5 Signs Your African Contractor Workforce May Be Misclassified

The hardest part is done.

Your organisation has expanded legally into one or more African countries, using an African Employer of Record (EOR), or through a legal entity. You have found and onboarded talent and your operations are running in what appears to be full legal compliance.

But there may still be a chink in your compliance armour, one that risks getting larger and larger if you do not pay proper attention to it: employee misclassification.

The consequences are quite severe, ranging from time losses, fines, and reputational damage that is difficult to repair once word is out.

What is worker misclassification?

Worker misclassification happens when a worker taking on the responsibilities of an employee is wrongly classified as an independent contractor. Because of this misclassification, the person is deprived of rights and privileges usually given to employees, such as:

• Overtime payments
• Pension payments
• Benefits such as paid maternity leave, paid paternity leave, paid sick leave, and paid annual leave
• Employer contributions made to the government and local tax authorities. 

Wondering if there’s a way to further distinguish independent contractors from employees? Find out more here.

1.     The contractor works exclusively for you, on a fixed schedule

Genuine independent contractors typically serve multiple clients and set their own working hours.

If a contractor works solely for your organisation, follows your standard working hours (whether it’s 9 to 5 or shift work), and cannot take on other clients without your approval, this looks far more like an employment relationship than a contractor arrangement.

2.     The contractor relies on your equipment, systems, and company identity

A contractor who uses a company laptop, uses and logs into your internal systems, holds a company email address, or is listed on your organisational chart is being integrated into your business in ways that go beyond a typical service arrangement.

True contractors usually supply their own tools and operate under their own business identity.

3.     The contractor is closely supervised and managed like staff

Independent contractors are generally engaged to deliver a specific outcome, with a fair amount of freedom in how they get there. Quality and safety standards notwithstanding, the outcome can be said to matter most. If a worker is subject to day-to-day supervision, performance reviews, disciplinary processes, or regular one-to-one meetings with a manager, this level of control is a strong indicator of an employment relationship.

4.     The relationship has continued, unchanged, for years

Contractor engagements are meant to be time-bound or tied to a specific project or deliverable.

When a contractor has been performing the same core duties for your organisation for several years, with no defined end date or project scope, authorities in many African jurisdictions are likely to view this as a long-term employment relationship, regardless of what the contract says.

5.     The contractor cannot delegate or subcontract the work

A genuine contractor is usually free to send someone else to complete the work, or to bring in help as needed. If your agreement requires the individual personally to carry out all the work, with no right of substitution, this may point toward an employment relationship rather than a contractor one.

If several of these signs apply to workers in your organisation, it is worth looking into. Calling in expert advice would also be the next best step forward to guard from misclassification risks.

How Africa HR Solutions can help

Correctly classifying your workforce across different African jurisdictions requires an understanding of labour law that varies significantly from country to country.

Africa HR Solutions has 15+ years of experience supporting organisations across 46+ African countries. We help you classify, onboard, and manage talent in full compliance with local law.