Key Takeaways
Before diving into the contract types, here are the key points startups should know about international employment contracts in 2025.
- There are many different types of international employment contracts, and the right one depends on the role, the startup’s growth stage, and the worker’s expectations.
- Picking the wrong contract type can lead to penalties, legal disputes, or unexpected costs. Some African regulators automatically reclassify contracts if they don’t align with local labor law.
- Startups don’t have to rely on outdated hiring models. Flexible international contracts make it possible to hire in Africa while staying compliant and cost-effective.
With immigration fees skyrocketing (like the $100,000 U.S. H-1B charge) and local talent shortages across Europe and North America, startups are hiring across borders as a core strategy.
Africa has emerged as a natural hub: m0000000000illions of skilled young professionals, competitive costs, and time-zone alignment with both Europe and North America.
But access alone isn’t enough. Every country has unique employment rules, from mandatory benefits in Kenya to probation period limits in Nigeria. Get it wrong, and you risk fines, disputes, or being barred from hiring in that market altogether.
Choosing the right type of contract is what separates smooth scaling from compliance nightmares.
Types of International Employment Contracts
1. Permanent (Indefinite) Employment
A permanent or indefinite employment contract is the most traditional arrangement. It offers employees ongoing work with no pre-set end date.
Globally, this often means a full-time schedule of about 35–40 hours per week, but in Africa, the definition varies.
For instance, in Nigeria, the Labour Act does not fix maximum working hours for all sectors, while in Kenya, standard workweeks are typically capped at 52 hours, depending on industry.
Typical employer obligations include:
- Processing payroll and tax deductions under local law (PAYE in Nigeria, PAYE/NSSF in Kenya, PAYE/Provident Funds in South Africa).
- Providing statutory benefits such as pension contributions, health insurance, and paid leave.
- Maintaining proper records and issuing payslips.
- Honoring notice periods and severance pay if terminating employment.
- Ensuring a safe and fair workplace.
Use cases for startups:
- Hiring core team members who will grow with the business (lead developers, finance leads, senior managers).
- Securing loyalty in competitive roles where turnover is expensive.
Risks:
- Once benefits are written into a permanent contract, they generally cannot be reduced without triggering disputes.
- Some countries mandate probation limits (e.g., Nigeria: max 3 months; Ghana: up to 6 months). Missing these details can invalidate clauses in the contract.
2. Fixed-Term
Fixed-term contracts run for a defined period, such as six months or one year.
They are treated as temporary arrangements, but, in many African jurisdictions, carry the same legal rights as permanent employees for the contract duration.
Typical employer obligations include:
- Paying statutory contributions (tax, pensions, insurance) during the contract period.
- Providing proportionate leave entitlements.
- Respecting termination clauses if ending the contract early.
Use cases for startups:
- Filling gaps during maternity or sick leave.
- Hiring engineers or designers for project-based work (e.g., a 9-month app build).
- Testing new markets or business models without committing to permanent headcount.
Risks:
- In South Africa, repeatedly renewing a fixed-term contract can automatically convert it into permanent employment.
- If startups imply or promise future opportunities beyond the contract, employees may argue “legitimate expectation” and take legal action if not retained.
3. Part-Time
A part-time employment contract involves fewer working hours than a full-time arrangement. Definitions vary: in some African countries, part-time is under 30 hours weekly, while others leave it to employer discretion.
Typical employer obligations include:
- Providing proportional statutory benefits (e.g., if full-time staff receive 20 days’ leave, part-time staff working half the hours should receive 10 days).
- Withholding taxes and contributions on actual hours worked.
- Documenting expected weekly or monthly hours in the contract.
Use cases for startups:
- Hiring marketing, design, or admin support on a lean budget.
- Covering non-core but essential functions without a full-time payroll burden.
- Supporting flexible arrangements (e.g., a developer working part-time while studying).
Risks:
- Misclassifying part-time staff as “freelancers” to cut costs can expose startups to penalties.
- Overloading a part-time employee with full-time hours without adjusting benefits risks claims of underpayment or misclassification.
4. Freelance / Independent Contractor
Freelancers are self-employed professionals contracted for specific deliverables. They are not on payroll and typically invoice for services. In Africa, this is a fast-growing model, especially in IT, design, content writing, and consulting.
Typical employer obligations include:
- Clearly defining deliverables, timelines, and payment terms in the contract.
- Respecting intellectual property ownership (e.g., code, designs, or reports created).
- Ensuring compliance with cross-border tax treaties if hiring freelancers from outside the company’s base country.
Use cases for startups:
- Rapidly scaling output without committing to long-term hires.
- Engaging niche experts for short-term tasks (e.g., cybersecurity audits, product copywriting).
- Keeping operational flexibility during early-stage funding cycles.
Risks:
- High risk of misclassification: if the freelancer works fixed hours, is supervised daily, or is your only developer, regulators may reclassify them as employees.
- Misclassification can lead to retroactive tax bills, pension contributions, and penalties. In Kenya, for example, the tax authority has flagged cases where “consultants” were essentially permanent employees.
5. Consulting Agreements
A consulting contract is for specialists who provide advice, training, or strategy rather than day-to-day execution. Consultants are typically independent and may serve multiple clients at once.
Typical employer obligations include:
- Outlining scope of work, duration, and fees clearly.
- Protecting intellectual property and confidential information with NDAs.
- Specifying ownership of deliverables (e.g., training material or research reports).
- Paying fees promptly, usually via invoice rather than payroll.
Risks:
- If a consultant is treated like an employee (regular working hours, close supervision, integrated into teams), regulators may reclassify them.
- Lack of clarity on IP ownership can lead to disputes, especially if consultants reuse frameworks across clients.
6. Agency Staff
Agency staff are hired through a third-party staffing company, which is the legal employer. The agency handles payroll, contracts, and benefits while the startup manages the day-to-day tasks.
Typical employer obligations include:
- Paying invoices to the staffing agency (not directly to workers).
- Providing a safe and non-discriminatory work environment.
- Aligning on the scope of duties and working conditions with the agency.
Use cases for startups:
- Hiring customer service reps during peak seasons via a staffing firm.
- Scaling quickly without handling direct compliance paperwork.
Risks:
- Dual liability: even if the agency is the “employer of record,” startups can still be held responsible for health, safety, or discrimination claims.
- Costs may run higher than direct hiring since agencies add a margin.
- Some African countries have stricter limits on agency work, especially if it extends beyond three months.
7. Internship / Trainee
Internships and trainee contracts bring in junior talent for learning and on-the-job training. They may be paid or unpaid depending on the country, but many regulators now mandate at least a stipend.
Typical employer obligations include:
- Clearly defining the learning objectives and duration.
- Providing mentorship and a safe work environment.
- Paying a stipend if required by local law (e.g., in Nigeria, interns in many sectors now expect stipends even if not legally mandated).
- Ensuring equal treatment if interns perform work similar to employees.
Use cases for startups:
- Building a pipeline of junior developers or marketers.
- Reducing costs while grooming potential future employees.
Risks:
- Misusing internships for cheap labor can trigger penalties or reputational harm.
- In some regions, interns working beyond certain hours or performing billable tasks must be converted to formal employees.
8. Zero-Hour / On-Call
Zero-hour contracts have no guaranteed hours. Workers are “on call” and only engaged when needed. This is common in hospitality, events, and retail sectors.
Typical employer obligations include:
- Paying workers only for hours actually worked.
- Providing statutory benefits where required once hours exceed thresholds.
- Recording shifts and issuing payslips in compliant formats.
Use cases for startups:
- Event-based businesses in tourism or entertainment.
- Seasonal retail or logistics needs (e.g., holiday sales).
Risks:
- Lack of predictability for workers may lead to high turnover.
- Some African regulators have scrutinized zero-hour models for fairness.
- If workers routinely work set hours, regulators may argue they are de facto part-time or full-time employees.
9. Employer of Record (EOR)
An Employer of Record is a third-party company that legally employs talent on behalf of your startup. The worker is on the EOR’s payroll but reports to your team.
Typical employer obligations include:
- Paying a monthly fee to the EOR (covers salary, taxes, and compliance).
- Setting day-to-day work goals and performance standards.
- Ensuring fair treatment in line with labor law.
Use cases for startups:
- Hiring quickly in a new African market without setting up a local entity.
- Testing expansion into multiple countries simultaneously.
Risks:
- Costs can add up for larger teams, since EORs charge per employee.
- Limited control over some HR policies (since they sit with the EOR).
- Choosing the wrong provider can still expose you to compliance risks.
10. Professional Employer Organization (PEO)
A PEO acts as a co-employer. Unlike an EOR, you still need a local entity, but the PEO manages HR functions such as payroll, benefits, and compliance.
Typical employer obligations include:
- Maintaining a registered entity in the country of hire.
- Collaborating with the PEO on HR decisions.
- Paying both service fees and statutory contributions.
Use cases for startups:
- Scaling teams in markets where you already have a subsidiary.
- Outsourcing HR headaches while focusing on growth.
Risks:
- Not a solution for startups without a local entity; that’s where EOR is better.
- Confusion between co-employer responsibilities can lead to disputes if contracts are vague.
Choosing the Right International Employment Contract in Africa
Choosing the right international employment contract is more than a legal box-tick. It affects cost, retention, compliance, and even your reputation as an employer.
For startups hiring in Africa, the variety of contract types means flexibility, but also responsibility. Misclassification, missed benefits, or ignoring probation rules can derail expansion faster than hiring mistakes.
That’s why many founders use EOR and PEO solutions like Betternship to simplify compliance.
It keeps the startup lean, fast, and compliant while still giving access to Africa’s top talent.