Step-by-Step Guide to Hiring Employees in Tanzania

Tanzania presents an exciting opportunity for global businesses to invest and incorporate a subsidiary or branch in the country. With the urbanization rate at 36% in 2021, the East African coastal country is planning to achieve middle-income status by 2025.

As any business expands, they’re likely to find and onboard more employees to continue its growth. Tanzania invites global employers to benefit from its economic plan to push private investments. There are viable opportunities in industries across manufacturing, mining, health & education, aquaculture development & ICT.

This guide aims to address the topic of how to hire employees in Tanzania in a comprehensive manner. It will benefit employers with a vision to capture major African markets.

Before hiring employees in Tanzania, employers need to register with the Tanzania Revenue Authority. Further, an employer shall report, deduct income tax for your employees, and pay employer contributions. Any global employer planning to hire Tanzanian workers can navigate the guide and understand the recruitment process in Tanzania better.

Things to Know Before Hiring in Tanzania

Tanzanian economy is one of the fastest growing economies in Africa. Since 2000, it has shown 7% annual Gross Domestic Product (GDP) growth. Companies planning to set up an entity may find the recruitment process in Tanzania challenging due to its unique demographics, language, and culture. Additionally, specific regulations vary between mainland Tanzania and the Zanzibar region, an insular autonomous region of Tanzania.

Employers may further read on to gather a general awareness of the local workforce and the employment regulations.

The following factors may enhance the employer outlook on recruitment and selection in Tanzania.

The labor market in Tanzania

• A young and vibrant population is growing at 5% per annum.
• Tanzania has a higher employment-to-population ratio at all levels than Eastern African averages.
• The female labor-force participation rate in Tanzania is about 80%. Yet there is a gender gap of 8% points in total employment.

Language of the workforce in Tanzania

• Tanzania is a land of 112 indigenous African languages, and Swahili is replacing the vernacular languages in everyday life.
• The educated Tanzanian workforce is proficient in English.

Labor laws in Tanzania

• The existing labor laws in Tanzania are largely influenced by the International Labour Organisations (ILO) labor standards.
• At the same time, the demands of globalization favor employers to easily hire or recruit in Tanzania.

Entitled paid leaves

• Typically, job hours are 42 hours a week – 6 working days in the week and seven working hours each day in Tanzania.
• Tanzania laws allow 28 days of paid annual leave for employees working over 6 months.
• There are a total of 15 public holidays.
• The statutory laws allow paid maternity leave of 84 days. It is extendable to 100 days for the birth of more than one child.
• Paid paternity leave in Tanzania is three days within the first seven days of birth.
• The same provision applies in case the employee intends to start a business.
• Employers provide 126 days of sick pay (the first 63 days at 100% of the regular salary and, after that, 50% of the typical salary).

Conducive environment to support investment

• Tanzania is a politically stable country with no significant ethnic conflicts or internal uprisings history.
• The national government has about 20+ Bilateral Investment Treaties signed with different countries and reaffirmed the private sector as the engine of economic growth.
• Foreign businesses are guaranteed against nationalization & expropriation.

The Cost of Hiring an Employee in Tanzania

Hiring is a one-time process of finding a suitable candidate to fill an open role, whereas recruitment is a continuous process of employing at regular intervals. The cost determination for employing processes is tiresome.

The average national hourly cost of hiring people in Tanzania in 2022 is close to 7,280 TZS, which is equal to about USD 3.30. In specific regions like Dar es Salaam, the hourly wages are much higher than the national average. The hourly wage rate will also vary according to the kind of work. In the agricultural sector, the average hourly wage is 3,960 TZS, whereas, in other sectors, the hourly wage can go up to 10,000 TZS.

Additionally, there are indirect costs involved in hiring an employee in Tanzania. Here is a brief outline of it:

Business registration

• Any business in Tanzania must register with the Business Registrations and Licensing Agency (BRELA).
• Registration and compliance fees vary depending on the type of service – registering business names, industrial licenses, type of companies – local incorporation or foreign branch, trade and service marks, and patents.

Minimum wage & other allowance costs

• Tanzania’s minimum wage varies according to the categories covering various employment sectors. It ranges between 40,000 TZS and 400,000 TZS.
• The monthly rate is based on 26 working days per month or 234 hours per month.

Payroll tax liability

• Employers deduct social insurance premiums for employees working permanently in Tanzania.
• Employee social security in Tanzania is financed through contributions at the rate of 20% of the employee’s salary (10% deduction from the employee’s gross salary and the remaining 10% by the employer)

PAYE form

• Employers must report salaries, staff benefits, deducted tax, and employer contributions using the Pay-As-You-Earn (PAYE) form.
• The applicable rates for Tanzania mainland are the same as those of Tanzania Zanzibar.

Organizational Trade

• Employers should let the employees join a Trade Union.
• The harmonious working relationship between employer and employee is strongly influenced by Trade Unions during the recruitment process in Tanzania.

Moreover, companies also need to invest their time and money in legal help, collaborating with recruitment agencies, and employee screening.

What Does a Company Need to Hire Employees in Tanzania?

Employers in Tanzania are free to employ permanent or temporary staff.

To hire employees in Tanzania, global employers must register with the Business Registrations and Licensing Agency (BRELA) to get a certification of incorporation. Before employers can hire Tanzanian workers, they must register with the Tanzania Revenue Authority (TRA) to meet taxation obligations.

Further, businesses must register with the National Social Security Fund (NSSF), the Occupational Safety and Health Agency (OSHA), and the Worker’s Compensation Fund (WCF) to fulfill various legal obligations as local Tanzania employers. Companies must also open a domestic bank account in Tanzania for easy transactions.

Additionally, local Tanzanian companies must adhere to the following employment standards to successfully start recruiting in Tanzania.

Recruitment and appointment policy

• A good recruitment and appointment policy is a hallmark of an equal opportunity organization that employs in Tanzania.
• Such a policy indicates that a company in Tanzania administers all personnel actions without discrimination about gender, race, age, religion, marital status, political opinion, disability, etc.

Employment contract

• Drafting a valid employment contract is an essential practice in the recruitment process in Tanzanian companies.
• An employment contract covers a range of rights and obligations of the employer and employee along with the nature of the job role, terms of employment, employee entitlements, remuneration, confidentiality clause, etc.
• Employers can furnish a written employment contract in Swahili or English.

Termination procedures

• A clearly defined termination procedure will keep the employer away from frivolous mediation or arbitration.
• The termination process and notice period should be mentioned on the employment contract to avoid any legal disputes.

Grievance and disciplinary procedures

• An employer in Tanzania should put in place policies and procedures for handling employee & workplace grievances.
• An employer also sets a proper disciplinary procedure to regulate the standard of conduct within the company.

Once a Tanzanian subsidiary is formed, it can start advertising for job positions in the local labor market. A subsidiary can also hire staff in Tanzania through an agency or secondment supplier.

Various Options for Hiring Employees in Tanzania

Employers must engage and expand their HR team to hire suitable employees for the company.

Global employers can also hire staff without establishing an entity in Tanzania. There are innovative solutions like an Employer of Record (EOR) that can act as a primary employer on paper, eliminating the need to establish a subsidiary or branch for recruitment and selection in Tanzania.

In simple terms, an EOR acts as the official employer in Tanzania on the company’s behalf. All legal compliance like the employment relationship, managing HR tasks like onboarding, payroll, or even termination becomes the responsibility of an EOR.

The Steps to Hiring in Tanzania

Here is the step-by-step guide on how to hire employees in Tanzania:

Register as an employer

• Employers must register for the Pay-As-You-Earn (PAYE) system from the Tanzania Revenue Authority for withholding tax on taxable incomes of employees.
• All employers may file Form NSSF/R1A with the National Social Security Fund & Workers Compensation Fund to provide various employment benefits.

Scout for local talent

• Even a single proprietor or single-person business can hire employees in Tanzania.
• Advertising online is a popular strategy to attract remote employees, among other hiring processes in Tanzania.
• Employers can directly post relevant job posts on top job search sites like BrighterMonday Tanzania, Jobs in Tanzania, Vipajijobs, and Glassdoor Tanzania for hiring employees in Tanzania.
• Employers may also engage services from a staffing agency or recruitment companies.

Conduct background screening of prospective candidates

• Most employers trust the data-driven employee screening of candidates selected to hold integrity-sensitive job positions.
• They must conduct background checks when hiring staff in Tanzania, including interim personnel, self-employed professionals, temporary staff, interns, and volunteers.
• Even though employers have no legal obligations for processing or handling data, they are highly encouraged to maintain confidentiality and handle the data responsibly.

Work and residence permit for employing foreign nationals

• Registered employers in Tanzania may employ foreign nationals to work in Tanzania.
• Class B & Class C work permit is suitable for hiring foreigners in Tanzania.

1. 1. Class B: Foreigners employed by a company or institution
   2. Class C: For missionaries, students, volunteers

• The process to obtain the visa usually takes up to 2 months.
• Apply for residence permits through the Directory of Immigration Services.

Enter into a contract of employment

• After successful background screening, employers can draft employment contracts when recruiting and selecting in Tanzania.
• There is no provision under the employment laws and standards in Tanzania to provide a written contract.
• An employment contract to hire employees in Tanzania may specify
• Details about the workplace and the date of commencement of the employment
• Nature of employment and period of notice
• A detailed description of the employee’s duties
• Details about the pay, employee benefits & allowances
• Mention the length of the paid annual leave and length of the typical working day or week
• State any applicable Trade Union agreement

Let Multiplier be Your EOR Platform in Tanzania

Any registered employer in Tanzania can hire temporary or permanent staff. The recruitment and selection process in Tanzania for any foreign entrepreneur, subsidiary or branch of a foreign incorporated business is pretty straightforward. However, employers must keep in mind the statutory & common practices to start employing in Tanzania.

Now eliminate all the hassles of complying with Tanzanian employment and tax laws to hire or recruit employees with innovative Employer-Of-Record (EOR) or Professional Employer Organization (PEO) solutions like Multiplier.

Multiplier offers a convenient SaaS-based EOR/PEO solution to employ suitable talent in Tanzania without establishing a Tanzanian subsidiary or a branch.

Our integrated services ensure seamless employee onboarding, automated payroll, contingent workforce management, or even terminations on behalf of the global employer in Tanzania. Employers can manage international teams and their payroll without incorporating a physical business entity in Tanzania.

Global employers can benefit from Multiplier’s EOR & PEO solutions in testing new markets and setting up teams at a fraction of the cost in over 150 countries.