In today’s evolving employment landscape, understanding the differences between employees, independent contractors, and gig workers is essential. Each classification carries unique legal implications under Kenyan law, including different rights, obligations, and protections. This article provides a comprehensive overview of these distinctions, citing relevant Kenyan statutes and case precedents. We also examine various tests that Kenyan courts apply to determine employment classification.
1. Definition of an Employee
Under the Employment Act of 2007, an employee is defined as someone employed for wages or a salary, including apprentices and indentured learners. An employee is governed by a written or oral contract of service. Employers must issue their employees a written contract outlining the terms and conditions governing the employment relationship.
Characteristics of an Employee
- Control and Supervision: The employer has significant control over the employee’s work, including tasks, execution methods, and work hours.
- Ongoing Obligation: The employee has a continuous duty to provide services.
- Benefits: Employees enjoy statutory protections such as guaranteed monthly wage, leave entitlements, maternity/paternity leave, housing allowance, health insurance, severance pay, and other benefits outlined in the Employment Act.
- Social Security Contributions: Employers must make deductions and contributions to the National Social Security Fund (NSSF) and Social Health Authority for employees.
- Provision of equipment: The employer generally provides employees with the tools and equipment to perform their contracted services/ jobs.
Relevant Case Law
In Kenya Hotel & Allied Workers Union v. Alfajiri Villas (Magufa) Ltd. [2014] eKLR, the court determined that an employment relationship existed based on the employer’s control over the work and the worker’s economic dependency and that the claimant was not an independent contractor, as the Respondents argued.
2. Definition of an Independent Contractor
An independent contractor is a self-employed person or entity contracted to perform work for—or provide services to another entity as a non-employee. An independent contractor enters into a contract for work or a contract for service with the client for the duration of the work, and once the work ends, the contract is terminated.
The hallmarks of a true independent contractor are that the contractor will be a registered taxpayer, will work his hours, runs his own business, will be free to carry out work for more than one employer at the same time, will invoice the employer each month for his/her services and be paid accordingly and will not be subject to usual “employment” matters such as the deduction of PAYE, leave entitlements etc.
Characteristics of an Independent Contractor:
- Autonomy: Independent contractors retain control over their work methods, hours, and resources.
- Project-Based Engagement: Contractors are usually hired for specific projects, and their relationship with the employer ends upon project completion.
- No Statutory Benefits: Contractors do not receive benefits such as paid leave, termination notice, or severance pay.
- Self-Managed Taxes: Contractors handle their tax obligations and are not subject to payroll deductions.
Provision of equipment/Tools: Contractors use their tools to conduct the work.
3. Definition of a Gig Worker
Gig workers or freelancers are independent contractors who perform “gigs,” which are short-term, flexible, on-demand jobs for one or more clients or platforms. Gig workers engage in temporary, flexible jobs, often through digital platforms such as digital cab-hailing apps such as Uber, Bolt, Jumia, Glovo, Taxify and other freelancing platforms such as Fiverr and Upwork. Gig work generally involves short-term or one-off engagements without the formality or benefits of traditional employment.
Characteristics of a Gig Worker/Freelancer
- On-Demand Work: Gig workers are engaged as needed, often through digital platforms.
- Payment Per Task: Compensation is typically based on completed tasks rather than a regular salary.
- Lack of Traditional Benefits: Gig workers do not receive statutory protection or benefits under current employment laws.
- Control and Flexibility: Gig workers can choose when and where they work, although platforms may exert some control over their activities.
In Kenya, the gig economy is growing massively, and various platforms such as Fiverr, Uber, Jumia, and Glovo, among many others, empower Kenyans to engage in freelance and short-term work. However, this economic shift has blurred the line between traditional employment and independent contracting.
Gig workers, such as those engaged through digital platforms, present unique challenges in classification. Although they often exhibit characteristics similar to independent contractors, platforms may exert significant control over aspects such as pricing, task acceptance, and performance reviews, which complicates their classification.
A landmark case relevant to this discussion is the UK Supreme Court decision in Uber BV v Aslam [2021], where Uber drivers were classified as “workers” rather than independent contractors. The court decided on Uber’s control over drivers’ pay, fares, vehicle standards, acceptance rates, and service delivery. This classification gave drivers certain labour protections under UK law, distinguishing them from full-time employees but still entitling them to protections independent contractors do not receive.
The UK Supreme Court’s decision, which hinged largely on Uber’s level of control over its drivers, could significantly influence Kenyan courts if a similar case on gig worker classification arises. Unlike the UK, where labour law differentiates among employees, workers, and independent contractors, Kenyan law currently lacks this intermediate category. In Kenya, the determination of employment status heavily depends on the degree of control an employer or platform exercises over the worker.
As the gig economy expands, it is likely that Kenyan legislators and courts may look to decisions such as Uber BV v Aslam for guidance, potentially leading to reforms that protect gig workers’ rights while maintaining the flexibility that defines gig work.
Key Legal Distinctions: Employee vs. Independent Contractor vs. Gig Worker
| Criteria | Employee | Independent Contractor | Gig Worker |
| Control | Employer exercises significant control over tasks, hours, and methods. | A contractor has autonomy over work methods, hours, and execution. | The platform may exert control over tasks but with flexible hours for workers. |
| Obligation | Ongoing obligation to provide services, with the expectation of continuous work. | Limited obligation; project or task-based engagement without continuity. | No ongoing obligation; workers can accept or reject tasks as they choose. |
| Benefits | Entitled to statutory benefits (e.g., minimum wage, leave entitlements). | Not entitled to statutory employment benefits. | Generally, they lack statutory protections and benefits. |
| Payment | Regular salary or wage, typically with deductions for taxes. | Paid per project or task, responsible for own tax filings. | Paid per task, often through a platform; responsible for self-managed taxes. |
| Social Security Contributions | Contributions by employers (NSSF, NHIF) are mandatory. | No employer contributions; responsible for personal social security. | No mandatory contributions from the platform or employer. |
| Economic Dependence | Usually economically dependent on the employer. | Often economically independent; may work for multiple clients. | Varies; many gig workers depend on the platform for income but can work across platforms. |
| Control over Profit/Loss | Limited ability to influence profit or loss directly. | Can make a profit or incur a loss based on work efficiency and client management. | Earnings depend on the number of tasks completed and platform policies. |
| Liability | Limited personal liability as duties are performed on behalf of the employer. | Independent contractor bears liability for the quality and completion of their work. | Varies; gig workers may have liability for task completion but generally lack formalized protections. |
| Public Identification | Often identified as part of the employer’s business (e.g., uses company branding). | Operates independently; typically does not use client branding. | May or may not be identified with the platform, depending on task type. |
Tests Used by Kenyan Courts to Distinguish Workers
Kenyan courts use several key tests to determine the appropriate classification of workers. Each test assesses different aspects of the working relationship. Below are the primary tests used to determine whether a worker is an employee, independent contractor, or gig worker.
1. Control Test
The Control Test is a foundational test that examines the employer’s degree of control over the worker’s activities. In an employment relationship, the employer typically dictates what work is done, how it is done, and when it is done.
Key Considerations:
- Supervision and Direction: Is the worker subject to the employer’s detailed instructions?
- Work Hours: Does the employer set the hours of work?
- Performance Monitoring: Is the worker’s performance under regular employer oversight?
However, the formal or personal subordination of a worker as a test for the existence of a contract of service may not apply to highly specialized workers, such as doctors, lawyers, and other professionals. Recent case law suggests that persons who possess a high degree of professional skill and expertise, such as surgeons and civil engineers, may be employed on contracts of service notwithstanding that the employer has little control over the use of their skills. Per Mocatta L.J. in Whittaker Vs Minister of Pensions and National Insurance [1966] 3 ALL ER at 537, [1967] 1 QB at 167. The resident and non-resident freelance pilots, in our case, fall well within this category.
Case Law
In Stanley Mungai Muchai v. National Oil Corporation of Kenya [2012] eKLR, the court emphasized that the level of control the employer exercised over the claimant indicated an employment relationship, given that the employer set work hours and closely supervised the work.
2. Integration Test
The Integration Test assesses whether the worker’s tasks are integral to the employer’s business operations. The integration test applies where the worker is subjected to the rules and procedures of the employer rather than personal command. The employee is part of the business, and his or her work is primarily part of the business. If the worker’s activities are core to the employer’s business, they are more likely to be classified as employees.
Key Considerations:
- Core Business Functions: Does the worker perform roles essential to the business?
- Representation: Does the worker represent themselves as part of the organization (e.g., using company email or business cards)?
3. Economic Reality Test
The Economic Reality Test (also known as the Economic Dependence Test) evaluates the financial relationship between the worker and the employer. This concept seeks to fill the gap created under the control test, taking into account the nature of the modern highly specialized workforce. This test considers how much the worker depends economically on the employer for their livelihood.
Key Considerations:
- Economic Dependence: Is the worker financially dependent on the employer?
- Investment and Risk: Does the worker invest in their tools and bear the financial risk of their work?
- Profit or Loss Potential: Can the worker make a profit or incur a loss based on their management skills?
4. Mutuality of Obligation Test
Mutuality of obligation refers to the contractual duty of the employer to provide work for the person presenting for work and the contractual duty of that individual to accept that work. As such, both parties are obliged under contract law to act upon their promises, where there is a clear intention to have their working relationship regulated by contract. The Mutuality of Obligation Test examines whether there is an ongoing expectation that the employer will provide work and that the worker will accept it. In an employment relationship, this mutual obligation is typically present.
Key Considerations:
- Expectation of Continuous Work: Does the employer provide regular work, and is the worker obligated to accept it?
- Guaranteed Work Hours: Does the employer guarantee a specific number of work hours?
- Control by the Employer: Is there a sufficient degree of control being exercised by the engager?
Case Law
In Ready Mixed Concrete (South East) Ltd v. Minister of Pensions and National Insurance [1968] 2 QB 497, a foundational UK case that has influenced Kenyan jurisprudence, the court held that mutuality of obligation is essential for an employment relationship.
Application of the Tests to Gig Workers
Gig workers, such as those employed through digital platforms, present unique challenges for classification. Although gig workers often exhibit characteristics similar to independent contractors, platform control over aspects like pricing and performance reviews can blur this distinction. As Kenyan law has yet to address gig workers explicitly, courts may adapt existing tests or create new ones to accommodate this classification.
While Kenyan courts have yet to make a definitive ruling on the legal status of gig workers, the Employment court recently addressed a related issue in Meta Platforms, Inc. v Motaung & Others (2024). Content moderators filed a petition against Meta and Sama, alleging unfair labour practices. In an interlocutory ruling, the Employment Court ruled that the petitioners were Meta employees, with Sama acting as Meta’s agent but the Court of Appeal reversed this decision stating that the Employment Court had ruled prematurely on contested issues. The final decision on this matter will be pivotal in shaping Kenya’s legal framework for digital and gig work.
Conclusion
In Kenya, courts employ multiple tests—the Control, Integration, Economic Reality, Mutuality of Obligation—to determine a worker’s status as an employee, independent contractor, or gig worker. As the gig economy continues to expand, these classifications may require adaptation or new legislation to address the unique conditions of gig work.
Employers and workers benefit from understanding these distinctions, as each category brings different rights and obligations. With the potential for legal disputes arising from misclassification, accurate application of these tests is essential for compliance under Kenyan law. The continued growth of the gig economy may drive legislative reforms to protect gig workers while preserving the flexibility that defines this new form of work.
