When a company hires someone in Kenya through an Employee of Record (EoR), the relationship involves more than one organization. This often creates confusion about who the true employer is. The most important idea is that the law recognizes one party as the official employer, even if another party manages the employee’s daily work.
Meaning of “Legal Employer” Under Kenyan Practice
The “legal employer” is the company that is officially recognized as the employer under an employment contract (a contract of service). This employer is the one that carries the legal responsibility for key employment obligations such as issuing the employment contract, paying salary through payroll, making lawful deductions, providing statutory benefits, and keeping employment records as required by Kenyan laws and regulations.
The EOR as the Legal Employer in an EoR Arrangement
In an EoR model, the Employee of Record is the legal employer because the employee signs the employment contract with the EoR. The EoR’s name is normally the one that appears on the employment agreement, payslips, and other formal employment records. Since the EoR is the employer on paper, the EoR is expected to ensure the employment relationship follows Kenyan legal requirements.
The Client Company as the Day-to-Day Work Manager
Even though the EoR is the legal employer, the client company usually manages the work in practice. The client assigns tasks, sets goals, reviews performance, and controls the daily workflow. This is why the EoR relationship is often described as a shared arrangement, where the EoR handles legal employment responsibilities while the client controls the employee’s output and day-to-day performance expectations.
Key Kenyan Laws That Shape the EOR Relationship
Kenyan employment obligations are mainly guided by the Employment Act, 2007, which covers employment terms, leave, pay, and termination protections. The Labour Relations Act, 2007 is also important where union issues, disputes, and collective bargaining may apply. Workplace safety responsibilities are influenced by the Occupational Safety and Health Act, 2007, while work-related injury compensation is addressed under the Work Injury Benefits Act, 2007. Payroll obligations often connect to the Income Tax Act (for PAYE), the NSSF Act, 2013 (for social security), and applicable health-related contribution rules, depending on current regulations. You can refer to our article on “Overview of Payslip Deductions.”
What the EoR Is Typically Responsible for in Kenya
Because the EoR is the legal employer, the EoR typically the employee has a locally compliant employment contract and that payroll is run correctly. The EoR commonly manages statutory deductions such as PAYE and NSSF and ensures statutory leave entitlements are honoured. The EoR also keeps employment records and normally leads formal HR processes such as issuing official letters, documenting disciplinary steps, and ensuring termination processes follow the procedural expectations under Kenyan law.
What the Client Company Is Typically Responsible for in Kenya
The client company is usually responsible for directing and supervising the employee’s daily work. This includes setting priorities, giving instructions, monitoring performance, and providing tools and systems needed to do the job. The client also plays a major role in maintaining appropriate workplace conduct, including expectations around professionalism, information security, and day-to-day working arrangements, even when the employee is working remotely from Kenya. The client is also responsible for transferring the required payroll funds to the EoR, who then handles the disbursement to the employees.
Hiring and Termination: How Decisions Are Usually Handled
In EoR arrangements, the client company chooses who to hire and decides what they want the employee to achieve. The EoR then hires the person legally by issuing the employment contract and onboarding the employee into payroll. When termination becomes necessary, the client often triggers the decision from a business perspective, but the EoR usually carries out the formal termination steps to align with Kenyan requirements on notice, fair procedure, and final payments. This approach helps reduce risk because Kenyan termination disputes often focus on whether the correct process and lawful reasons were followed.
Why Clear Roles and Documentation Are Important
Even in an EOR structure, real day-to-day behavior matters. If there is a dispute, decision-makers may look at who controlled the work, who supervised performance, and how discipline or termination decisions were handled. For this reason, EoR arrangements work best when roles are clearly written down in the service agreement between the client and the EoR, and when the client follows the EoR’s guidance on formal employment steps.
In Kenya, in a standard Employee of Record arrangement, the EoR is the legal employer because the employment contract is with the EoR and the EoR handles payroll, statutory deductions, and compliance tasks. The client company remains the day-to-day manager because it directs the employee’s work and performance. This split is the core of the EoR relationship and is the main reason EoR services are used for cross-border hiring.