Tanzania is a fast-growing East African nation that offers a wealth of opportunities for businesses looking to expand. With a growing population and an abundance of natural resources, the country is quickly becoming a top destination for foreign direct investment (FDI). The country is also experiencing significant progress in poverty reduction, access to education and improvements in healthcare. The government, in tandem with the Tanzania Development Vision 2025, is ramping up efforts to boost its economy by attracting multinational companies (MNCs) to invest in the country’s infrastructure and workforce. This strategic move aims to accelerate the country’s progress and foster growth.
Why Tanzania?
- As one of the fastest-growing economies in Africa, Tanzania has a bright future and is projected to continue growing at an impressive pace according to projections from the World Bank.
- The labor force in Tanzania is young and vibrant, with over 70% of the population under the age of 30.
- Tanzania offers a range of investment opportunities across a variety of industries, including agritech, fintech, tourism, construction, renewable energy and information technology (IT).
- The Global Innovation Index ranks Tanzania among the top lower middle-income economies in the world and the Tanzania Startup Association was recently set up to help nurture the country’s burgeoning startup ecosystem.
What is the main source of labor laws in Tanzania?
The Employment and Labor Relations Act (ELRA) is the main source of labor law in Tanzania. It regulates the relationship between employers and employees and covers a wide range of topics, including employment contracts, minimum wage, working conditions and dispute resolution.
Other important rules and regulations that affect Tanzania’s labor framework include:
- The Constitution of the United Republic of Tanzania
- Wages Order
- Occupational Health and Safety Act
- National Social Security Fund Act
- Public Holidays Ordinance Amendment Act
What should companies know about employment contracts?
According to Tanzanian labor law, employers are required to provide written employment contracts to any employee who works six or more days per month. The agreement can be for a definite or indefinite period or for a specific task.
The contract must be in writing if the worker is to work outside Tanzania. It must include specific information about the worker, job description, commencement date, form of contract, duration of the contract, place and hours of work, remuneration, benefits and any other relevant information.
If any of the information in the contract changes, the employer must revise the written particulars and notify the worker in writing. Employers must also clearly explain all the written particulars to the worker in a language that is understandable to them. The written document must be kept for five years after the termination of employment. If an employer fails to produce a written contract in legal proceedings, they bear the burden of proof regarding any alleged term of employment.
Are probation periods allowed?
While the ELRA doesn’t include a specific provision on probationary periods, it does imply that a probationary period of six months exists. This is because the law states that a worker who has been employed for less than six months cannot file an unfair termination claim against their employer.
What are some regulations around termination?
In Tanzania, there are four valid reasons for terminating an employee’s employment:
- Misconduct
- Incapacity
- Incompatibility
- Employer operational requirements/retrenchment.
Certain groups of employees are protected against termination or dismissal, including:
- Employees who are pregnant or on maternity leave
- Employees who are trade union members or participate in lawful trade union activities
- Employees who are whistleblowers or report any unlawful or improper conduct of the employer or any other person
- Employees who are absent from work due to illness or injury (for a period not exceeding 36 months in total)
- Persons with disabilities (unless they cannot perform their job duties even with reasonable accommodation)
Employers who terminate these groups of workers without a valid reason or proper procedure may face legal consequences for unfair termination. Additionally, employers are required to provide employees with a certificate of service upon termination.
How do notice periods work?
Either the employee or the employer may terminate an employment contract by giving due notice or paying in lieu of notice. The minimum notice period required for terminating an indefinite-term contract depends on the employee’s length of service:
- Seven days for employees who have worked for one month or less
- Four days for employees who are hired on a daily basis
- 28 days for employees who are hired on a monthly basis
The notice must be given in writing and should include the reasons for termination, as well as the date on which the notice is given. The notice should not be given during any period of leave taken by the employee.
Are severance payments required?
If an employee has worked for an employer for at least one year and is made redundant, they are entitled to receive severance pay. The amount of severance pay is at least seven days’ basic wage for each completed year of employment, up to a maximum of ten years.
However, an employee is not entitled to severance pay if they are terminated for misconduct, incapacity or incompatibility with business requirements. Additionally, an employee is not entitled to severance pay if they refuse alternative employment with the same or any other employer. Severance pay does not affect an employee’s entitlement to other termination benefits.
Are bonuses required?
There is no legal requirement for employers to provide bonuses to their employees in Tanzania. However, many employers do offer performance-based bonuses or other incentives to attract and retain talent.
Are supplemental benefits common?
Supplemental benefits may be offered by some employers in Tanzania but they are not mandatory under the country’s labor laws. These benefits are usually additional benefits provided by employers to their employees on top of the statutory benefits required by law, such as paid leave, health insurance and pension contributions.
As the economy advances and the talent market becomes more competitive, more companies are using supplemental benefits as a tool for engagement and retention. Some common supplemental benefits that employers may offer include performance bonuses, housing allowances, transportation allowances, education assistance and other perks.
The availability and extent of supplemental benefits will vary between different employers and industries in Tanzania. It is recommended that MNCs work with an expert partner to develop benefit plans compliantly and cost-effectively.
Why are Employer of Record (EOR) services becoming more popular in Tanzania?
Tanzania has made great strides in improving its business environment and attracting foreign investment. However, for multinational companies (MNCs) looking to establish a presence in Tanzania, there are still bureaucratic hurdles to overcome, such as lengthy registration processes and complex tax and payroll regulations.
By engaging an EOR like GoGlobal, MNCs can avoid the hassle of setting up a legal entity and navigating the intricacies of Tanzanian employment law. With our expertise, we take care of the hiring, payroll and benefits administration, ensuring compliance with local regulations, while the MNC can focus on building their business and expanding their operations.
Moreover, Tanzania’s increasingly competitive job market makes it challenging for MNCs to secure top talent, especially for specialized roles. GoGlobal’s Recruit & Hire solution pairs seamlessly with our EOR services, enabling our clients to source and onboard the best candidates with ease. This means we offer a comprehensive suite of end-to-end solutions – from talent sourcing to payroll administration.
Our EOR services can be either a temporary bridge solution or a long-term operational solution to streamline hiring, mitigate risks and ensure compliance for MNCs operating in Tanzania.
What sets GoGlobal apart from other EOR providers in Tanzania?
At GoGlobal, we take a people-first approach to HR and prioritize building strong relationships with our clients and their employees.
We have team members all around the world with deep experience in global expansion and hiring. However, our local team members on the ground in Tanzania have an in-depth understanding of the country’s unique cultural customs, language and regulatory environment. This combination of a global mindset and local expertise enables us to provide a tailored and personalized experience to our clients and client workers.
With GoGlobal by your side, you can focus on your core business goals and leave the HR complexities to us – and gain peace of mind knowing that you’re building a team in Tanzania compliantly and cost-effectively.
GoGlobal has a significant on-the-ground footprint in Africa, maintaining local offices across 18 countries spanning from North Africa to Sub-Saharan Africa. This extensive on-the-ground footprint empowers GoGlobal to offer exceptional assistance to clients in expanding their operations and building successful teams across Africa.
Contact us to talk with an international HR expert.