Doing Business With a Tanzania PEO/EOR
Due to its growing trade and investments, Tanzania is the second-largest economy in East Africa and has a stable growth trajectory. Foreign direct investments benefit significantly from the country’s political stability. The total value of exports and imports, which is 42% of the country’s GDP, illustrates the significance of international trade to Tanzania’s economy. The government has recently enacted several reforms to encourage foreign investment, such as rewriting tax laws and establishing an investment promotion board.
Even though the government tries to ease the process of starting a business, it is not free of challenges. Companies must get a work and residence permit which can take 3-10 days. Even after establishing your business, foreign companies must try to grow their brand image and face stiff competition.
If you wish to benefit from the efforts of Tanzania’s leading players and start a business here, you can work with a Tanzania PEO. Multiplier’s EOR and PEO services can take care of orientation, training, and keeping staff in Tanzania, comprising full-time and freelance workers.
Why Use a Tanzania PEO?
Tanzania PEO services help organizations hire employees by adhering to the country’s labor law. The International PEO oversees all aspects of an employee’s human capital, including benefits, payroll, and tax obligations, while new hires and headquarters teams focus on their corporate goals.
Moreover, opening a subsidiary or local office in Tanzania isn’t always the best course of action because it’s time-consuming and expensive. A more efficient and productive option when starting a business in a new country is to hire through Tanzania PEO/EOR services. It minimizes HR costs and manages employee benefits and payroll.
Multiplier PEO services manage employees on your behalf and formally license them through our Tanzanian affiliate. As a result, we are in charge of conformity, and employees can begin working for your company in a few days. PEOs/EORs provide a more effective means of onboarding personnel, conducting market research, and adjusting to shifting commercial needs in Tanzania.
Tanzania PEO Costs
In Tanzania, most PEOs offer either fixed or variable charges. A qualified PEO will charge you between $500 and $1,500 per worker yearly or some percent of an annual cost. This structure is beneficial for those companies which have stable monthly salaries.
At Multiplier, we offer affordable PEO services. . Our straightforward and upfront PEO fee for full-time employees starts at $300 per month per employee. It includes managing leaves, overseeing payroll, and other benefits. The monthly freelancer fee is $40, which covers onboarding and paying freelancers worldwide.
Our concise and appropriate Tanzania EOR solutions are designed to streamline payroll and benefits for your remote workers. Multiplier is an advanced and flexible PEO system that simplifies managing global HRM.
How to Hire in Tanzania?
The Tanzanian government has a strict Employment and Labor Relations Act which prohibits any employer from discriminating in the workplace. It allows the right to the association between employees and employers. Organizations can partner with global PEO services like Multiplier to adhere to these regulations. We provide SaaS-based PEO and EOR solutions in Tanzania so you can maintain a competitive advantage.
Moreover, any business that employs people in Tanzania must have a formal employment contract describing every aspect of the position. For a seamless expansion in Tanzania, companies must consider employment policies and be aware of local organizations.
Tanzania employment contract
Employment agreements in Tanzania can be verbal or written. Still, it is ideal for drafting a written contract in Swahili that outlines the conditions of the employee’s pay, benefits, and termination obligations. The salary and other remuneration amounts should always be stated in Tanzanian Shillings instead of foreign currency in an offer letter and employment contract.
Employee benefits in Tanzania
- The standard workday lasts nine hours, including an hour for lunch, while the typical workweek is 45 hours.
- Employees may work up to 12 hours a day within the terms of a contractual agreement without being compensated for overtime. The overtime work schedule should not exceed five days or 45 hours. Employers must also ensure that the workload is not more than 10 hours a week.
- Work completed between 8 p.m and 6 a.m. is considered night work. Employees who work night shifts get a 5% higher remuneration than the regular rate. Those who work overtime are entitled to overtime pay at the rate of 5%.
- Working more than nine hours a day is considered overtime.
- An employee’s workday should not exceed 12 hours.
- Those who work overtime are entitled to compensation of 1.5 times the regular pay.
- Employees are not allowed to work more than ten overtime hours per week or 50 hours throughout four weeks. Employees receive double the standard pay rate if they work on a national holiday.
The Tanzanian government has mandated the minimum wage for all workers. Tanzania’s minimum wage depends upon the employee’s work industry. The monthly minimum wage varies between 40,000 and 400,000 Tanzanian shillings.
In Tanzania, the following public holidays are observed by all workers with paid time off:
- New Year’s Day on January 1
- Zanzibar Revolutionary Day on January 12
- Karume Memorial Day on April 7
- Union Day is April 26.
- Labor Day on May 1
- Day of Saba Saba on July 7 (Industrial Day)
- Farmer’s Day on August 8.
- Nyerere Day on October 14
- Independence day on December 9
- Christmas Day on December 25.
- Boxing Day on December 26
The religious celebrations of Id al-Haj, Eid al-Fitr, Maulid Day, Easter, Good Friday, and Easter Monday are also recognized in Tanzania. Islamic holidays have varying dates each year.
Full-time workers are entitled to 28 days of paid leave every year. Public holidays that might fall during the leave time are not included in this leave. This paid leave incentive is not available to employees who have not worked for six months.
- Employers offer a travel assistance stipend at the end of every second year to assist staff in covering travel expenses when taking time off. This sum must be agreed upon by the parties and documented in a bargaining agreement, human capital guideline, or employment contract.
- An employer can decide when an employee can take annual leave. However, they cannot ask employees to work during annual leave. Employees must get compensation from their employer before starting their leave. Whether an employee agrees, the law forbids remuneration in lieu of absence.
- Pregnant employees, who have worked for the employer for six months, are entitled to 84 days of paid maternity leave. They can start maternity leave four weeks before the anticipated due date. No employee may begin working before a break of 6 weeks following childbirth.
- If the child passes away within a year of delivery or is stillborn, the employee is entitled to an extra 84 days of paid maternity leave.
- An employee who gives birth to two or more children simultaneously is granted 100 days of paid maternity leave.
- The social security system covers maternity benefits.
Paid parental leave
- Employees whose spouse is expecting a child are entitled to 7 days of paternity, of which three are paid leaves.
- During the work duration with the same employer, an employer is obliged to up to 4 terms of paid paternity leave.
- An employee is entitled to a minimum of 126 days of sick time in any leave cycle. An ill leave received after the first 63 days is paid at half salary. The very first 63 days of absence are compensated at full salary.
- If an employee does not provide a health certificate or if the worker is eligible for paid sick leave under any legislation, fund, or collective agreement, the employer is not compelled to pay the employee for sick time.
- For the death or illness of a child, partner, parent, or other close relatives, a worker is entitled to at least four days of paid leave.
Because every business is unique, you can select the Tanzania payroll solution that best suits your requirements:
- Internal: The highest chances of successfully establishing an internal payroll belong to large affiliates with a long-term commitment to functioning in Tanzania. This strategy will cost a lot of money and require a large HR team.
- Remote: Employers can also be added to the remote payroll of your parent firm in another nation. You only need to abide by each country’s appropriate laws and rules.
- Local outsourcing: A payroll processing business in Tanzania will assist you in making timely payments to your staff, but it cannot guarantee compliance; you will be held accountable for all choices.
- Using a global PEO for outsourcing: Multiplier is the Employer of Record (EOR) for full compliance. You can rely on us to pay your employees on time and assist you in being compliant as your go-to Tanzania payroll outsourcing service.
With Multiplier as your EOR partner, you can skip the process of setting up an entity in Tanzania. With our PEO services, employers can start immediately with their newly hired employees.
Taxation in Tanzania
Tanzania follows a progressive tax system wherein higher tax rates are applicable on higher income. The resident tax rates of Tanzania are as follows:
- Between 270,000 and 520,000 TZS – 8% tax rate
- Between 520,000 and 760,000 TZS – 20% tax rate + 20,000 TZS
- Between 760,000 and 1,000,000 – 25% tax rate + 68,000 TZS
- 1,000,000 and above – 30% tax rate + 128,000 TZS
Employers and employees are also liable to contribute to the National Social Security Fund (NSSF). Employers need to contribute 20% to NSSF. Employers can make some part of this contribution from employees’ income. However, the employee’s share should not exceed 10% of the monthly wage.
Termination/Severance in Tanzania
- Employers can terminate the employee’s contract in Tanzania on the grounds of misconduct, incapacity, incompatibility, and not meeting the requirements.
- If the notice is provided during the first month of work, the notice cannot be less than seven days.
- Employers must issue a notice of termination four days in advance if employed daily or weekly. For monthly employees, termination notice should be issued 28 days in advance.
- Employers must issue termination notices in writing, and both parties should agree to the notice period.
- The notice must have the reason for termination and its issued date.
- Employers are liable to pay regular monthly salaries during the notice period.
- If an employee leaves their job after a year of continuous service, the employer is required to pay severance pay.
- The employer must give the employee severance compensation equal to seven days’ worth of the employee’s basic pay, up to ten years of employment with the employer.
- Employees terminated on the grounds of misconduct, or not fulfilling requirements are not entitled to severance pay.
Running a business abroad can be difficult and time-consuming. As a business, you must handle the payroll, personnel, and benefits following Tanzanian laws. A global PEO service like Multiplier can help you manage these responsibilities.
A PEO solution like Multiplier makes it simple for companies to enter and conduct business abroad. You may manage recruit orientation, payroll, benefits, expenses, and other HR-related tasks with the aid of our HR experts. We guarantee that all pertinent rules, regulations, and legislation are adhered to strictly. You may relax knowing that we will support you as you establish your business in Tanzania.
Our Tanzania PEO Simplifies Your Expansion
When you choose Multiplier as your multi-service Tanzania PEO, you can anticipate a hassle-free and efficient business growth process:
- As a co-employer, our professional employer organization helps your business with onboarding, payroll, developing compensation plans, and other crucial HR services.
- Without having to establish a company in Tanzania, you can recruit full-time employees thanks to Multiplier’s Employer of Record Tanzania solution, which serves as the principal employer.
- Our worldwide payroll management system includes an all-in-one payment system for simply handling all payroll-related issues.
- Our PEO Tanzania helps you develop a comprehensive, inclusive, and transparent benefits plan to satisfy your employees’ needs. Such a remuneration structure aids talent retention even when bringing on new hires.
- There are no added expenses, and our pricing is constant and competitive.
- Without the need to set up a subsidiary in Tanzania, our experts will help you launch your operational processes if you choose to work with us as your global EOR partner.
Reach out to our PEO Tanzania experts immediately if you want to learn more about our services.