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.
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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:
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.
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:
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 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:
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.
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.
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.
Lunch break is applicable only if the employee works continuously for five hours.
Overtime is compensated at 150% of the salary for anything over 48 hours or 200% for working on a designated holiday or rest day.
In Tanzania, an employee can continuously work for 6 days but the 7th day must be a rest day.
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Employees can be paid daily, weekly, bi-monthly, or monthly.
Employees who are paid on a monthly basis receive their salary no later than the end of the month.
There are no provisions in the law regarding 13th salaries.
In Tanzania, the Employment and Labour Relations Act 2004 provides for annual leave on completion of a year of continuous service with an employer.
Employees who have been employed for at least 6 months are entitled to 28 days of consecutive leave per year 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.
There are 15 paid public holidays in Tanzania.
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.
The first 63 days of sick leave are paid at 100% of the regular salary and thereafter, 50% of the regular salary.
In order to be entitled to sick leave and pay, the employee must provide a medical certificate.
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.
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.
There is no parental leave.
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The law does not have a specific provision for family/ social gatherings or activities of that type, but they can request some days off taken from their annual leave.
Employees can request some days off taken from their annual leave.
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:
Automatic Termination:
Termination of employment by the employee/Resignation:
Termination of employment by an employer:
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.
The notice period in Tanzania is:
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.
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.
