Independent contractors or freelancers are self-employed individuals who provide services to companies as a non-employee. This is one of the most common ways companies tend to hire non-local designers, engineers, support reps, etc.
For legal and tax purposes, independent contractors are not classified as employees. They may work for multiple clients, set their own work hours, negotiate their pay rate, and decide how a job gets done.
For example, the IRS says that if an independent contractor or freelancer does work that can be controlled (what will be done and how it will be done) by an employer then they are, in fact, classified as an employee.
As you can imagine, hiring someone as an independent contractor versus an employee is a fine line to tread.
While there are benefits when you choose the contractor route, there are quite a few drawbacks to consider and you’ll need to weigh them carefully to determine the best fit for your company.
A foreign subsidiary is a company that operates overseas as part of a larger company who’s HQ is in another country.
Establishing a foreign entity is great for having an international presence and accessing new markets. Though, setting up a subsidiary in Kenya can be expensive, stressful, and time-consuming. It's not for the faint of heart.
To set up a subsidiary in Kenya, you have to:
If you're lucky, this process can take months. If you're not so lucky, it can take up to a year. And on average, it costs about $50k-$80k, all-in-all, to get setup. And that's just for Kenya.
An employer-of-record (EOR) is a company that hires and pays an employee on behalf of another company.
An EOR is typically used to overcome the financial and regulatory hurdles that often come with employing remote workers.
Each country has its own payroll, employment, and work permit requirements for non-resident companies doing business in their jurisdiction. Meeting those demands can be a huge obstacle when it comes to hiring remotely.
At Panther, we help companies employ and pay people in over 160 countries, without having to set up a foreign subsidiary. Payroll, benefits, taxes, compliance, and more are all handled by us, at a fraction of the cost.
Outside of saving you months and tens of thousands of dollars, other advantages of using Panther are:
Because you no longer have to set up your own subsidiary, you’ll save a ton of time and tens of thousands of dollars using Panther.
Paying employees in Kenya is not the same as paying workers in your own country. Employees have to be paid using Kenya’s employment and payroll standards.
This means that you have to know, understand, and keep up with 1) fluctuating currency changes, and 2) local payroll and tax laws in the countries you’re looking to hire in.
Outside of the laws and regulations around payroll, there may be different conditions surrounding leave, overtime, termination, and more. As you can imagine, maintaining this kind of regulatory knowledge can be challenging. But it is crucial and necessary to follow local legislation.
After, you’ll have to determine the best way to pay your international employees. This can be done in a number of ways, including but not limited to:
One of the most challenging (and expensive) parts of paying international employees is setting up the infrastructure to do so.
Before you start to run payroll, you have to register your company as the local employer in the country the worker resides in. As you can see in the “Set up a subsidiary” section, this is a multi-step process that can take up to a year and put you on your way to bankruptcy.
Outside of EORs acting as the full admin employer, many also provide remote payroll.
For example, at Panther, in just 1-click, you’re able to pay your entire global team, anywhere in the world. We send you an invoice each month, charge you in US Dollars, and pay your employees the same amount in their local currency.
We factor in currency fluctuations and use the mid-market rate plus any applicable fee passed on by our provider at cost at the time of billing.
A full work week is 52 hours for daytime employees and 60 for employees who work nights.
Hours worked cannot exceed more than 116 hours in any 2– week period for daytime employees and 144 hours for nighttime employees.
Overtime is paid at the rate of 150% of the regular pay.
Casual employees- Wages are paid at the end of the workday.
Employees with an indefinite term employment contract- Wages are paid monthly and must be paid by the last working day of the month.
No 13th Salary.
PTO is calculated by the:
There are 13 public holidays. If a holiday falls on a Sunday, then the proceeding Monday is observed.
The duration of sick leave entitlement provided to workers is dependent on how long they have been employed by their employer:
Women are entitled to 91 days of maternity leave paid at 100% of the regular pay rate.
To be eligible, the woman has to give at least 7 days’ notice to their employer when the leave is intended to be taken and must be able to provide a medical certificate.
Fathers are entitled to 2 weeks paid paternity leave.
In the event of adoption for married employees, the same laws for maternity and paternity leave apply, however, instead of 7 days’ notice for the mother, 14 days’ notice must be given to the employer.
The employer must first conduct a hearing when termination is being considered for misconduct, performance, or physical incapacity to perform duties. The employee is entitled to have a union representative or another employee present in the hearing.
A termination letter with just cause must be provided.
When the employer initiates the termination of an employment agreement, final wages must be paid out on the termination date.
If the employee has been employed for more than 4 weeks, the employer is obligated to provide a certificate of employment after the employment agreement has ended.
The notice period in Kenya is:
When the employee receives wages on a daily basis, no notice is required.
When the employee is paid on a monthly basis, a 28-day written notice must be given by either the employee or employer. It is also possible to give payment in lieu of notice.
There are no provisions in the law regarding severance pay except for when the reason for termination is redundancy.
In this case, severance pay is 15 days of wages for every year of employment.
The probation period in Kenya is 6 months. If the employer dismisses the employee during this time, 7 days’ notice or payment in lieu must be given.