recently been problematically enlarged to encompass cases involving civilians accused of state security offenses under the state of emergency law.
PAID TIME OFF
Annual Vacation
- Employees are entitled to up to 30 days of paid annual leave each year, calculated on a 2.5-day per month basis.
- Employees in Algeria’s southern provinces earn an additional 10 days of yearly leave.
- Employees may be entitled to more than 30 days of leave, depending on their collective bargaining agreement and employment contract.
- Workers may carry over their annual leave balance to the following year upon written request and consent from the employer.
- Accrued leave is required to be paid out at termination. If the employee has a negative balance at the time of termination, the amount may be recouped.
Sick
- 15 days of paid sick leave per annual cycle.
- The employee is compensated with half their salary beginning on the first day of sick leave and a full salary beginning on the 16th day of illness or if the employee is hospitalized.
- Sick pay and the reimbursement of medical expenses are funded by the National Fund of Social Security, based on the mandatory social contributions paid by the employer and the employee.
Maternity
- Female employees are entitled to 14 weeks of paid maternity leave. This starts at least one week before the expected date of delivery.
- The female employee has the right to a daily benefit during maternity leave equal to 100% of the regular wage she receives. The employee must present to the Social Security Institution a certificate indicating she has ceased to work and a wage certificate from the employer.
Paternity
- Male employees whose wives have given birth have the right to 3 days of paid paternity leave. Employees must provide their employer with written notice.
Family
- The employee is entitled to 3 days off without pay for the following reasons: the worker’s marriage, the birth of the worker’s child, the marriage of one of the worker’s descendants, the death of one of the worker’s parents, children, brother or sister, or the death of a spouse.
National Holidays
- Algeria has a total of 12 public holidays which are paid.
Other Paid Time Off
- The employee is entitled to 3 days off without pay for the following reasons: the worker’s marriage, the birth of the worker’s child, the marriage of one of the worker’s descendants, the death of one of the worker’s parents, children, brother or sister, or the death of a spouse.
STATUTORY EMPLOYEE BENEFITS
Unemployment
Employee/Insured Person :
- 0.5% of total monthly covered wages for social insurance (unemployment benefit).
- 0.375% of total monthly covered wages for social insurance (weather-related unemployment compensation).
Employer :
- 1% of total monthly covered wages for social insurance (unemployment benefit).
- 0.375% of total monthly covered wages for social insurance (weather-related unemployment compensation).
Covered earnings exclude any allowances.
Workers Compensation
- Work injury benefits are funded through the social security contribution system.
- To qualify for work injury benefits, the worker must be assessed for a work injury or occupational disease. Accidents that occur while commuting to and from work are covered.
- Injuries are classified on the basis of their consequences.
- Source of funds: The employer contributes 1.25% of gross monthly covered payroll towards work injury benefits (this is included in the 26% social security contributions).
Social Security
- Individuals employed by individuals, including domestic workers, drivers, janitors, and caretakers; veterans; certain kinds of fishers; apprentices receiving at least half the legal minimum wage; and self-employed individuals.
- 7.5% of yearly covered disclosed earnings
- The contribution amount is calculated using the minimum yearly earnings of 216,000 dinars.
- The maximum yearly earnings for contribution purposes are 4,320,000 dinars.
- 11.5% of gross monthly covered payroll (old age). For disability and survivor payments, see the source of funding section under Sickness and Maternity.
- Allowances are not considered covered wages.
Retirement
- The National Retirement Fund administers and collects contributions for the old-age program for employed persons.
- For full pension, a male worker must have attained 60 years of age, and a female worker must have attained 55 years of age.
- The workers must have at least 15 years of paid or credited contributions.
- A year of paid contributions is defined as a period of at least 180 days during which the insured worked.
- The old-age pension is calculated as per the following formula: 2.5% of the insured worker’s average monthly earnings in the five years preceding retirement, or the highest five years of earnings in full work history, multiplied by the number of years of paid contributions.
- The maximum monthly old-age pension is 15 times the legal monthly minimum wage.
Health
- Medical Aid is a private option and is based on an employee voluntary basis to sign up or for the employer to offer it.
- Algeria has a public health care system funded by the Algerian government. Given the country’s young population, policy prioritizes preventative health care and clinics over hospitals.
PRIVATE EMPLOYEE BENEFITS
Workers Compensation
N/A
Retirement
N/A
Health
- Private healthcare is available in Algeria and offers high standards of care and medical services.
Insurance
N/A
PERSONAL INCOME TAX
Tax Year
- The fiscal year, which roughly correlates to the calendar year, is the taxable period.
Tax Tables
- The local currency is DZD and Algeria uses a progressive tax rate up to 35%.
Taxable Income | Rates of Taxes |
0 – 240 000 | 0% |
240 001 – 480 000 | 23% |
480 000 – 960 000 | 27% |
960 001 – 1 920 000 | 30% |
1 920 001 – 3 840 000 | 33% |
3 840 000 + | 35% |
Taxation Method
- The taxation approach is a progressive income tax.
Double Taxation
- Algeria has multiple double taxation agreements.
Residence Requirements
The following individuals are regarded as having a tax domicile in Algeria, according to Algerian tax legislation:
- People who own a home, are a usufructuary, or rent a home for at least a year, even if the rental is paid for by their employment,.
- People who make Algeria their primary residence or the focus of their primary interests. If a person spends more than 183 days in Algeria in a calendar year, he or she will be regarded as an Algerian tax resident (even if not a national), and his or her income (made in Algeria and elsewhere) will be subject to taxation.
Payroll Calendars
- Wages are normally paid on the final working day of the month, according to the payroll cycle.
Rebates & Tax Credits
- Income tax withheld on pay and interest is deductible on global individual income tax.
Health Insurance
- Algeria has a public health care system funded by the Algerian government. Given the country’s young population, policy prioritizes preventative health care and clinics over hospitals.
Unemployment
Employee/Insured Person:
- 0.5% of total monthly covered wages for social insurance (unemployment benefit).
- 0.375% of total monthly covered wages for social insurance (weather-related unemployment compensation).
Employer:
- 1% of total monthly covered wages for social insurance (unemployment benefit).
- 0.375% of total monthly covered wages for social insurance (weather-related unemployment compensation).
Covered earnings exclude any allowances.
Social Security
7 percent of total monthly covered earnings for the insured individual (old age). For disability and survivor payments, see the source of funding section under Sickness and Maternity.
Allowances are not considered covered wages.
- 7.5 percent of yearly covered stated earnings for self-employed individuals.
- The contribution amount is calculated using the minimum yearly earnings of 216,000 dinars.
- The maximum yearly earnings for contribution purposes are 4,320,000 dinars.
Employer: 11.25 percent of monthly gross covered payroll (old age).
- Allowances are not considered covered wages.
- The government pays the minimum pension and contributes as an employer.
PAYROLL ELEMENTS
Income
- Salary, earnings, bonuses, overtime pay, taxable benefits, allowances, and certain lump-sum perks are examples of remuneration (revenue from employment).
- Profits or losses made by a company or trade.
- Income or profits derived from an individual’s status as a trust beneficiary.
Bonuses
- Bonuses in Algeria are not mandatory by law and are subject to agreement between employer and employee.
Allowances
- There are no mandatory allowances to be paid by the employer.
- The Social Insurance and Social Assistance system in Algeria, however, funds the below allowances:
- Family Allowance: Funded by the Social Insurance System Paid for children younger than the age of 17 (or 21 if an apprentice with earnings up to half the legal minimum wage, a student, or disabled)
- School Allowance: Funded by the Social Insurance System Paid for children older than 6.
- Special School Allowance: Funded by the Social Assistance System Paid for children in vulnerable situations, children with disabilities, etc.
- Solidarity Allowance: Funded by the Social Assistance System Paid to persons without any income, female household heads, persons with chronic diseases aged 18 or older, etc.
Certain conditions have to be met in order for the insured person to receive these benefits.
Benefits in Kind
N / A
Investment Income
Gains in capital
- When capital gains on the sale of assets are realized by a firm subject to IBS, they are taxed like ordinary income. For specific assets, 30% relief is provided if the assets have been held for up to three years, and 65% relief is provided if the transportable assets have been kept for longer. Capital gains on asset disposals can be avoided if the firm promises to reinvest them within three years.
Dividend earnings
- Dividends paid to non-resident shareholders are subject to 15% WHT at the source, which may be reduced or neutralized by an appropriate DTT. Beginning with fiscal year (FY) 2018, dividends paid to resident shareholders (natural persons) are subject to a 15% WHT at source (previously, 10%).
- According to Article 46 of the Finance Law for 2022, divided revenues amongst Algerian resident businesses that were previously subject to CIT are subject to a 5% withholding tax.
- Keep in mind that received gains are not included in the taxable base for CIT purposes.
Interest earnings
- Interest paid is subject to 10% WHT, is included in the recipient’s income, and is liable to CIT if the beneficiary is a legal organization. Interest paid to a non-resident is usually subject to a 10% WHT. The rate may be decreased in accordance with any relevant DTT.
Retirement Funding
- The National Retirement Fund administers and collects contributions for the old-age program for employed persons.
- For full pension, a male worker must have attained 60 years of age, and a female worker must have attained 55 years of age.
- The workers must have at least 15 years of paid or credited contributions.
- A year of paid contributions is defined as a period of at least 180 days during which the insured worked.
- The old-age pension is calculated as per the following formula: 2.5% of the insured worker’s average monthly earnings in the five years preceding retirement, or the highest five years of earnings in full work history, multiplied by the number of years of paid contributions.
- The maximum monthly old-age pension is 15 times the legal monthly minimum wage.
Health Insurance
- Algeria has a public health care system funded by the Algerian government. Given the country’s young population, policy prioritizes preventative health care and clinics over hospitals.
Risk Insurance
N / A
Taxable Income
Individuals may be taxed in Algeria under the following conditions:
- On their worldwide income, regardless of source or recharge agreements, if they are deemed Algerian tax residents.
- If they are not regarded as Algerian tax residents, they must pay tax on income derived in Algeria (received in consideration of a professional activity done in Algeria).
Allowable Deductions
Allowable deductions
- Alimony payments are tax-deductible.
Donations to charities
- Donations to charities are not tax-deductible.
Childcare costs
- Childcare costs are not tax-deductible.
Education costs
- Education costs are not tax-deductible.
Healthcare costs
- Healthcare costs are not tax-deductible.
Premiums for life insurance
- Premiums for life insurance are not deductible.
Mortgage interest costs
- Mortgage interest is tax-deductible.
Paid taxes
- Paid taxes are deductible.
PAYROLL TAXES AND EMPLOYER CONTRIBUTIONS
Payroll Taxes
- The employer is required to contribute 26% of the employee’s gross compensation (employer contribution) and 9% of the employee’s gross salary (employee contribution). Contributions to social security cover retirement, illness, unemployment, and workplace accidents.
Unemployment
Employee/Insured Person:
- 0.5% of total monthly covered wages for social insurance (unemployment benefit).
- 0.375% of total monthly covered wages for social insurance (weather-related unemployment compensation).
Employer:
- 1% of total monthly covered wages for social insurance (unemployment benefit).
- 0.375% of total monthly covered wages for social insurance (weather-related unemployment compensation).
Covered earnings exclude any allowances.
Social Security
- 7 percent of total monthly covered earnings for the insured individual (old age).
- Allowances are not considered covered wages.
- 7.5 percent of yearly covered stated earnings for self-employed individuals.
- The contribution amount is calculated using the minimum yearly earnings of 216,000 dinars.
- The maximum yearly earnings for contribution purposes are 4,320,000 dinars.
- Employer: 11.25 percent of monthly gross covered payroll (old age). F
- Allowances are not considered covered wages.
- The government pays the minimum pension and contributes as an employer.
Workers Compensation
- Work injury benefits are funded through the social security contribution system.
- To qualify for work injury benefits, the worker must be assessed for a work injury or occupational disease. Accidents that occur while commuting to and from work are covered.
- Injuries are classified on the basis of their consequences.
- Source of funds: The employer contributes 1.25% of gross monthly covered payroll towards work injury benefits (this is included in the 26% social security contributions).
ADMINISTRATION
Income
Personal income taxes are levied at progressive rates (the marginal rate is 35%).
Individuals may be taxed in Algeria under the following conditions:
- If they are considered Algerian tax residents they must pay taxes on their worldwide income, regardless of source or recharge agreements.
- If they are not considered Algerian tax residents, they must pay taxes on income earned in Algeria (paid in exchange for professional services performed in Algeria).
Payroll Taxes
- The employer is required to contribute 26% of the employee’s gross compensation (employer contribution) and 9% of the employee’s gross salary (employee contribution). Contributions to social security cover retirement, illness, unemployment, and workplace accidents.
Unemployment
Employee/Insured Person:
- 0.5% of total monthly covered wages for social insurance (unemployment benefit).
- 0.375% of total monthly covered wages for social insurance (weather-related unemployment compensation).
Employer:
- 1% of total monthly covered wages for social insurance (unemployment benefit).
- 0.375% of total monthly covered wages for social insurance (weather-related unemployment compensation).
Covered earnings exclude any allowances.
Social Security
- 7 percent of total monthly covered earnings for the insured individual (old age). For disability and survivor payments, see the source of funding section under Sickness and Maternity.
- Allowances are not considered covered wages.
- 7.5 percent of yearly covered stated earnings for self-employed individuals.
- The contribution amount is calculated using the minimum yearly earnings of 216,000 dinars.
- The maximum yearly earnings for contribution purposes are 4,320,000 dinars.
- Employer: 11.25 percent of monthly gross covered payroll (old age). For disability and survivor payments, see the source of funding section under Sickness and Maternity.
- Allowances are not considered covered wages.
- The government pays the minimum pension and contributes as an employer.
Workers Compensation
- Work injury benefits are funded through the social security contribution system.
- To qualify for work injury benefits, the worker must be assessed for a work injury or occupational disease. Accidents that occur while commuting to and from work are covered.
- Injuries are classified on the basis of their consequences.
- Source of funds: The employer contributes 1.25% of gross monthly covered payroll towards work injury benefits (this is included in the 26% social security contributions).
Statutory Benefits
- Algeria offers a universal healthcare system. There is also mandatory social security, which both the employer and employee have to contribute to.
Employee Benefits
- Certain benefits are mandated by law to be included in the Algerian benefit management plan. Algeria has 12 public holidays on which employees are excused from work, and they are additionally entitled to 30 days of paid leave time every year. They are also allowed sick leave and bereavement leave. Maternity and paternity leave are both offered.
LEGISLATION
- Labor Law of Algeria
STATUTORY BODIES
- National Retirement Fund
- National Social Insurance Fund
- National Social Security Fund for Nonwage Earners
- National Unemployment Insurance Fund
- Ministry of National Solidarity, Family, and Women
