An Employer of Record (EOR) is the legal employer for workers. It handles HR responsibilities like payroll, taxes, and compliance while the company directs the employees’ day-to-day tasks. This setup allows businesses to hire globally without establishing a local entity.
Hiring workers from Africa offers benefits due to the continent’s rapidly growing workforce and diverse talent pool. Africa is known for its young, tech-savvy population and emerging markets in technology, finance, and natural resources. The continent’s workforce is projected to be larger and younger than China or India by 2050, presenting significant opportunities for businesses looking to expand their operations.
Employment in Africa has been growing steadily, with the continent experiencing some of the world’s fastest-growing economies. According to recent data, Africa’s labor market is uniquely positioned for growth, with a large youth population entering the workforce. This demographic dividend offers many talent opportunities across various sectors, from technology startups to established industries.
To use an EOR in Africa, there are 6 basic steps to ensure you are set up properly:
- Find talent to hire in Africa
- Compare using an EOR to setting up a legal entity in Africa
- Get the information needed from your talent
- Choose an EOR provider with expertise in Africa
- Communicate your hiring needs to the EOR
- Have the EOR set up the contracts and hiring procedure
An EOR manages payroll, taxes, and benefits administration, ensuring compliance with local laws and regulations, thus simplifying the employment process for companies.
Different labor laws in Africa, such as those governing work hours, termination processes, and mandatory benefits, must be considered when hiring remotely. The hiring process in Africa involves identifying talent, ensuring compliance with local employment laws, and executing contracts, typically facilitated by an EOR for companies without a local presence.
1. Find talent to hire in Africa
Businesses should leverage a combination of local and international platforms to find talent to hire in Africa. LinkedIn remains a crucial tool for talent acquisition, allowing companies to search for candidates actively seeking opportunities and to headhunt passive candidates.
Local job boards such as Jobberman (for West Africa) and Careers24 (for South Africa) are popular among African job seekers and offer extensive listings across various industries. These platforms are particularly useful for finding candidates with specific skills and experience relevant to local markets.
Industry-specific job boards and professional associations can be valuable resources for specialized roles. For example, the African Development Bank’s job portal is a good platform for finding talent in the development and finance sectors.
Recruitment agencies with expertise in African markets, such as Africa HR Solutions and CA Global, can provide tailored solutions for companies seeking to navigate the complexities of hiring across different African countries.
2. Compare using an EOR to setting up a legal entity in Africa
When working with African employees, you must consider working with an EOR to set up your legal entity. An Employer of Record offers a quicker, less complex route to hiring local staff, bypassing the need for a formal company presence. This approach suits companies looking to test African markets or expand quickly without significant upfront investment.
An EOR manages all local employment laws, tax, and compliance issues, assuming responsibility for hired employees. This setup allows companies to start operations in weeks, compared to the months required to establish a legal entity.
On the other hand, setting up a legal entity in Africa offers greater control and the ability to customize business operations and policies. However, establishing a legal entity involves complex registration processes, significant upfront fees, and a deeper understanding of local laws and tax regulations.
Here’s a comparison of key factors:
| Factor | Employer of Record | Setting Up Legal Entity in Africa |
|---|---|---|
| Setup Time | 1-2 weeks | 2-3 months (varies by country) |
| Initial Cost | Low (typically only employee costs) | High (significant registration fees and capital requirements) |
| Ongoing Cost | Moderate (EOR fees + employee costs) | Variable (operational costs, compliance, etc.) |
| Complexity | Low (EOR handles most administrative tasks) | High (requires understanding of diverse African business laws) |
| Control over Operations | Limited (company directs daily work, EOR handles employment) | Full (complete control over all aspects of business) |
| Compliance Management | Handled by EOR (payroll, taxes, social security) | Company Responsibility (requires local expertise) |
| Scalability | Highly Flexible (easy to add or remove employees) | Less Flexible (changes may require legal procedures) |
| Local Expertise Required | Minimal (EOR provides guidance) | Extensive (need for local legal and tax advisors) |
| Suitable for | Market entry, testing African markets, short to medium-term projects | Long-term presence, full operations, strategic expansion |
| Risk | Lower (EOR assumes employer liabilities) | Higher (company bears all legal and financial risks) |
3. Get the information needed from your talent
To hire employees in Africa, you need some information about them. Typically, you’ll need the following essential personal information:
- Employee’s full name
- National identification number (varies by country)
- Address
- Date of birth
- Bank account details for salary payments
Additionally, you’ll need a comprehensive job description, including title, duties, and place of work. Employment contracts in Africa should detail the contract type, start date, salary, work hours, and other employment conditions.
It’s important to note that employment contract requirements can vary significantly across different African countries. Some countries may require contracts in English and the local language. The contract should include details on remuneration, work hours, holiday entitlement, and notice period for termination.
4. Choose an EOR provider with expertise in Africa
When choosing an EOR provider to work with in Africa, selecting one with deep expertise in African markets and a strong understanding of local labor laws is crucial to ensure compliance and smooth business operations.
Evaluate the provider’s experience managing employee onboarding, payroll, and legal compliance across multiple African countries. Look for a provider with a proven track record of working successfully with companies similar to yours, and check their reputation through client case studies or reviews.
Assess the range of services offered to see if they align with your needs, such as visa and work permit support, employee benefits management, and payroll processing. Choosing a provider that offers comprehensive employment services and is flexible enough to adapt to changes in various African labor laws is important.
Consider the provider’s technology and platforms, ensuring they offer secure, user-friendly systems with strong data protection measures. Evaluate their pricing models, look for transparency in fees, and assess the cost-effectiveness of your business.
What are the best EOR providers to use in Africa?
Here’s a table listing the top EOR providers for Africa and why each was selected:
| EOR Provider | Why It’s a Good Fit for Africa |
|---|---|
| Remote | Comprehensive coverage across multiple African countries, strong focus on tech industry needs, and offers competitive benefits packages tailored to various African markets |
| Deel | User-friendly platform for managing employees across Africa, offers detailed guidance on pan-African employment regulations and provides support for equity compensation |
| Atlas | Specializes in emerging markets, offers dedicated support for navigating Africa’s diverse regulatory environments, and provides competitive pricing |
| Multiplier | User-friendly platform for managing employees across Africa, offers detailed guidance on pan-African employment regulations and provides support for equity compensation. |
| Africa HR Solutions | Extensive experience across 44+ African countries, strong compliance support for diverse African labor laws, and expertise in managing local and expatriate workforces |
These EOR providers all offer services tailored to the unique challenges of hiring in Africa, including compliance with diverse local labor laws, cross-border payroll management, and navigating the complex African business environment.
5. Communicate your hiring needs to the EOR
It is important to communicate your hiring needs to the EOR to ensure the process aligns with your company goals and legal requirements. Provide a detailed job description, including the title, responsibilities, required qualifications, and skills.
Specify the job’s expected start date, location (including whether it’s remote or onsite), and any specific requirements related to African labor laws. Outline the proposed salary, bonuses, commission structures, and other compensation benefits, keeping in mind the cultural norms and expectations in the specific African country you’re hiring in.
Clarify the contract terms, including whether it’s a full-time or part-time position, and detail the working hours, including any flexibility or shift requirements. Discuss your company culture, growth plans, and how the position fits into future expansion in African markets.
By accurately representing these aspects, the EOR can find the right talent and ensure legal and administrative compliance with diverse African labor laws.
6. Have the EOR set up the contracts and hiring procedure
Once you have chosen which provider to work with and communicated all of your hiring needs, the EOR will set up the contracts and hiring procedure, ensuring compliance with African labor laws and employment practices.
The EOR drafts employment contracts that comply with local labor laws, including specific terms regarding job details, working hours, and termination procedures. They’ll also manage the necessary documentation for tax, social security, and payroll setup, adhering to mandatory withholdings and reporting requirements.
The EOR assists in obtaining work visas and residence permits for expatriate employees, collects personal and bank account information for payroll, and outlines the onboarding procedures in accordance with local employment laws. They’ll ensure your company complies with regulations across African countries, adjusting contracts and practices as laws change.
Additionally, the EOR administers benefits and handles formal onboarding, including the introduction to company systems and culture, ensuring a smooth start for your new African-based employees.
What help does an EOR provide in Africa’s payroll, taxes, and benefits administration?
The EOR will support Africa’s payroll, taxes, and benefits administration, ensuring compliance with complex local laws. It calculates and processes employee salaries, withholds the correct tax amounts, and handles social security contributions.
For payroll, the EOR manages regular pay periods, which can vary across African countries, and ensures compliance with local wage protection systems where applicable. They handle year-end reporting and ensure all payroll-related documentation is maintained as per local labor laws.
In terms of taxes, the EOR manages personal income tax deductions, which can vary significantly across different African countries. They also handle social security contributions, which can differ greatly from country to country.
For benefits, the EOR typically administers mandatory benefits such as annual leave, sick leave, and maternity leave, which can vary across different African countries. They may also manage other benefits, such as health insurance and pension contributions, adapting to each country’s specific requirements and norms.
What labor laws do you need to consider when hiring in Africa?
When hiring in Africa, a few key labor laws must be considered. Africa’s approach to labor laws varies significantly from country to country, with some nations offering strong employee protections while others have more flexible regulations.
Employment contracts
Local labor laws generally govern employment contracts in Africa and must often be in writing. Key elements that must typically be included are:
- Job title and description
- Compensation details
- Contract duration (if fixed-term)
- Working hours and days
- Leave entitlements
It’s important to note that contract requirements vary significantly between African countries.
Working hours and paid holidays
Working hours and paid holidays can vary widely across different African countries. For example, the standard work week in South Africa is 45 hours, while in Kenya, it’s 52 hours. Many African countries mandate a certain number of paid annual leave days, but the exact number can vary.
Taxes
Tax systems vary across African countries. Some countries have progressive tax systems, while others have flat-rate systems. The EOR must manage these varying tax requirements for each country where employees are located.
Severance pay
Severance pay regulations also vary across Africa. In some countries, it’s mandated by law, while in others it may be subject to negotiation or company policy.
Social security
Many African countries have social security systems that require contributions from both employers and employees. The rates and specifics of these systems can vary significantly between countries.
Here’s a summary of these key labor laws:
| Labor Law | Key Points |
|---|---|
| Employment Contracts | Often must be written, with specific details required |
| Working Hours | Vary by country, typically between 40-52 hours per week |
| Paid Holidays | Mandated in most countries, but number of days varies |
| Taxes | Systems vary, can be progressive or flat-rate |
| Severance Pay | Regulations vary, sometimes mandated by law |
| Social Security | Systems vary, and can be progressive or flat-rate |
How does the hiring process work in Africa?
Employers typically follow a structured process when hiring staff in Africa while adhering to local labor laws and cultural norms. The process usually involves:
- Defining the job requirements and creating a job description
- Advertising the position through various channels, including local job boards and LinkedIn
- Reviewing applications and resumes
- Conducting initial screenings, often via phone or video calls
- Holding in-person or virtual interviews with shortlisted candidates
- Performing background checks and contacting references (with the candidate’s permission)
- Making a job offer to the selected candidate
- Negotiating terms and finalizing the employment agreement
- Obtaining necessary work visas and permits for expatriate employees
- Completing required documentation, including registering the employee with relevant local authorities
- Onboarding the new employee
Throughout this process, employers must ensure compliance with local labor laws, which can vary significantly across different African countries. They must also be aware of cultural sensitivities and norms, which can differ greatly across the continent.
Is Africa a relatively easy continent to hire employees remotely through an EOR?
Yes, Africa is becoming an increasingly accessible continent for hiring employees remotely through an Employer of Record (EOR). The continent’s young, growing workforce and improving digital infrastructure make it an attractive destination for remote hiring.
Here are five pros and three cons for hiring employees in Africa:
Pros
Cons
Despite these challenges, the benefits of accessing the African talent market often outweigh the complexities, especially when working with an experienced EOR provider who can navigate the intricacies of diverse African employment laws and practices. The continent’s growing focus on innovation and technology and its demographic dividend make it an attractive option for companies looking to build diverse, talented teams.
