Consultancy agreement in Kenya: Template, Key Clauses and Local Law (2026)

What is a consultancy agreement in Kenya, and what does the law require? A consultancy agreement in Kenya is a contract for services under which an independent consultant provides expertise or work to a client for a fee. It is not a contract of employment. The consultant is in business on their own account, decides how the work is done, and is not entitled to employee protections such as leave, statutory notice or NSSF and SHIF contributions from the client. There is no single consultancy statute. The agreement rests on the general law of contract, drawn from the Law of Contract Act (Cap 23) and the common law, along with tax law on how the fees are treated. Two local features matter. First, classification. Kenyan courts and tax authorities look at the substance of the relationship, not just the label. A 2025 Tax Appeals Tribunal decision treated consultants as independent contractors, not employees, because the arrangement lacked fixed hours, employee benefits and mutual obligation, and the consultants controlled their own work. The lesson is that a genuine consultancy must be independent in fact, or it risks being re-characterised as employment with PAYE exposure for the client. Second, withholding tax. A client paying professional or consultancy fees to a resident consultant is generally required to deduct withholding tax at source, commonly 5 percent, and remit it to the Kenya Revenue Authority through iTax, giving the consultant a credit. A low monthly aggregate may be exempt, and VAT may apply on top, so confirm the current rules. This article is general information, not legal advice. Classification and tax turn on the facts and on current rules, so confirm the position with a Kenyan advocate or tax adviser. Last verified October 2026. ## A Kenya consultancy agreement template you can copy ```

CONSULTANCY AGREEMENT This Agreement is made on [DATE] BETWEEN: [CLIENT NAME], of [address] ("Client") AND [CONSULTANT NAME], [PIN / registration number], of [address] ("Consultant") 1. SERVICES The Consultant will provide the services described in Schedule 1 (the "Services") with reasonable skill and care and to professional standards. 2. INDEPENDENT CONTRACTOR The Consultant is an independent contractor, not an employee, partner or agent of the Client. The Consultant controls the manner and means of performing the Services and is responsible for its own tax, NSSF, SHIF and insurance. 3. TERM This Agreement begins on [START DATE] and continues until [END DATE / completion of the Services], unless ended earlier under clause 9. 4. FEES AND WITHHOLDING TAX The Client will pay fees of KES [amount] [per deliverable / per month / per day] on [invoicing terms]. The Client will deduct withholding tax at the applicable rate and remit it to the Kenya Revenue Authority, giving the Consultant the relevant certificate. [State whether VAT is added.] 5. EXPENSES The Client will reimburse pre-approved, reasonable expenses on production of receipts. 6. DELIVERABLES AND ACCEPTANCE The Consultant will deliver [the deliverables] by [dates]. The Client has [N] days to accept or request reasonable changes. 7. CONFIDENTIALITY The Consultant will keep the Client's confidential information secret and use it only for the Services, during and after the term. 8. INTELLECTUAL PROPERTY On full payment, intellectual property in the deliverables created for the Client is assigned to the Client. The Consultant keeps its pre-existing materials and licenses their use within the deliverables. 9. TERMINATION Either party may end this Agreement on [N] days written notice, or immediately for material breach not remedied within [N] days. The Client pays for Services properly performed up to termination. 10. DATA PROTECTION Where the Consultant processes personal data for the Client, it acts only on the Client's instructions and complies with the Data Protection Act 2019. 11. LIABILITY [Set a liability cap and any exclusions, as negotiated.] 12. GOVERNING LAW This Agreement is governed by the laws of Kenya. Signed: For the Client: __________ For the Consultant: __________ Name / designation / date Name / designation / date

- **Fees and withholding tax (clause 4).** Record the fee basis and invoicing terms. For a resident consultant, the client commonly withholds 5 percent on professional or consultancy fees and remits it, giving the consultant a certificate to set against its own tax. Confirm the current rate, any exemption for small monthly totals, and whether VAT applies.
- **Deliverables and acceptance (clause 6).** Most consultancy disputes are about scope. Define the deliverables and an acceptance window so "done" is objective.
- **Intellectual property (clause 8).** A client paying for work usually wants to own the output. Assign the deliverables on full payment, while letting the consultant keep its own pre-existing tools under a licence.
- **Data protection (clause 10).** If the consultant handles personal data for the client, the Data Protection Act 2019 applies. Require processing only on the client's instructions and with proper safeguards.
- **Termination (clause 9).** Set a clean notice period and a payment-on-termination rule so neither side loses out for work already done. ## Red flags to watch for - **A consultancy that is really employment.** Fixed hours, close supervision, benefits and no other clients point to employment, with PAYE and statutory exposure for the client. Keep the consultant genuinely independent, or hire them as an employee.
- **Silence on withholding tax.** If the agreement does not address withholding tax, the parties argue later about gross versus net. State it.
- **No IP assignment.** Without clause 8 the consultant may own the work the client paid for. Assign it, on payment.
- **Vague scope.** "Advisory services as required" leads to scope and fee disputes. List the deliverables.
- **Ignoring data protection.** If personal data is involved and there is no data clause, the client can breach the Data Protection Act 2019 even though the consultant did the processing. ## A note on jurisdiction and current law A Kenyan consultancy agreement rests on the Law of Contract Act and the common law, with the real risks in classification and tax. Get independence wrong and the arrangement can become employment. Get tax wrong and the fee position is unclear. The Data Protection Act 2019 adds obligations where personal data is processed. Because the current withholding rate, any exemption and the classification tests turn on the facts and on live rules, confirm the position with a Kenyan advocate or tax adviser. Adira is built around Indian corporate law first and is architected to expand. Deeper, verified Kenyan coverage is on the roadmap rather than live today, so use this template as a sound starting point and have local counsel check anything high-value. ## Where a contract workspace helps A company that uses consultants tends to use many, on similar but not identical terms. The work that outlasts one agreement is keeping the independence wording, the tax treatment and the IP assignment consistent across every engagement, and tracking who is engaged until when, with what deliverables due. Keeping the drafting, review and signed versions in one AI workspace tuned to how your company engages consultants means the independence, tax and IP terms stay consistent across every agreement, with edits made in plain language. [Adira](https://adiralaw.com) is one workspace built to work this way. This template alone is enough to put a fair Kenyan consultancy agreement in place. *This article is general information, not legal advice. Classification, withholding tax and data protection rules turn on the facts and change, so have a qualified Kenyan advocate or tax adviser review anything important. Last verified October 2026.*