How to Hire Staff in Kenya Without Setting Up a Company

You need Kenyan talent but are not ready to incorporate. This guide explains your legal options for building a team in Kenya without establishing a local entity.

The Legal Problem

Under Kenyan law, you cannot legally employ someone in Kenya without a registered employer entity in the country. This presents a challenge for foreign companies that:

• Want to test the market before full commitment
• Need to hire just one or two employees
• Are waiting for company registration to complete
• Prefer not to deal with Kenyan corporate compliance

Fortunately, there are three legal pathways to engage Kenyan workers without your own local entity.

Option 1: Incorporate a Kenyan Company

While this guide focuses on alternatives, incorporating remains the standard approach for companies planning significant, long-term operations in Kenya.

When to Choose This:

• You plan to hire 10+ employees
• You need full brand presence in Kenya
• You are making significant capital investments
• You want maximum control and credibility

Considerations:

• Setup time: 3-8 weeks
• Setup cost: $3,000 - $10,000+
• Ongoing compliance: Monthly tax filings, annual returns, accounting
• Requires local director or nominee for practical banking/compliance

Option 2: Use Independent Contractors

Hiring Kenyan professionals as independent contractors (freelancers) is a common approach for project-based work or specific expertise.

Advantages:

• No local entity required
• Quick to engage
• No employment compliance burden
• Flexible for short-term projects

Risks and Limitations:

• Misclassification risk: If the relationship looks like employment, authorities may reclassify it
• Limited control: Contractors control how work is done
• Intellectual property: Requires clear contractual assignment
• Exclusivity: Contractors typically serve multiple clients
• No loyalty or continuity: Higher turnover risk

Contractor Misclassification Risk in Kenya

This is the critical concern. Kenyan courts and the Kenya Revenue Authority look at substance over form. Your "contractor" may be deemed an employee if:

• They work exclusively for you
• You control their working hours and location
• You provide equipment and tools
• They cannot substitute someone else to do the work
• They are integrated into your business operations
• You pay them a fixed regular amount (like a salary)

Misclassification consequences can include:

• Backdated PAYE, NSSF, and SHIF liabilities
• Penalties and interest
• Employment tribunal claims
• Reputational damage

Best Practices for Contractor Engagement:

• Use genuine contractors with multiple clients
• Engage through formal service agreements
• Pay per project or deliverable, not time-based
• Allow contractors flexibility in how work is done
• Ensure they use their own equipment
• Review arrangements if engagement extends beyond 6 months

Option 3: Use an Employer of Record (EOR)

An EOR is a Kenyan company that legally employs staff on your behalf. This is the most compliant and lowest-risk option for hiring without your own entity.

How It Works:

1. You identify the candidate and agree terms
2. The EOR signs an employment contract with the worker
3. You pay the EOR a monthly fee covering salary + service charge
4. The EOR handles payroll, taxes, and compliance
5. You direct the employee's daily work

Advantages:

• Fully compliant with Kenyan employment law
• Quick setup (5-10 business days)
• No misclassification risk
• EOR assumes employment liability
• Full control over employee's work
• Employee feels like part of your team
• Easy transition to your own entity later

When EOR is Ideal:

• Hiring 1-15 employees
• Testing the Kenyan market
• Need to hire quickly
• Want to avoid compliance complexity
• Plan to incorporate eventually but not yet

Comparison: Contractors vs. EOR

Factor	Contractors	EOR
Compliance risk	High (misclassification)	None
Control over work	Limited	Full
Loyalty/retention	Lower	Higher
Setup time	Immediate	5-10 days
Monthly cost	No overhead	Service fee applies
Statutory obligations	Contractor's responsibility	EOR handles all
Termination flexibility	High (per contract)	Must follow Kenyan law

Onboarding Timeline with EOR

With BaseKenya's EOR service, here is the typical timeline:

1. Day 1: You provide candidate details and compensation terms
2. Day 2-3: EOR prepares compliant employment contract
3. Day 4-5: Candidate reviews and signs contract
4. Day 5-7: KRA PIN verification and payroll setup
5. Day 8-10: Employee starts, first payroll cycle begins

What Information You Need to Get Started

To onboard an employee through an EOR, you will need:

• Full name as appears on ID/passport
• National ID or passport copy
• KRA PIN certificate
• NSSF and NHIF numbers (if previously employed)
• Bank account details for salary payment
• Next of kin information
• Job title and description
• Proposed gross monthly salary
• Start date

BaseKenya EOR Pricing

BaseKenya offers transparent EOR pricing:

$199 per employee, per month

This flat fee includes:

• Employment contract preparation
• Monthly payroll processing
• All statutory deductions and remittances
• Payslip generation
• Employment compliance management
• Dedicated support
• No setup fees, no minimum commitment

Making the Right Choice

Choose contractors when:

• Work is project-based and time-limited
• You need specialized expertise temporarily
• Genuine independence can be maintained
• Budget is the primary concern

Choose EOR when:

• You need ongoing, dedicated employees
• You want to control how work is done
• Compliance and risk management matter
• You want to build long-term team relationships
• You plan to incorporate eventually

Ready to hire in Kenya? Book a free consultation to discuss whether EOR is right for your situation.