How to Hire Remote Employees In 

Tanzania

The Basics

Currency
Employer Taxes
Payroll Frequency
Official Language

Employment in 

Tanzania

Hire Independent Contractors

Independent contractors or freelancers are self-employed individuals who provide services to companies as a non-employee. This is one of the most common ways companies tend to hire non-local designers, engineers, support reps, etc.

For legal and tax purposes, independent contractors are not classified as employees. They may work for multiple clients, set their own work hours, negotiate their pay rate, and decide how a job gets done.

For example, the IRS says that if an independent contractor or freelancer does work that can be controlled (what will be done and how it will be done) by an employer then they are, in fact, classified as an employee.

As you can imagine, hiring someone as an independent contractor versus an employee is a fine line to tread.

While there are benefits when you choose the contractor route, there are quite a few drawbacks to consider and you’ll need to weigh them carefully to determine the best fit for your company.

Benefits of Hiring Independent Contractors
Reduced overhead: Lower cost in expenses, payroll, benefits, and more.
Greater flexibility: Contractors can be brought on as-needed. If not a good fit, you simply don’t have to move forward with the contract.
Reduced legal risk: Contractors aren’t usually protected by employment anti-discrimination and workplace safety laws.
Disadvantages of Hiring Independent Contractors
Risk of Misclassification: Not only does this deny workers their proper protections, it can also result in steep penalties and damage to your company. If the IRS determines that employee misclassification has occurred, you will be liable for a percentage of the employees wages, FICA contributions, penalty fines, unpaid taxes, up to a year in prison, and more.
Lack of Control: Contractors are drawn to being independent because it gives them greater control over the work they perform and who they work with. Because they’re not employees, you can’t tell them what to work on and how it should be done.
Lack of Loyalty: Contractors come and go as-needed. Many companies hire contractors for short-term work, which makes it difficult to cultivate loyalty.
Increased Scrutiny: Using Independent Contractors typically leads to an increased risk of being audited.

Set up a subsidiary in 

Tanzania

A foreign subsidiary is a company that operates overseas as part of a larger company who’s HQ is in another country.

Establishing a foreign entity is great for having an international presence and accessing new markets. Though, setting up a subsidiary in Tanzania can be expensive, stressful, and time-consuming. It's not for the faint of heart.

To set up a subsidiary in Tanzania, you have to:

  1. Register your business name and file articles of incorporation
  2. File for local bank accounts
  3. Learn and keep track of the local employment laws
  4. Set up local payroll
  5. Hire local accounting, legal, and HR people

If you're lucky, this process can take months. If you're not so lucky, it can take up to a year. And on average, it costs about $50k-$80k, all-in-all, to get setup. And that's just for Tanzania.

Use an Employer-of-Record (EOR)

An employer-of-record (EOR) is a company that hires and pays an employee on behalf of another company.

An EOR is typically used to overcome the financial and regulatory hurdles that often come with employing remote workers.

Each country has its own payroll, employment, and work permit requirements for non-resident companies doing business in their jurisdiction. Meeting those demands can be a huge obstacle when it comes to hiring remotely.

At Panther, we help companies employ and pay people in over 160 countries, without having to set up a foreign subsidiary. Payroll, benefits, taxes, compliance, and more are all handled by us, at a fraction of the cost.

Outside of saving you months and tens of thousands of dollars, other advantages of using Panther are:

  • Ability to attract talented and motivated employees from all over the world.
  • Full legal compliance: There is no risk of violating local employment laws.
  • Transparency: Employees are still your employees. All the work, processes, operations and day-to-day business belong to you, the company, just like with any other employee. Panther just takes on all of the responsibilities, obligations and admin work related to your team's employment.
  • No risk of misclassification

Because you no longer have to set up your own subsidiary, you’ll save a ton of time and tens of thousands of dollars using Panther.

Paying Remote Employees

Paying employees in Tanzania   is not the same as paying workers in your own country. Employees have to be paid using Tanzania’s employment and payroll standards.

This means that you have to know, understand, and keep up with 1) fluctuating currency changes, and 2) local payroll and tax laws in the countries you’re looking to hire in.

Outside of the laws and regulations around payroll, there may be different conditions surrounding leave, overtime, termination, and more. As you can imagine, maintaining this kind of regulatory knowledge can be challenging. But it is crucial and necessary to follow local legislation.

After, you’ll have to determine the best way to pay your international employees. This can be done in a number of ways, including but not limited to:

Pay through a local entity

One of the most challenging (and expensive) parts of paying international employees is setting up the infrastructure to do so.

Before you start to run payroll, you have to register your company as the local employer in the country the worker resides in. As you can see in the “Set up a subsidiary” section, this is a multi-step process that can take up to a year and put you on your way to bankruptcy.

Work with an EOR

Outside of EORs acting as the full admin employer, many also provide remote payroll.

For example, at Panther, in just 1-click, you’re able to pay your entire global team, anywhere in the world. We send you an invoice each month, charge you in US Dollars, and pay your employees the same amount in their local currency.

We factor in currency fluctuations and use the mid-market rate plus any applicable fee passed on by our provider at cost at the time of billing.

Tanzania

 Specific Information

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

Overtime is compensated at 150% of the salary for anything over 48 hours or 200% for working on a designated holiday or rest day.

Payroll Tax

Employer

Minimum Wage

Payroll

Pay Cycle

13th Salary

“13th month payment” is not mandatory.

Leave

Paid Time Off (PTO)

PTO is calculated by the:

Public Holidays

There are 15 public holidays.

Sick Days

The duration of sick leave entitlement provided to workers is dependent on how long they have been employed by their employer:

  • In accordance with Employment and Labor 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.

Maternity Leave

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.

Paternity Leave

Employment and Labor Relations Act 2004 provides for paid paternity leave of at least 3 days (in a leave cycle of 12 months) for a new father if this leave is taken within the 7 days of the birth of a child.

The employer may require reasonable proof of birth of child prior to paying for paternity leave.

Parental Leave

There is no parental leave.

Other Leave

None.

Marriage Leave

None.

Bereavement Leave

None.

Termination

Termination Process

Termination of employment can be initiated by any of the parties to a contract of employment. Lawful termination of employment under common law includes:

Termination of employment by agreement:

  • When the employer and employee agree to bring a contract of employment to an end in accordance with an agreement.
  • For example, if there is a contract for a period of one year and the agreed period expires then the contract will obviously come to an end.

Automatic Termination:

  • A contract of employment may be terminated automatically in circumstances such as death or loss of business of the employer.

Termination of employment by the employee/Resignation:

  • This happens when an employee due to material breach of the contract by the employer decides to resign from her employment.

Termination of employment by an employer:

  • An employer may also terminate the employment of an employee but there is a need to comply with the provisions of the law and contract relating to termination.

Notice period lasts one week if it is served in one month of employment.

After first month an employee working on daily basis should be served notice four days before termination and if an employee works on monthly basis, the notice period should be 28 days.

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.

Notice Period

The notice period in Tanzania is:

  • Notice period lasts one week if it is served in one month of employment.
  • After first month an employee working on daily basis should be served notice four days before termination and if an employee works on monthly basis, the notice period should be 28 days.

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.

Probation Period

There is no explicit provision in the Employment and Labor Relations Act 2004 about probation period.

However, this act implicitly requires a probationary period of 6 months by saying that a worker with less than 6 months of employment may not bring an unfair termination claim against the employer.