Employer of Record in Africa: What It Is, Benefit, Costs, and How to Hire

Key Takeaways

• An Employer of Record (EOR) is a company that becomes the legal employer on behalf of your business.
• EORs handle payroll, contracts, taxes, and compliance, while you manage daily work.
• Using an EOR is faster and cheaper than setting up a local entity in each African country.
• An African EOR helps companies hire vetted talent across Nigeria, Kenya, Ghana, South Africa, and beyond.
• Betternship combines EOR support with direct access to skilled African professionals.

 

Introduction: Employer of Record in Africa

Hiring across borders is a huge opportunity. Companies can access talent anywhere, build distributed teams, and scale faster than ever. 

But it also comes with a big challenge: compliance.

Every country has its own rules for payroll, taxes, benefits, and contracts. If you want to hire someone in Nigeria, Kenya, Ghana, or South Africa, you can’t just wire them money and call it a salary. 

You need to follow local employment laws or risk penalties, legal disputes, or reputational damage.

That’s where an Employer of Record comes in.

EORs have grown in popularity worldwide because they make international hiring faster, safer, and more cost-effective. 

Instead of setting up a company in each country, you can hire through an EOR that already has the legal infrastructure in place.

And if you’re looking at hiring African professionals, Betternship is making the process even easier by combining access to vetted talent with EOR compliance support.

 

What Is an Employer of Record (EOR)?

An Employer of Record is a third-party company that legally employs workers on your behalf.

Here’s how it works:

• The EOR becomes the official, legal employer in the country of hire.

• Your business still manages the employee’s day-to-day work, performance, and projects.

• The EOR takes care of contracts, payroll, taxes, benefits, and compliance.

In simple terms: An EOR does the paperwork. You focus on the work.

This model allows businesses to expand quickly into new markets, or hire remote talent, without setting up local entities in every country.

Example:

• You’re a SaaS company in Germany looking to hire a data analyst in Nigeria.

• Instead of setting up a Nigerian subsidiary (which could take months and cost thousands), you use an EOR.

• The EOR employs the analyst legally, pays their salary in naira, and handles taxes.

• You get to manage the analyst’s work as if they were on your team.

 

What Does an EOR Do in Africa?

An Employer of Record in Africa manages all the legal and compliance responsibilities of employment. That includes:

• Contracts: Drafting locally compliant employment contracts.

• Payroll: Running payroll in local currencies (naira, shilling, rand, cedi, etc.).

• Taxes: Withholding and remitting PAYE, pension, social contributions, and other deductions.

• Benefits: Ensuring statutory and optional benefits (health, leave, insurance) are handled.

• Compliance: Staying up to date with changing labor laws in each country.

• Onboarding & Offboarding: Managing employee registration and termination procedures.

Without an EOR, you’d need to figure all this out yourself, set up a local business entity, hire lawyers and accountants, and keep track of changing regulations. 

That’s not practical for most companies, especially if you’re only hiring a handful of people.

 

Benefits of Using an EOR in Africa

Hiring through an Employer of Record gives companies a faster, safer way to build teams in Africa without worrying about compliance headaches. 

Here are the biggest advantages:

1. Hire faster

Setting up a local company can take months. 

In Nigeria, for example, registering a subsidiary means incorporating with the Corporate Affairs Commission (CAC), setting up tax accounts, and sometimes dealing with multiple government bodies. 

An EOR lets you start hiring in weeks, not months.

 

2. Stay compliant

Each African country has unique labor laws:

• Nigeria: Employers must deduct PAYE (Pay-As-You-Earn tax) and contribute to pension (PENCOM).

• Kenya: You’re required to pay NSSF (National Social Security Fund) and NHIF (National Health Insurance Fund).

• South Africa: UIF (Unemployment Insurance Fund) contributions are mandatory.

• Ghana: Employers contribute to SSNIT (Social Security and National Insurance Trust).

An EOR ensures all of this is done correctly so you don’t risk penalties or disputes.

 

3. Reduce costs

Hiring lawyers, payroll providers, and HR consultants in each country adds up quickly. An EOR bundles those services into one cost-effective solution.

4. Attract talent

Top professionals want stability. Being employed through a compliant EOR means they get proper contracts, benefits, and payroll, instead of being misclassified as contractors. 

That makes your offer more attractive.

 

5. Expand regionally

Many companies start by hiring in one African country and then scale to others. 

With an EOR, you don’t need to repeat the entity setup process every time. One EOR partner can help you hire across multiple countries at once.

 

EOR vs. Setting Up a Local Entity in Africa

Local Entity Setup:

Pros: Full control, ability to open offices, long-term presence.

Cons: Slow (months), expensive, heavy compliance burden.

 

Employer of Record:

Pros: Fast, cheaper, compliant from day one, flexible if you’re testing a market or only hiring a few employees.

Cons: Less direct control over HR administration.

 

When to use which:

• If you’re testing a new market, need speed, or plan to hire fewer than 20 employees, EOR is the smart option.

• If you’re committing long-term to a country and opening physical offices, entity setup might make sense.

 

How Much Does an EOR Cost in Africa?

Costs vary by provider, but there are two common models:

1. Flat monthly fee per employee (e.g., $250–$500).

2. Percentage of payroll (e.g., 10–15% of salary).

Additional charges can include:

• Onboarding fees
• Benefit administration fees
• Country-specific compliance support

The key is to look for transparency. Some providers hide costs in contracts, which can surprise you later.

Example:

If you’re hiring a software engineer in Kenya for $2,000/month:

• With a flat-fee model ($400/employee), you’d pay $2,400/month total.

• With a payroll % model (12%), you’d pay $2,240/month total.
  

The right choice depends on how many people you’re hiring and your budget structure.

 

How Betternship Fits Into the Employer of Record Model

Most global EOR providers focus on compliance only. 

They handle payroll, taxes, and contracts, but they don’t help you actually find the right people. 

That’s where Betternship is different.

Betternship combines two critical parts of hiring in Africa:

1. Access to talent

We connect companies to vetted African professionals across software engineering, product, design, and data.

Every profile on Betternship is pre-screened for skills and experience.

You can start with Betternship Outsource or Projects (short-term trial work) before making a long-term hire.

 

2. Employer of Record support

We work with trusted EOR partners to handle local compliance.

That means payroll, tax, and contracts are taken care of in Nigeria, Kenya, Ghana, South Africa, and beyond.

You stay focused on managing the team, while we ensure everything is legally sound.

This dual approach solves the biggest gap in global hiring: compliance and talent access in one place.

 

Why Companies Choose EOR in Africa

• Market expansion: Africa is one of the fastest-growing talent pools in the world, especially in tech. An EOR lets companies test markets without heavy investment.

• Remote hiring: Many African professionals are experienced in working remotely with international companies. An EOR makes it simple to employ them compliantly.

• Cost advantage: Setting up an entity can cost thousands per year. An EOR lets you hire for a fraction of that.

• Talent retention: Professionals are more likely to stay when they’re paid reliably, in local currency, with the right benefits.

 

Conclusion

Hiring in Africa doesn’t need to be slow, costly, or risky. 

With an Employer of Record (EOR), you can expand into African markets, access top talent, and stay compliant without setting up entities in every country.

Betternship makes this process even simpler. We connect you directly with vetted African professionals and handle the compliance side through trusted EOR partners. 

The result is faster hiring, lower costs, and stronger teams.

Ready to hire in Africa?

Explore Betternship offers and start building your team today.

 

FAQs About Employer of Record in Africa

1. What is an Employer of Record in Africa?

It’s a service that legally employs African workers on behalf of your company, handling compliance, payroll, and contracts while you manage the work.

2. Why use an EOR in Africa instead of contractors?

Contractors can be misclassified, creating legal risks. An EOR avoids this and ensures workers get benefits and protections.

3. Is using an EOR in Africa cost-effective?

Yes. It’s far cheaper and faster than setting up a local entity, especially if you’re hiring fewer than 20 employees or testing new markets.

4. How is Betternship different from global EORs?

Global EORs are compliance-first. Betternship combines compliance with access to vetted African professionals, making it easier to both find and hire the right talent.