Employee Loan Management Software: Salary Advances, Installments and Legal Deduction Limits in Egypt and KSA

Employee loan management software takes an employee's advance or loan request, routes it for approval, turns it into an installment schedule and deducts each installment from payroll automatically until the balance is cleared, while keeping every deduction inside the legal limits. If you're still tracking advances in a notebook or spreadsheet, you're exposed to three expensive mistakes: deducting more than the law allows, missing an installment, or losing the outstanding balance when someone resigns. This guide covers the rules in Egypt's Labour Law 14 of 2025 and the Saudi Labor Law, a worked example and a checklist for a fair, enforceable loan policy.

Key takeaways

• Egypt: repayment of an employer loan is capped at 10% of the wage, with no interest (Art. 113).
• Other debts and garnishments are capped at 25% (50% for alimony), calculated after tax and social insurance (Art. 114).
• Saudi Arabia: employer-loan recovery is capped at 10% of the wage (Art. 92), and total deductions at half the wage due (Art. 93).
• A written policy matters more than the tool: who qualifies, how much, over how many months and who approves.
• The outstanding balance must surface automatically in the final settlement.

Legal information here is general guidance, not legal advice. Check the official text or your adviser before applying it.

What problem does loan management software solve?

An employee advance is money the employer pays up front and recovers in one go or in installments from salary. Simple in theory, messy in practice:

• Nobody agrees on the balance. The employee says five installments are paid; finance sees four.
• Deductions exceed the legal cap. A large monthly installment invites complaints and disputes.
• Overlapping loans. A second advance before the first is repaid, and the installments get tangled.
• Balances disappear at exit. Final dues are paid and nobody remembers the open loan.
• Inconsistent approvals. One person is approved in a day, another waits a month, with no clear criteria.

Good software turns an informal arrangement into a complete record: request, approval, schedule, deduction, balance and report.

Loans vs other payroll deductions in Egypt

Egyptian law treats each type of deduction differently, so keep them separate in policy and in your system:

Sources: the law text on Manshurat and Wikisource, and the EY alert.

A loan installment isn't a penalty, and a penalty isn't a debt. Each has its own approval path, cap and audit record. When several apply in the same month, check with your adviser how the caps interact, and make sure your software warns you before a payroll run that breaks them.

What about an advance against this month's pay?

Some companies pay part of the current month's salary early and deduct it in full from the same month's payroll. That is essentially early payment of wages already earned. If the amount goes beyond what the employee has earned and becomes a debt repaid over later months, the 10% installment rule applies. Spell out the difference in your written policy and take advice on edge cases.

Egypt's 10% rule in practice

Article 113 is clear: the employer may recover a loan by deducting no more than 10% of the wage, and may not charge interest. Three operational consequences follow:

1. The installment is driven by the salary, not the loan size. A bigger loan means more installments, not a bigger deduction.
2. Total installments = principal. No admin fees and no hidden interest.
3. Define the wage base in your policy and apply it consistently, after checking with counsel.

Worked example (illustrative numbers)

An employee earns EGP 10,000 a month and asks for an EGP 6,000 advance.

• Maximum installment = 10% × 10,000 = EGP 1,000 a month
• Minimum number of installments = 6,000 ÷ 1,000 = 6

For an EGP 5,500 advance, the correct schedule is five installments of 1,000 and a final installment of 500, equal to the remaining balance. The classic spreadsheet mistake is splitting the amount into decimal installments (916.67) and leaving rounding differences hanging, or deducting a full installment in the last month that exceeds the balance.

Saudi Arabia and the Gulf

For Saudi branches, the rules sit in the Saudi Labor Law as published by MHRSD:

• Article 92: no deduction for private rights without the worker's written consent, except in listed cases, including recovery of employer loans of no more than 10% of the wage.
• Article 93: total deductions may never exceed half of the wage due, except in specified cases.
• Final settlement: within one week if the employer ends the contract and two weeks if the employee does (Art. 88), with any outstanding loan shown.
• Wage Protection System: in the wage file uploaded through Mudad, loan installments sit within the deductions field that the transferred net pay is reconciled against, so they must be recorded accurately in payroll.

Checklist for a written loan policy

• Eligibility: e.g. after probation and with no open loan.
• Maximum amount: a multiple of monthly salary or a fixed amount by grade.
• Maximum number of installments and repayment period.
• Installment rule: within the legal cap (10% in Egypt and KSA), no interest.
• Approval route: line manager then HR, plus finance or senior management above a threshold.
• Postponement: allowed? How often? Approved by whom?
• Early repayment: can the employee clear the balance at once?
• Exit: how the balance is handled in final settlement, within the law and the written agreement.
• Confidentiality: who can see loan requests and amounts.

The loan lifecycle, step by step

1. Request from the employee app, or entered by HR on the employee's behalf, with amount, installments and reason.
2. Automatic checks: eligibility, any open loan, and whether the proposed installment stays within the legal cap.
3. Approvals along a defined route, with amount-based conditions and escalation if an approver sits on it.
4. Disbursement recorded with date and method (bank transfer, wallet or cash).
5. Schedule created, with the final installment equal to the remaining balance.
6. Monthly deduction in payroll, shown as a separate line on the payslip.
7. Changes such as a postponed installment or early repayment, approved and logged.
8. Closure when the last installment is paid, after which the employee can apply again under your policy.

Manual tracking vs loan management software

How BashKatib helps with employee loans

In BashKatib, loans and advances live inside payroll, not in a side file, so every installment reaches the payroll run without re-keying:

• Requests from the app: employees request a loan or advance in the employee app and track status and remaining balance.
• Flexible approvals: manager → department head → HR or finance, with conditions such as "above a set amount, add the finance manager", delegation during leave, SLA escalation and one-tap mobile approval.
• Mathematically correct schedules: the final installment equals the remaining balance, and deductions are tracked per loan.
• Legal limit checks before approval, alongside disciplinary deduction caps (5 days per violation and per month in Egypt).
• Skip or postpone an installment with approval; the schedule recalculates automatically.
• Automatic payroll deduction shown on bilingual payslips and carried into bank transfer files or the Saudi WPS file.
• Final settlement: outstanding loans and unreturned assets are included in the settlement statement with the last salary and leave encashment. See asset and custody management.
• Bonuses and penalties in one place: a penalty catalogue linked to your disciplinary policy, and bonuses that reach payroll only after approval.
• Reports on bonuses, penalties and loans, and payroll cost by branch and department. See reports.
• AI voice daily briefing: the owner's spoken summary includes pending approvals awaiting their decision, loan requests among them, with the oldest flagged. See the AI voice briefing.

Because loans touch both salary and contract, read our guides to payroll software and employee contract management, or start with the HR software overview.

Pricing: loans and payroll are included from the Growth plan (EGP 45 or SAR 14 per employee per month, billed annually), together with statutory files, the approvals engine, asset custody and the owner's daily voice briefing. Prices are as of writing and exclude VAT; see pricing.

Common mistakes to avoid

• Sizing the installment from the loan rather than the salary, which breaks the legal cap.
• Adding "admin fees", which amount to the interest Egyptian law prohibits.
• Mixing loan installments with penalties, losing the disciplinary record.
• Not showing employees their balance, so every payday becomes a debate.
• Paying final dues before reconciling balances: loans, custody items and leave.

Frequently asked questions

How much of an employee's salary can be deducted to repay a loan in Egypt?

Article 113 of Labour Law 14 of 2025 caps the deduction for repaying an employer loan at 10% of the wage, with no interest. Other debts and garnishments are capped at 25% of the wage (50% for alimony) under Article 114, calculated after income tax and social insurance.

Can an employer charge interest on an employee loan in Egypt?

No. Labour Law 14 of 2025 requires employer loans to be recovered without interest, so total installments must equal the principal only.

What are the loan deduction limits under the Saudi Labor Law?

Article 92 bars deductions for private rights without the worker's written consent except in listed cases, including recovery of employer loans of no more than 10% of the wage. Article 93 caps total deductions at half of the wage due, except in specified cases.

What happens to an outstanding loan when an employee resigns?

The remaining balance appears in the final settlement and is handled according to the written agreement and what the law allows. Egypt requires final dues within 7 working days; Saudi Arabia within one week if the employer ends the contract and two weeks if the employee does.

Can an installment be skipped or postponed for a month?

Yes, if your policy allows it. In BashKatib an installment can be skipped or postponed with approval; the schedule is recalculated automatically and the reason is kept in the audit log.

How does an employee request a salary advance in BashKatib?

From the employee app they choose a loan or advance request, enter the amount, number of installments and reason. It follows your approval route (manager, then HR or finance depending on the amount), and once approved the installment schedule is created and deducted in payroll automatically.

Get loans under control

Try BashKatib free for 14 days on the full Pro plan, extendable to 30 days so you can run a parallel payroll and compare results. Start your free trial or book a demo and we'll help you set up your loan policy and approval route.