Global Payment and Compliance
Remote work salaries. How to compensate remote workers. Remote work compensation strategies.
Since the pandemic started, remote working has been the new normal for many people in Africa. African institutions are realigning their work practices to comply with the latest trend.
Power connections and internet access are also improving across the continent, so the remote work scene is thriving. However, remote work adaptation raises the question of how to compensate remote workers.
Whether you have a remote team in Africa or plan to set up one, you must develop an efficient compensation process for your remote team. Paying remote employees in Africa is more complex than paying employees in an office setting.
Therefore, you want to ensure that you get everything right to keep your employees happy and the business thriving. In addition, you have to meet tax and compensation policies. Considering these concerns, you need to know about remote work compensation in Africa.
If you have a remote team in Africa, you can pay the employees in various ways. Each method has its pros and cons and choosing the right one should depend on your ability to handle the drawbacks while providing convenience to your employees.
An employer of record (EOR) is a company that helps you recruit, manage, and pay employees in other countries on your behalf. Working with an employer of record in Africa is a great way to manage your remote team. This is because they will handle most aspects that relate to the management of your remote team. These include administrative work, payroll, tax compliance, and benefits handling.
A reliable EOR based in Africa like Workpay will help you hire the best talent for your company. It will also enable you to pay them without opening a legal entity in that country. The EOR is acquainted with the country's tax laws and local statutory benefits, so it will make your work easier.
You should consider setting up a legal entity in Africa to manage your remote team as the employer. This involves opening a local bank account and finding local tax lawyers, benefits managers, and payroll providers.
This process could take time, and it is often suited for companies planning to establish a long-term commitment in the country by hiring many remote employees. So, consider a different approach if you are looking for a short-term arrangement with minimal hiring.
As an employer, you also have the option to pay remote African employees as independent contractors. This requires approaching the process differently since most independent contractors are self-employed.
They set their own payment rates and are free to negotiate their preferred working schedules and payment methods.
In addition, independent contractors do not receive the same company benefits as regular employees. It would be best if you were cautious when paying remote employees as independent contractors, as a simple misclassification could subject your company to fines and other severe penalties.
Every African country has unique laws and regulations regarding employees' statutory benefits. To retain remote employees for longer, be ready to offer them more benefits than the government stipulates.
All full-time remote employees in most African countries are entitled to benefits. Employers can evaluate prospective employees for a certain period before hiring them full-time. However, remote employees are entitled to benefits even during these trial periods.
The following are some of the most common benefits offered to remote employees in Africa:
In Africa, employees who work overtime must be fully compensated. Depending on the country, employers may be required to pay up to 200% of regular wages for overtime. It is also worth noting that overtime hours are capped at a specific limit per day or week.
Employees in Africa must be compensated during their days off and public holidays. You should get acquainted with the specific public holidays of the country before hiring employees. Even if the employee does not use their paid time off, you are still required to compensate them.
Employers are also expected to compensate their remote employees in Africa during their sick leave. However, the employer can ask for records to prove the illness.
Employers must provide health coverage to their employees in most African countries. You can work with a country's health insurance scheme to offer health coverage to your employees. Instead, you can provide a stipend to choose their preferred coverage.
Female employees in Africa are entitled to at least four months of maternity leave. Receiving compensation during maternity leave varies depending on the agreement.
The ideal currency depends on where your remote employees are located. For example, if you have a remote team in Kenya, you are expected to pay in Kenya Shillings (KES). This can change if you are paying remote employees as independent contractors.
Independent contractors can choose their preferred currency. However, they must convert their income to the local currency when paying taxes.
The following approaches will ensure that you are compensating remote employees in Africa fairly:
Africa is filled with top talent that employers can use to propel businesses to success. And since the workforce drives the company's success, you must ensure that your remote employees are content.
Timely and convenient compensation will efficiently secure employee satisfaction. If you plan to set up a remote team in Africa, reach out to Workpay to help you hire the right employees and pay them in compliance with the law.
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