Navigating the complex labour laws governing employment practices is essential when running Tanzania payroll. However, building an in-house compliance team may not be the most efficient way to manage your remote team’s payroll in Tanzania.

Regardless of size, global companies need help to secure in-country expertise for localised payroll service. This is where a partner like Workforce Africa provides significant value in supporting global firms to maintain compliance when handling payroll in Tanzania, addressing every intricate detail, including;

• Salary computation requirements,
• Taxation legislation specifics (social security, employee income tax, corporate tax, VAT and other employee deductions.
• Benefits administration, and more (health insurance, pension, paid leaves, holiday compensation.

Workforce Africa simplifies hiring and payroll compliance for offshore talent management in Tanzania. No need for a subsidiary or entity setup. From contracts and onboarding to taxes, payroll, and admin tasks, partnering with us – a payroll firm in Tanzania will help you focus on growth for greater levels of success.

Employment Contract Termination

In accordance with the laws of Tanzania, employment contracts can be terminated by either party upon giving notice, usually two weeks for an employment contract that is still within the probationary period and minimum of 28 days for other types of employment contracts, depending on the terms of the contract. The employer may also terminate an employee’s contract without notice if there is just cause, such as gross misconduct or breach of contract, (after the law mandated disciplinary procedures). Conversely, an employee may terminate their contract by resigning in writing, which must be acknowledged by the employer. It is essential to follow the proper procedures for terminating an employment contract to avoid any potential legal disputes or penalties.

Tanzania Country Overview

The United Republic of Tanzania lies in East Africa. It is predominantly an English-speaking country, with a majority of the population also fluent in Swahili. Two critical cities in Tanzania are Dar es Salaam, the capital and the economic hub, and Dodoma. These urban centres act as transit points to ecotourism destinations and beach resorts. With a population exceeding 68.5 million people, Tanzania boasts a significant demographic presence.

In recent years, key industries experiencing growth include textile, food processing, and brewing. Tanzania boasts a market-based, diversified economy comprising gold, coffee, agriculture, and services. Considerations such as the low labour cost and abundant natural resources make Tanzania attractive for businesses seeking expansion opportunities. 

Although Tanzania possesses a highly skilled workforce, hiring and establishing a team can be time-consuming and challenging. However, partnering with an Employer of Record (EOR) or Professional Employer Organisation (PEO) in Tanzania facilitates swift market entry. It manages all legal complexities associated with operations in the country.

Payroll Processing in Tanzania

Local labour laws in Tanzania govern payroll processing, with each employee’s salary potentially calculated differently. Due to compliance concerns, processing payroll at scale can become complex, cumbersome, and risky. Here are the phases of payroll processes global businesses should understand-:

Pre-payroll Phase

Your organisation’s unique approach to payroll compliance shapes its policies and processes, including payroll preparation. Global firms must prioritise essential business elements in the pre-payroll phase, such as accurate business profile documentation and tailored work location policies, which is crucial. Customise leave and work policies to align with local standards in Tanzania to ensure compliance and transparency while collaborating closely with compliance teams or partners to help adhere to statutory requirements throughout the payroll management process for your remote team.

In this phase also, standardising compensation packages to conform with local payment norms, such as payment cycles, which enhance compliance and meet employee expectations, is necessary.

Payroll Calculation Phase

Streamlining input collection and validation processes ensures accurate wage calculations in this phase of payroll processing. This phase involves the actual calculation of wages, with a primary focus on this task. Utilising software automation and digital document submission tools makes payroll calculations efficient and reduces the risk of human error in this process.

Post-payroll Phase

The post-payroll phase in Tanzania refers to the period after payroll processing, where employers review and settle any outstanding issues related to employee compensation, benefits, and taxes. This phase typically includes: salary payment, compliance reporting, benefit administration, audit and reconciliation. The post-payroll phase is crucial in Tanzania as it ensures that employers comply with regulatory requirements, maintain a good employer-employee relationship, and reduce the risk of penalties or fines associated with non-compliance.

Payroll Components in Tanzania

Here are some aspects comprehensively needed to navigate Tanzania’s payroll compliance:

• Salary/Wages
• Overtime benefits
• Social security contribution
• Paid leaves
• Paid holidays
• Payroll taxes
• Other laws

Navigating Tanzania Payroll Compliance

Tanzania’s employment regulation primarily revolves around the Employment and Labour Relations Act, along with pertinent sections of other laws and acts. The Labor Law outlines critical aspects of payroll processing and compliance with crucial employment practices-:

Salary/Minimum Wage

The current minimum wage in Tanzania is regulated by the minimum wage Act that was revised in 2023 which outlines minimum pay for each industry the Act covers both salaried and wage-based contracts.

Overtime Benefits

Employees who work beyond the standard working hours (9 hours per and 45 hours per week) are entitled to overtime pay at 150%of their regular hourly wage. Maximum overtime work is limited to 12 hours per day and 50 hours in a 4-week period.

National Health Insurance Scheme

In Tanzania, health insurance is primarily managed through the National Health Insurance Fund (NHIF). In 2023, Tanzania enacted the Universal Health Insurance Act, mandating that all residents must have at a minimum level of health insurance coverage.

Pension Contributions

In Tanzania, pension contributions are primarily managed through the National Social Security Fund (NSSF) for employees in the private sector.

Payroll Taxes

Paid Leaves

• Annual Leave: 28 Calendar days paid annual leave days are granted to employees.
• Sick Leave: Employees are eligible for a minimum of 126 days of sick leave within a 36-month period. This leave is divided as follows:
  • The first 63 days are on full pay.
  • The remaining 63 days are on half pay.
• Maternity Leave: Maternity leave is a minimum of 12 weeks paid leave while paternity leave is 3 days. After the maternity leave expires the employee is required work 7 hours per day for a period of 6 months.
• Other Leave: In Tanzania, employees may be granted compassionate/special leaves on some family events. These include the death a parent, spouse, child or sibling. Such leave shall be paid within the limits and deadlines specified.
• Paid Public Holidays: In Tanzania, the paid holidays are as follows:

• • January 1: New Year’s Day
  • January 21: Zanzibar Revolutionary Day
  • Good Friday: The Friday before Easter
  • Easter Monday: The Monday after Easter
  • April 7: Karume Day
  • April 26: Union Day
  • May 1: Workers’ day
  • May 13 – 14: Eid Al Fitr
  • July 7: Saba Saba
  • July 27: Ed Al Hajj
  • August 8: Nane Nane
  • October 14: Nyerere Day
  • October 8: Ed Al Maulud
  • December 9: Independence Day
  • December 25: Christmas day
  • December 26: Boxing Day

Payroll in Tanzania also encompasses termination and probationary periods law. Notice period depends on the contractual agreement but from 1 month. Severance is paid after completion of 12 months of continuous employment.

Payroll Outsourcing in Tanzania

Payroll outsourcing in Tanzania primarily helps global companies in the country file tax returns on time, ease the pressure of work, reduce the burden of processing payment for their workforce in Africa with 100% accuracy and within timelines – Companies want to avoid errors in employee salaries, as salary is one of the critical reasons for attrition.

Collaborate with an Africa employer of record and payroll solutions provider such as Workforce Africa to strategically outsource your payroll operations while ensuring compliance with local labour regulations. Additionally, leverage our flexible service offerings to expand your international teams as needed.