Independent Contractors Agreement

Ensure proper classification in Kenya! Understand the key differences between independent contractors and employees. This guide clarifies who can benefit from Independent Contractor Agreements and how to avoid misclassification risks.

Who is an Independent Contractor?

• Self-employed individual or business providing services.
• Negotiates project scope and terms directly with clients.
• Controls how work is done (client only controls final product).
• Often called consultants, or freelancers.

Independent Contractor Agreements Benefit:

• Contractors/Freelancers: Establish clear terms with clients.
• Clients/Businesses: Outline service arrangements in writing.
• All Parties: Minimize confusion and conflict with a written agreement.

Independent Contractor vs. Employee:

Understanding the distinction ensures:

• Proper tax filing.
• Compliance with employment law.

Key Differences:

Independent Contractor

• Discusses project scope directly with the client.
• No employment benefits from clients.
• Personally invested in contracting business (profits & losses).
• May hire assistants or subcontractors.
• Invoices clients for completed work.
• Signs Independent Contractor Agreement.
• Subject to Withholding Tax.
• Works on a fixed-term or project basis.
• Uses own tools or equipment.

Employee

• Employer creates job description.
• The employer controls wages, schedule, and work methods.
• Employer pays a portion of payroll taxes.
• Signs Employment Contract.
• Receives benefits (medical, pension, vacation, sick pay).
• Undergoes performance reviews.
• Receives in-house training.

Misclassifying Employees as Contractors?

Risks for Employers and Workers:

• Employers: Financial penalties, lawsuits, reputational damage.
• Workers: Loss of benefits, tax burden, reduced job security.

Download our FREE Guide: “INDEPENDENT CONTRACTOR AGREEMENT.docx“