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Hiring in Algeria
Algeria, officially known as the Democratic Republic of Algeria, is located in North Africa. Global PEO or Employer of Record (EOR) play a pivotal role in providing companies with services related to hiring employees, and ensuring compliance with Algeria’s legal and tax regulations. Employment regulations covering annual leave, holidays and termination are stipulated under Algeria’s Labor Code. For instance, the Algerian Labor Law provides employees a minimum entitlement to 30 calendar days’ paid annual leave. Global PEO’s act as the official Employer of Record (EOR) and thus are responsible for facilitating companies with compliance in accordance with Algeria’s Labor Code. Resident individuals are taxed on their worldwide income; whereas non-resident individuals are taxed only on their income sourced in Algeria. Global PEO’s further facilitate companies by ensuring that they are compliant with Algeria’s tax laws and regulations.
statutory labor requirements
Probation Period
- An employee may be employed on probation for up to six months, although highly qualified individuals may be subject to a probationary period for up to 12 months.
Annual Leave
- The Algerian Labor Law provides employees a minimum entitlement to 30 calendar days’ paid annual leave.
Public Holidays
- New Year's Day (1st January)
- Yennayer (12th January)
- Labor Day (1st May)
- Eid al-Fitr
- Independence Day of Algeria (5th July)
- Eid al-Adha
- Islamic New Year
- Ashura
- Prophet's Birthday
- Revolution Day (1st November)
Maternity Leave
- Provided that the employee has worked at least either 15 calendar days / 100 hours during the three months preceding the date of the first medical acknowledgment of pregnancy or 60 calendar days / 400 hours during the 12 months preceding the first medical acknowledgment of pregnancy, a female employee is entitled to 14 weeks’ fully paid maternity leave.
- This includes a compulsory period of leave before the expected date of birth and following delivery of not less than six weeks.
Paternity Leave
- Male employees can take three days of paid paternity leave as long as they submit a written notice and reason.
Sick Leave
- Employees are entitled to 15 days’ paid sick leave at half salary; and full salary from the 16th day of sickness onwards
Work Hours
- The working week typically runs from Sunday to Thursday and the maximum prescribed working hours for an employee is 40 hours per week (based on a five-day week) and eight hours per day (exclusive of a one-hour break).
- Friday is the statutory day of rest each week
Overtime
- Overtime hours must not exceed 20% of the maximum working hours (i.e. eight hours per week) and an employee must not be required to work more than a total of 12 hours per day.
- Where an employee is required to work additional hours, they are entitled to overtime pay, of a minimum of 150% of the normal hourly wage.
- If circumstances require the employee to work on their weekly day off, they must be granted another day off (in lieu) and 150% off their wage for the overtime period.
Notice Period
- The notice period is 5 days per year served capped at 30 days.
Severance
- Employees receive 15 days of severance pay per year of service after 2 years of service.
13th / 14th Month Pay
- No
- There is no statutory requirement to pay the 13th or 14th month salary and the structural measures aimed at tightening the link between pay and performance suggests that it is not customary practice to pay the 13th month.
- Employees are entitled to a generous 30 days paid leave.
income tax
- Under Algerian rules, individuals could be subject to tax:
- On their worldwide income if they are considered as Algerian tax residents, irrespective of source or recharge arrangements.
- On their income sourced in Algeria (received in consideration of a professional activity performed in Algeria) if they are not considered as Algerian tax resident.
- Personal income taxation is applied with progressive scale rates (marginal rate 35%).
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Income Tax |
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Progressive rates up to 35% |
deductible expenses
Personal Deductions
- Alimony payments are deductible.
- Charitable contributions are not deductible.
- Childcare expenses are not deductible.
- Education expenses are not deductible.
- Healthcare expenses are not deductible.
- Life insurance premiums are not deductible.
- Mortgage interest expenses are deductible.
- Taxes paid are deductible
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Deductible Expenses |
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immigration
- Entry visas are required for nationals of the European Union (EU), United States and certain Arabic countries, such as Egypt.
- Moroccan and Tunisian nationals are not required to have entry visas.
- Foreign nationals who wish to enter Algeria for a period not exceeding 15 days can enter with a business visa.
- This visa allows the holding of meetings (internal or with clients) but not the provision of services.
- Foreign nationals who wish to work in Algeria under a contract that has a duration of less than three months must obtain a temporary work authorization.
- It can be renewed once in a year.
- Under Article 9 of Law No. 81-10, a foreigner who is assigned to Algeria for a duration of less than 15 days does not require a temporary work authorization.
- However, a temporary work visa is always required.
- To obtain the visa, a foreign national must justify his or her work in Algeria.
- After the granting of a temporary work authorization and work visa, a work permit is required.
- A work permit’s validity may not exceed two years, but it is renewable.
- French nationals benefit from a special regime.
- They need to obtain a foreign worker declaration instead of a work permit.
- A foreign worker working as a managing director of an Algerian entity is exempt from the work permit requirement but needs a business professional card and, in some circumstances, a residence card as well.
- Foreigners who are intending to extend their stay in Algeria beyond the duration specified in the visa must request a residence card 15 days before expiration of the visa’s validity.
- This card is valid for two years.
- A residence card with a validity of 10 years can be issued after a regular residency of 7 years in Algeria.
- The application form for the residence card must be sent to the local police office.
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Type of Visa/Permit |
Documentation |
Validity |
Eligibility |
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Business Visa |
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30 days |
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Temporary Work Visa |
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3 months |
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Work Permit |
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Maximum 2 years |
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value added tax (vat)
Value-added tax (VAT) at 19% or 9% or 0% is paid by the individual as final consumer.
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VAT |
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Standard Rate |
19% |
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Reduced Rate |
9% |
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Zero Rate |
0% |
withholding tax
Dividends
- Dividends and distributions of profits paid to a nonresident company or individual are subject to a 15% withholding tax, unless the rate is reduced under a tax treaty
Interest
- Interest paid to a nonresident is subject to a 10% withholding tax, unless the rate is reduced under a tax treaty
Royalties
- Royalties are subject to a 24% withholding tax, unless the rate is reduced under a tax treaty
Technical Service Fees
- A 24% withholding tax applies on gross income derived from service fees paid abroad by a local company to a foreign company
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WHT |
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Dividends |
15% |
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Interest |
10% |
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Royalties |
24% |
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Technical Service Fees |
24% |
termination
- Fixed term contracts terminate on expiry. Unlimited term employment contracts may only be terminated for cause’ or redundancy.
- In order for an employee’s employment contract to be terminated for cause’, there has to be serious misconduct and dismissal is only permitted once a disciplinary procedure has been carried out.
- Failure to carry out a disciplinary procedure will result in the dismissal being deemed to be ‘abusive’ and this will have consequences for the employer, who will be required to pay termination compensation.
- Under the Algerian Labor Law and Legislative Decree No. 94-09 dated 26 May 1994 (the Algerian Redundancy Law), an employer may terminate employment on redundancy grounds only if economic reasons justify such a measure and once all alternatives aimed at avoiding redundancy have been exhausted.
- A redundancy is subject to a mandatory procedure, decided after collective bargaining.
- The procedure requires the involvement of the local labor administration.
- Should there be a breach of the correct procedure, the termination of an employment contract on the grounds of redundancy shall be deemed to be ‘abusive’.
- The termination of employment for reasons other than those identified above, or where termination has taken place without the correct procedures having been followed, is deemed to be ‘abusive’, giving 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.
statutory benefits
- These are mandatory benefits as postulated by law
- These include probationary period, annual leave, public holidays, sick leave, maternity leave, paternity leave, overtime pay, notice period, and severance pay
- Statutory benefits also include social security benefits
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Statutory Benefits |
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Probationary Period |
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Annual Leave |
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Public Holidays |
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Maternity Leave |
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Paternity Leave |
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Sick Leave |
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Overtime Pay |
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Notice Period |
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Severance Pay |
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Social Security Benefits |
payments and invoicing
- The taxable period is the calendar year.
- The individual tax return has to be deposited before 30 April (for the FY19 annual tax return and as a result of the COVID-19 crisis, the deadline has been postponed to 30 June 2020).
- Withheld income tax has to be declared with 20 days following the month of income payment.
- Income tax in the framework of the individual tax return is paid upon receipt of tax notification. The withheld income tax is paid when depositing the monthly tax return.
ease of doing business
- The ease of doing business index is an index created by Simeon Djankov, an economist at the Central and Eastern Europe sector of the World Bank Group.
- Higher rankings (a low numerical value) indicate better, usually simpler, regulations for businesses and stronger protections of property rights.
- According to the World Bank Algeria ranked 157th in the World in 2019 in terms of ease of doing business.
employee accruals
| Christmas Bonus% | 0% |
| Christmas Bonus Over Vacations % | 0% |
| Severance per Year % | Employees receive 15 days of severance pay per year of service after 2 years of service (4.109% of annual salary) |
| Vacations % | The Algerian Labor Law provides employees a minimum entitlement to 30 calendar days’ paid annual leave (8.21% of annual salary) |
| Notice % | The notice period is 5 days per year served capped at 30 days (1.37%) |
| Christmas Bonus Over Notifications% | 0% |
| Vacations Plus% | In Southern wilayas provinces (extra 10 days holiday) (2.74% of annual salary) |
| Total percentage of Salary (yearly) | The total employment accruals as a percentage of salary per anum are equal to 16.47% |
employer accruals
Additional information (Country Accruals)
| Vacation | 11.23 |
| Health insurance | 26% |
| It is the employer’s obligation to contribute 26% of the employee gross salary (employer contribution) and 9% of gross salary (employee contribution). The social security contributions cover retirement, illness, unemployment, and work accidents. |
Employer Accruals Additional information
| Employment Accruals | ||
| Annual Leave | The Algerian Labor Law provides employees a minimum entitlement to 30 calendar days’ paid annual leave. | This equals 8.22% (30/365 days) of annual income. |
| Maternity Leave | A female employee is entitled to 14 weeks’ fully paid maternity leave. | This equals 27% (14/52 weeks) of annual income. |
| Paternity Leave | Male employees can take 3 days of paid paternity leave | This equals 0.82% (3/365 days) of annual income. |
| Sick Leave | Employees are entitled to 15 days’ paid sick leave at half salary | This equals 4.1% (15/365 days) |
| Overtime Pay | Where an employee is required to work additional hours, they are entitled to overtime pay, of a minimum of 150% of the normal hourly wage. An employee must not be required to work more than a total of 12 hours per day. | This equals additional 50% pay. Overtime can't exceed 4 hours per day or 80 hours a month. Hourly wage rate is 1125 DZD.Overtime rate is an additional 562.5 DZD. |
| Severance Pay | Employees receive 15 days of severance pay per year of service after 2 years of service. | This equals 4.1% (15/365 days) |
| Social Security Contribution | It is the employer’s obligation to contribute 26% of the employee gross salary (employer contribution) | 26% of employee's gross salary |
