The three common setups
When a company abroad hires you to work from Africa, it usually picks one of three setups. The job ad doesn't always say which, so ask early.
| Setup | Who legally employs or engages you | Who handles tax on your pay |
|---|---|---|
| Employee of a local entity | The company's own subsidiary in your country | The employer, through local payroll |
| Employee through an employer of record (EOR) | A third party such as Deel, Remote or Oyster, under a local contract | The EOR, through local payroll |
| Independent contractor | Nobody employs you. You sign a services agreement with the company | Usually you |
All three are legitimate. Companies often use different setups in different countries, and some won't hire at all where they have no local setup. GitLab's public handbook, for example, says it hires where it has an entity and isn't currently hiring in locations without an entity or a PEO. Its existing team members in those places work as independent or company-to-company contractors.
How an employer of record works
An EOR lets a company hire you as an employee in your country without opening its own office there. Deel describes an EOR as an organization that employs and pays workers compliantly on a company's behalf, handling things like locally compliant contracts, payroll and tax filing, and benefits. Oyster says its EOR legally employs workers on behalf of another business, with pay in local currency and automated tax and deduction calculations. Remote describes converting contractors to locally compliant employment contracts.
In practice:
- Your employment contract is with the EOR or its local partner, not with the company you work for day to day.
- The company you work for manages your work, goals and team.
- The EOR runs payroll, deducts tax and statutory contributions, and issues payslips.
- Leave, notice and benefits follow your country's labour law as a minimum, plus anything extra the company offers.
Not every EOR covers every country, and coverage changes. If a company says its provider "doesn't support" your country, that's often the real reason, not your CV.
What changes for you
| Topic | Employee (local entity or EOR) | Contractor |
|---|---|---|
| Paid leave and sick days | At least what local law requires | Only if your agreement says so |
| Notice period | Set by contract and local law | Set by your agreement, sometimes very short |
| Tax and contributions | Deducted from your pay | You register, declare and pay yourself |
| Equipment and internet | Often provided or paid | Usually yours, unless agreed |
| Payment | Salary in local currency or as agreed | You invoice, often in USD, EUR or GBP |
Because contractors carry their own costs and risks, contractor rates are often quoted higher than an employee salary for the same work. When you compare offers, subtract your tax, contributions, leave you won't be paid for, transfer fees and equipment. Our guide to negotiating pay for remote jobs from Africa covers this.
Tax: who files what
As an employee through a local entity or an EOR, tax is normally withheld from your pay through local payroll. As a contractor, you'll usually have to register with your tax authority, keep records, and declare and pay the tax yourself.
South Africa shows how this works in one country. The South African Revenue Service (SARS) says a provisional taxpayer includes any person who earns income other than remuneration, and any person who earns remuneration from an employer that isn't registered for employees' tax. SARS describes provisional tax as a way of paying income tax in advance, with at least two payments during the tax year. A foreign company paying you directly, without South African payroll, can put you in this group.
Rules differ in every country and change often. Read our country guides for Kenya, Nigeria, South Africa, Ghana and Egypt. This is general information, not tax advice. Before you sign your first contractor agreement, it's worth an hour with a registered tax adviser in your country.
Clauses to check in a contractor agreement
- Parties: the company's full legal name and country. If none is given, ask. You need to know who you'd go after for unpaid invoices.
- Scope: what you'll deliver and what's out of scope.
- Rate and currency: hourly, daily, monthly or per project, and in which currency.
- Invoicing and payment terms: how often you invoice and how many days they have to pay.
- Payment method and fees: bank transfer, a payroll platform or another service, and who pays transfer fees. See getting paid from abroad in Africa.
- Hours and availability: any required overlap hours or response times.
- Intellectual property: they should own what you make for them, not your earlier work or side projects. Check the wording.
- Confidentiality: normal, but it shouldn't stop you describing your role in general terms on your CV.
- Termination: notice in both directions, and payment for work done up to the end date.
- Non-compete and exclusivity: be careful with broad bans on working for anyone else.
- Governing law and disputes: which country's law applies and how disputes are handled.
Checks for an employment or EOR offer
- Which legal entity is your employer, and in which country?
- Is the salary gross or net, and in which currency?
- What will be deducted each month, and will you get payslips?
- What leave, sick pay and benefits come with it?
- How long is probation, and what's the notice period after it?
- Who's your day-to-day manager, and at which company?
Sign only through official channels. If an email says you've been hired through an EOR, log in through the EOR's official website rather than a link in the message, and confirm the offer with your recruiter.
Red flags in any contract
- A fee to "onboard", buy equipment or receive the contract
- No company name, address or registration details
- Payment only in crypto through an app you've never heard of
- Weeks of unpaid "trial" work
- Requests for your bank login, PIN or one-time codes
Any one of these is a reason to stop and check. Our guide to remote job scams in Africa explains how.
