Technology and globalisation now provide companies and workers alike with a plethora of convenient work trends. From remote work solutions and work-from-home to the rise of auto-entrepreneurs, today’s workforce is more diverse than ever before, and the job market is all the richer for it. Such solutions allow businesses to have their pick of in-house workforce, remote employees, or independent contractors and consultants, according to their own unique needs.
Indeed, prior to the Covid-19 pandemic, independent contractors already accounted for 1/3 of the workforce. With this event acting as a catalyst for an even faster rise of the gig economy, balancing the employee-to-freelancer ratio appears to be one of the wisest choices for any business.
This opportunity, however, entails an accrued need for vigilance against a common, yet easily avoidable mistake: misclassification of employees. It is also referred to as independent contractor misclassification, which means the exact same thing: the act of erroneously classifying an employee as an independent contractor.
Why is it such a serious mistake?
Employing a worker and working with a freelancer carry very different implications. In the employer-employee relationship, the employer owes several obligations to the employee: guaranteeing a salary; paying benefits, pensions and compensations as need be; granting paid leave according to local legislation; and often deducting taxes directly from the employee’s salary. Such duties do not exist between a company and a freelancer, as it would all be a simple matter of contract.
These important differences have often prompted ill-intentioned employers to take advantage of the difference between these two terms. They employed workers but classified them as independent contractors with the sole aim of avoiding responsibility for taxes, benefits, or any other emoluments owed to the employees, which led misclassification of employees to also be known as “sham contracting”.
This error, whether it comes from a genuine clerical mistake or is done purposefully, is both frowned upon and unlawful, and entails heavy penalties. It also negatively affects the reputation of a company, as it tends to demonstrate major compliance weaknesses (in terms of labour law), and could also insinuate that the company does not care for employee welfare as it should.
It can be easy to fall into this trap in all good faith. Identifying whether this scenario applies to you may therefore be confusing. Starting with these four questions may help you in determining whether or not your workforce is correctly registered.
These criteria, however, are in no way exhaustive. They are also subject to subtleties. For example, in the case of termination, it could be hard to distinguish between an employee with a “contrat à durée déterminée”, which is legally binding in Mauritius, and an independent contractor with a long-term mission, for example, to meet the company’s training needs over a year.
When planning for expansion in the African continent, with a hybrid workforce, it is therefore important to properly identify each collaborator, and knowing the exact laws that apply to each category is key to smooth operations and a good reputation.
As mentioned earlier, many factors can help you distinguish between an employee from an independent contractor, from their independence and ability to take leave days (without needing your permission) to whether or not you provide them with equipment.
When thinking of expanding, it is important to bear in mind that the issue of employee classification is manifold when it comes to law. Mastering local contractual law, labour law and tax law is key to compliance… This brings about the third tip.
When in doubt, always get an expert’s opinion, which is time-saving, far more cost-effective, and safer than trying to learn all about it yourself. Your decisions will then stand guided by employment and legal experts, which minimises the risk of committing misclassification of employees. They may even come up with better solutions to cater for your specific hiring needs.
One of these solutions often includes training your payroll staff in these matters. Indeed, while having experts advise you on complex matters is the best bet, simultaneously training your staff to handle simpler scenarios is the key to efficient operations and cost optimisation.
If all of the former options seem time, resource and energy-consuming, you might opt for this one tip that combines them all, whilst eliminating your responsibility to manage all of it and set up the required monitoring structures.
Instead, delegate these duties to an Employer of Record for a seamless experience! Indeed, as an Employer of Record, Africa HR alleviates the heavy burden of compliance (and liability) to complex international employment regulations. Our teams of Legal and HR experts will take over the practical, administrative, and compliance aspects of onboarding and workforce management, as they help you navigate the ever-changing labour laws and regulatory practices all over the continent.
Compliance tools and mechanisms will give you timely updates of any regulatory changes for effortless compliance with domestic laws, so that you may dedicate yourself fully to your core activity in total peace of mind.
Grant Geraghty is the longest-serving member of the Africa HR team. This resident subject matter expert and client champion is responsible for gaining a deep understanding of our clients’ unique HR needs in Africa and providing tailored solutions that align with their business objectives. Grant collaborates closely with our clients to ensure that their requirements are properly implemented, providing ongoing support and guidance throughout the process.
Grant brings a wealth of experience to his role, having served as Africa HR’s longest-serving employee. He holds a Bachelor of Commerce degree, with a major in Economics and Business Finance, from the University of Natal in South Africa. Additionally, he has completed a certification program in Payroll and Tax Administration from the University of Cape Town, further enhancing his expertise in HR operations and compliance.
His commitment to delivering exceptional service and his extensive knowledge of HR in Africa make him an invaluable member of the Africa HR team.
Kevina Takoordyal has a BA Hons Business Management from the University of Glamorgan, UK, with MBA in leadership and Innovation, MBA General, PMP Certified, and Agile Scrum Master. She currently works as the Head of Operations at Africa HR Solutions Ltd with more than 20 years of proven leadership capabilities in Operations, Business Development, People Management, Process Optimization, and Project Management in the Financial Services, BPO, Banking Industry, and Heath Care Industry. In Senior leadership roles with an international footprint across Europe working and extensive Pan- African experience from a compliance, finance, and operations angle, Kevina comes across with a panoply of cross-functional skills. Kevina also serves on a few Boards, Non-Independent Executive at MioD and for NGOs on a voluntary basis, a coach and mentor to aspiring female leaders across Africa and Mauritius.
Kevina is a firm believer in Servant Leadership with a strong focus and commitment to uplifting others, with the ability to deliver through a highly engaged – diverse team, and works towards consistently synergistic value creation. While being a focused and adaptive thinker and Kevina is actively participating in panel discussions on Innovation, CX, Digital transformation.
Kevina serves as Project Assessor for the National Youth upskilling program. She has been recognized as Global Talent in a few companies, Ceridian, and International SOS Ltd whereby she has been awarded a few scholarships and had the opportunity to be mentored by Senior Vice President in the US. Award Winner in various fields and at a national level and recognized including Super Achiever Leader Award in Africa in 2016, Awarded Africa Women Leader 2018.
Viloshna is an experienced finance professional with 18 years of expertise in strategic financial planning, financial analysis, cash flow management, systems and controls implementation, financial reporting, and continuous process improvements. She currently serves as Head of Finance & Business Support, where she has successfully automated and leveraged the financial reporting system capabilities to ensure efficient company operations.
Viloshna’s background includes senior roles in a multinational pharmaceutical company and a large listed Mauritian conglomerate. Her meticulous attention to detail and strategic thinking have streamlined financial processes, making her a valuable addition to any finance team. Viloshna is a qualified finance professional with an FCCA qualification and an MBA, bringing valuable expertise to any organization.
In her current role, Viloshna leads the company’s Treasury and Payments function, including the fulfillment of the company’s cross-border payments into Africa. With her strong educational background and extensive experience, Viloshna consistently demonstrates her ability to optimize financial operations, minimize risks, and improve profitability. Her expertise in financial reporting and process improvements make her a valuable asset to any organization.
A qualified lawyer who joined Africa HR Solutions in July 2020, Mark Du Preez has experience working in private practice for a reputable law firm in South Africa. He also played commercially focused roles at a leading private bank, wealth management company, and outsourcing firm in South Africa and Mauritius.
Mark has played a pivotal role in Africa HR Solution’s risk mitigation strategy, which positively impacted P&L performance over the years.
He currently leads the Partnerships function of the company including relationships and oversight with in-country partners (ICPs) across Africa.
Alex has more than 15 years of experience in the global, strategic development of both enterprise and consumer brands in categories including technology, transport, enterprise software, entertainment, and travel.
With experience in roles on both agency and corporate side, he has worked across international brands and has led the development and execution of multi-discipline campaigns across EMEA, NORAM and Asia Pacific.
His focus is on driving meaningful business impact through brand differentiation and building high-functioning, digitally oriented, and analytically driven capabilities. He is motivated by working with, and developing dynamic people, teams, and organizations.
He leads, manages, develops and mentors the Key Account Management department, including line management responsibility for the team of Key Account Managers and Key Account Administrator who represent the Company as the primary communication link between all relevant stakeholders, including clients, third party in-country partners and internal functions.
Originally from Mauritius, he holds bachelor’s degrees in International Business, Finance and Management from the University of Nevada, Reno.