How to hire and pay contractors in Kenya

How a foreign company hires and pays a contractor in Kenya

Sign a contract for services that buys defined tasks, have the contractor invoice you, and pay into their Kenyan bank account or a wallet. A genuine contractor sits outside the Employment Act, so there is no Kenyan payroll to run.

With Toku as contractor of record, Toku contracts each contributor, collects their invoices and pays them, and your company buys the labeled data from Toku. To employ someone full time instead, see employer of record in Kenya.

Contractor or employee: the Employment Act test

The Employment Act 2007 applies to a contract of service: an agreement, oral or written, express or implied, to employ or serve as an employee for a period of time, with an employee being someone employed for wages or a salary (s.2). A contractor under a genuine contract for services falls outside it.

There is no general presumption that a contractor is an employee, but the label does not decide it either: a contract of service can be implied from how the work actually runs. One specific rule matters for task work: a casual worker paid daily who works continuously for a month, or on work expected to last three months or more, is deemed to be on a monthly contract with full statutory terms (s.37).

• Pay per accepted task or deliverable, not a daily or monthly wage.
• Let contributors choose when and how much they work, and work for others.
• Don't set shifts, supervise hours or apply staff discipline.

Tax registration, invoices and the records you keep

Income tax applies to income that accrued in or was derived from Kenya (Income Tax Act, s.3), which includes fees for services performed in Kenya. Anyone with a tax liability registers for a KRA PIN, which is used across all tax laws (Tax Procedures Act ss.8 and 12).

A contractor who carries on business issues electronic tax invoices through KRA's eTIMS system and keeps records for five years (Tax Procedures Act, ss.23 and 23A). Turnover tax does not cover management, professional or training fees (s.12C), so many professional contractors are on ordinary income tax.

A person paying professional or management fees of KES 24,000 or more a month to a Kenyan resident must withhold tax (s.35(3)(f)). The Act does not say how this applies to a foreign payer with no presence in Kenya. When nothing is withheld, the contractor declares the gross fees on their annual self-assessment return, due by 30 June.

What you keep as the payer: the contract, the contractor's KRA PIN, their eTIMS invoices, accepted-task records and proof of payment. Toku keeps these for every contributor it contracts.

Payment rails, shillings and Central Bank of Kenya rules

Kenya repealed its exchange controls in 1993 and runs a market-determined exchange rate (Central Bank of Kenya), so a contractor can hold fees in a foreign-currency account or convert them to shillings. Only Central Bank of Kenya notes and coins are legal tender (CBK Act, s.22).

Payments from outside Kenya to a person in Kenya must go through an authorised bank or authorised microfinance bank, unless the Central Bank permits otherwise (CBK Act, s.33H). Pay contractors into their own Kenyan bank account, or through a channel the Central Bank has authorised.

Paying contractors in Kenya in stablecoins

Yes, contractors in Kenya can be paid in stablecoins with Toku. Each contributor can choose USDC or USDT to their own wallet instead of a bank transfer.

The Virtual Asset Service Providers Act 2025, in force since 4 November 2025, requires businesses providing virtual asset services in or from Kenya to be licensed. The Capital Markets Authority oversees exchanges and trading platforms, and the Central Bank of Kenya oversees custodial wallets, virtual asset payment processors and stablecoin issuance. The VASP Regulations 2026 have applied since 22 July 2026. The Act regulates providers and does not stop individuals from holding or receiving virtual assets.

Crypto is not legal tender, and the Central Bank's 2015 caution on virtual currencies predates the new licensing regime, so Toku confirms the route for each person. The 3% digital asset tax was repealed in 2025 (s.12F), and stablecoin fees are taxable income like any other. To set it up, talk to us about paying in stablecoins in Kenya.

Making the IP transfer valid in Kenya

Kenya is one of the few countries where the law moves copyright to the client by default. Under the Copyright Act (Cap. 130), a work commissioned by someone who is not the author's employer is deemed transferred to the person who commissioned it, unless the agreement excludes or limits that (s.31(1)(a)). Put the commission and the transfer in the contract anyway, so the record is clear.

A separate assignment, or an exclusive licence, has no effect unless it is in writing and signed by or for the assignor (s.33(3)), and since 2019 an assignment is valid only once it is lodged with the Kenya Copyright Board (KECOBO), recorded and entered in its Assignment Register (s.33(3A)). Where a law requires a signature, only an advanced electronic signature meets it (Kenya Information and Communications Act, ss.83O and 83P), so a plain click or typed name is not enough for an assignment.

• Rely on the commissioning rule: state that the tasks are commissioned and that copyright in each deliverable belongs to your company, or to Toku for onward transfer to you.
• If you use a separate assignment: sign it with an advanced e-signature or wet ink and record it with KECOBO, or it is invalid.
• Mind the time limits: a licence that does not state its period ends after three years (s.33(7)), and agreements for loosely described future works can be ended on one month's notice after three years (s.33(8)).
• Moral rights cannot be transferred during the author's life (s.32(2)), so the contract should say how the work may be edited and whether it is credited.

Pay data labelers in Kenya with Toku

Toku Contributor Payouts contracts each labeler in Kenya as contractor or agent of record, collects an IP assignment that meets Kenyan law and pays per accepted task in shillings, US dollars, USDC or USDT. You send task totals through the mass payouts API or a file, and every payout ties back to its contributor, agreement and tasks.

Toku pays contractors in 100+ countries. Contractor management lists at $19 per contractor per month on the pricing page, and Contributor Payouts is priced on the contributors you actually pay. The API is documented at docs.toku.com.