Engaging someone as an independent contractor can suit both sides: flexibility for the worker, agility for the business. The label, however, is not decisive. Kenyan courts look at how the relationship actually works, and a contractor who looks like an employee in substance will often be treated as one.
When is a contractor actually an employee in Kenya?
The ELRC and the tribunals that preceded it weigh the substance of the arrangement: who controls how, when and where the work is done; whether the person is integrated into the organisation; who provides the tools; and whether the person works exclusively for one business. A written agreement describing the relationship as independent carries weight, but it cannot change facts that point the other way.
What are the risks of misclassification?
- Claims for unfair termination, notice pay and accrued benefits
- Liability for unpaid PAYE and associated penalties assessed by the Kenya Revenue Authority
- Arrears of contributions under the NSSF Act
- Exposure under the Work Injury Benefits Act 2007 if the person is injured at work
- Cost and disruption where several engagements are affected at once
How can you structure contractor engagements properly?
Start by matching the documents to the reality. A contractor agreement should reflect genuine independence: the contractor decides how the work is delivered, invoices for services, provides their own equipment where sensible, and is free to serve other clients. If the working reality is closer to employment, it is usually safer to engage the person as an employee and budget for the statutory costs. Counsel review is inexpensive compared with a reclassification dispute spanning several years of engagements.
A periodic audit pays
Engagements drift: a one-off project becomes a standing arrangement with a fixed desk and set hours. A periodic review of active contractor files, and of the contracts behind them, keeps the position honest. Our corporate team reviews and drafts both contractor and employment agreements through our contract services, within the firm’s wider practice areas.
This article was written by Charles Muriu Mathenge, who advises businesses, HR directors and boards on corporate and commercial matters at CS Advocates LLP.
For guidance on your specific situation, contact CS Advocates LLP , call, WhatsApp, or book a confidential consultation at our Westlands, Nairobi office.