Tanzania PEO & Employer of Record

WeHG provides an International PEO and global Employer of Record service in Tanzania to companies willing to get into the Tanzanian market or hire local/expat employees in this country.

Standard approach requires establishing a subsidiary in Tanzania.  However, our simplification allows you to start the operations in Tanzania within days hence save time and money.  WeHG would hire job applicants on your behalf when you maintain all-inclusive operational control of their work. So legally they would be our employees, on our local payroll, 100% compliant but will work on your behalf.

Tanzania fast facts

Population, million: 56
Land area: 947,303 km²
Capital: Dodoma
Local currency: Tanzanian shilling (TZS)

GDP per capita:$ 3,574
GDP in currency:$ 200.144 billion

Tanzania, East African country situated just south of the Equator. Tanzania was formed as a sovereign state in 1964 through the union of the theretofore separate states of Tanganyika and Zanzibar. Mainland Tanganyika covers more than 99 percent of the combined territories’ total area. Mafia Island is administered from the mainland, while Zanzibar and Pemba islands have a separate government administration. Dodoma, since 1974 the designated official capital of Tanzania, is centrally located on the mainland. Dar es Salaam, however, remains the seat of most government administration, as well as being the largest city and port in the country.

Hiring, Negotiating and Doing Business in Tanzania

Necessity of written employment contract

Written contracts are not necessary, oral contracts are permissible. Still, an employee must be supplied with a Written Statement of Particulars containing terms listed above. It is however not advised to enter into an oral contract of employment because in case of any legal proceedings the burden of proving or disproving an alleged term of employment shall be on the employer. If an employer fails to produce a contract of employment or written statement of particulars he/she will then fail to prove any term contained therein and the dispute might be decided against him/her. It is therefore very important to supply an employee with a written contract or at least a Written Statement of Particulars.

Different forms of engagement: employment, contracting, work with private entrepreneur

While the recent legal reforms are a meaningful step towards improving working conditions in the United Republic of Tanzania, certain limitations are apparent. The legal standards on pay, leave and maternity protection, for example, remain inadequate. Although the National Employment Policy asserts that the legal definition of “employee” is broad, informal sector workers still tend not to benefit from the legislation. In particular, the prevalence of contracting, subcontracting, home-based work and self-employment in the informal sector makes the Employment and Labour Relations Act difficult to implement. The precedence of collective agreements over statutory provisions, and the government’s authority to specify exemptions from the coverage of the legislation, are also constraints.

Tanzania Employment Contract

Types of employment agreements

There are mainly three types of contracts under which you can be employed and these are:

• A contract for an unspecified period of time: As the name explains, for this type of contract the duration of employment is unspecified, meaning not provided for. Some call it a permanent contract.
• Contract for specified period of time: This is a type of contract in which the duration is specified. Under this contract if the specified duration has expired then the contract automatically comes to an end. A contract for a specified period of time could be of a duration of one month, three months, one year,  two years etc.
• Contract for a specific task: This is a kind of contract in which a person is employed to perform a specific task. Once the task is completed then that contract comes to an end. For example, it could be that a person is employed to offload crates of soda from a truck and once that task has been completed then the contract ends.

Tanzania working hours

According to the law, your normal working hours per day are 8 hours and these should not be more than 48 hours per week. By including the lunch and prayer time in hours of work, working hours should not be greater than 9 hours a day.

Overtime

Workers may be required to work overtime, work over and above ordinary hours of work, but not more than 12 hours a day and 50 hours in a 4-week cycle except in emergency.

A written agreement may require or permit a worker to work up to twelve hours in a day inclusive of any meal interval without receiving overtime pay. However, such agreement may not require or permit a worker to work more than 5 days and 45 hours as well 10 hours of overtime in a week.

A collective agreement may also provide for averaging of ordinary and overtime hours over an agreed period (not greater than one year) however such agreement may not require or permit the worker to work more than 40 ordinary hours  per week calculated over the agreed period and ten hours overtime per week calculated over the agreed period.

Vacation leave in Tanzania

The Employment and Labour Relations Act 2004 provides for annual leave on completion of a year of continuous service with an employer. A worker is entitled to 28 days paid annual leave, inclusive of any public holidays that may fall during the period of leave. The annual leave may be reduced by the number of days during a leave cycle, which are granted as paid occasional leave by the employer on worker’s consent.

A worker with less than six months of service is not entitled to paid leave under the Employment and Labour Relations Act, unless the worker is employed on a seasonal basis or has worked more than once in a year for the same employer, and the total period worked for that employer exceeds six months in that year.

An employer may determine the timing of annual leave provided that it is taken not later than six months once it becomes due. The timing may be extended to 12 month period on worker’s consent and if the extension is justified by the operational requirements of the employer.

Workers are entitled to 24 consecutive hours of rest per week between last working day in one week and the first ordinary working day of the next week. Employment and Labour Relations Act requires that weekly rest day, in principle, should be Sunday for all employees.

Tanzania Maternity Leave

Maternity leave is provided and regulated under the Employment and Labour Relation Act 2004.

Female workers are entitled to at least twelve weeks (84 days) of fully paid maternity leave or 100 consecutive days (in case of multiple births) within a leave cycle of 36 months A worker is entitled to 84 days paid maternity leave within a leave cycle if the newborn dies within a year of birth.

Pregnant worker must notify the employer and provide medical certificate 3 months prior to proceeding on Maternity leave. She may commence maternity leave four weeks prior to the expected date of confinement or earlier if a medical practitioner certifies that it is necessary for the worker or her child. Also, a worker is not allowed to work within 6 weeks of child’s birth unless a medical practitioner certifies her to do so.

An employer is required to grant paid maternity leave to a worker four times during the  entire tenure of her service.

Tanzania Severance Laws

Employment and Labour Relations Act 2004 requires written termination notice before terminating services of a worker.

Either party may  terminate the employment contract after serving due notice or paying in lieu of notice. For terminating an indefinite term contract, the required notice period depends on the worker’s length of service as follows:

• 7 days for the service of one month or less;
• 4 days for a worker employed on daily basis; and
• 28 days for a worker employed on monthly basis.

A longer notice period may also be agreed upon between the parties if it is equal between the worker and the employer. Notice of termination has to be in writing, stating the reasons for termination and the date on which the notice is given. Notice of termination can’t be given during any period of leave allowed under law or notice that runs concurrently with any such period of leave.

The Employment and Labour Relations Act 2004 provides for Severance Pay. Worker is entitled to the severance pay if he/she has completed at least a year of a service with the employer. Severance pay in Tanzania is equal to at least 7 days basic wage for each completed year of employment up to a maximum of ten years.

Severance pay is not payable if an employment is terminated on account of misconduct, incapacity and incompatibility with requirements of business but who unreasonably refuses to accept alternative employment with that employer or any other employer, and if the worker has reached the retirement age or if the employment contract has expired or ended by reason of time. Payment of severance pay does not affect the rights of a worker to any other payable amount.

Tanzania Tax

There is a state social security scheme known as the National Social Security Fund (NSSF), which every employer in the private sector must contribute to. The employer’s contribution is 20% of the employee’s cash remuneration; however, the employer is entitled to recover up to half of this from the employee.

Similar contribution rates apply to the Public Service Social Security Fund (PSSSF) scheme, which is a special fund for the employer and employees in the public sector. In the PSSSF scheme, the contribution by employer and employee is 15% and 5%, respectively.

The standard rate of VAT is 18%, but the export of goods and certain services is eligible for zero rating.

Health Insurance Benefits in Tanzania

Medical benefits are available for insured workers and these include preventive and curative care,  medicine, clinical pathology and x-rays, laboratory tests, hospitalization, minor and major surgery. These benefits are limited to the medical services provided by doctors, nurses and other medical providers in authorized hospitals.

In accordance with Employment and Labour Relation Act 2004, every worker certified by a medical practitioner is entitled to paid sick leave (sickness benefit) for a period of 126 days in a leave cycle of 36 months. The worker must have been employed with the same employer for at least six months in the 12 months before the sickness began or be employed on a seasonal basis by the same employer.

Full wages are paid for the first 63 days of sick leave and half of the wages are paid for the remaining 63 days.

Additional Benefits in Tanzania

Tanzania’s compensation laws include a minimum wage that changes based on the various employment sectors. It can range anywhere from 40,000 to 400,000 Tanzanian shillings per month. However, the minimum wage last changed in 2018, so it could be updated again soon. Trade unions do exist in Tanzania, so you should always check to make sure your sector doesn’t have another minimum wage requirement.

While the law dictates that you must give out statutory benefits, whether you give out market norm benefits is entirely up to you. We recommend providing these supplemental benefits to show employees you want them to succeed and have long careers with your company. Some different benefits you can choose to give out include:

• Paid parental leave
• Private health insurance plans
• Stipends for a car, a phone, health insurance, housing, or education
• Additional paid time off
• Performance-based bonuses

General market practice benefits/additional allowances

Sectors and industries benefits:

• Agriculture and Agro-Processing

Zimbabwe is an agriculture based economy with opportunities for investment in value addition, meat processing, fruit juices, horticulture and floriculture, sugar milling and timber processing.

• Mining

Prospecting and mining of various minerals like gold, coal, diamond, granite and platinum (Zimbabwe has the largest reserves in the world after South Africa), cutting and polishing of diamonds, Quarrying and mineral exploration.

• Manufacturing

The manufacturing sector is in its nascent stage with few exploited areas whereby unprocessed agricultural commodities have dominated major exports and Zimbabwe wants to change this trend by encouraging investment in textiles, leather and food processing.

• Information , Communication and Technology

The government is planning to utilize new technologies in new media to play an important role in transforming the country from a resource based to a skill based and technology based economy to revitalize the production structure.

• Institutional investors ,Private Equity firms ,Traders

Zimbabwe has shown a continuous uptick in the stock market. With Europe and US markets still recovering from the 2007 market crash, Tanzania has shown high year on year gains and has become a veritable destination of foreign equity investors investing in Africa.

Tanzania Holidays

The public holidays are regulated under the Public Holidays Ordinance, 1966. It includes the following holidays:

• New Year Day (January 01)
• Zanzibar Revolution Day (January 12)
• Maulid Day (January 03)
• Good Friday (April 03)
• Easter Sunday (April 05)
• Easter Monday (April 06)
• The Sheikh Abeid Amani Karume Day( April 07)
• Union Day (April 26)
• Workers Day (May 01)
• International Trade Fair/Saba Saba Day (July 07)
• Nane Nane (Peasants) Day (August 08)
• Eid-el-Fitri (July 17)
• Mwalimu Nyerere Day (October 14)
• Idd-El-Hajj (September 23)
• Independence and Republic Day (December 09)
• Christmas Day (December 25)
• Boxing Day (December 26)

Dates of Muslim festivals are subject to the sighting of moon and thus are liable to change.

Why Choose WeHireGlobally

WeHG takes care of all the onboarding hurdles, payroll, compensation and benefits, tax filing, and termination of employment. Our Employer of Record solution allows you to manage your overseas teams efficiently while minimizing cost and risk.