Is a skilled professional I engage a contractor or an employee in Tanzania? It depends on how the work is done, not on the contract title. Under section 61 of the Labour Institutions Act a person who works for another is presumed to be an employee until the contrary is proved, and seven factors, such as control, set hours, tools and dependence on one client, point that way. A court weighs them together.
What the law says
Employment rights in Mainland Tanzania sit in the Employment and Labour Relations Act, Cap. 366 (ELRA), which applies to employees in Mainland Tanzania only. The test for who is an employee sits in the Labour Institutions Act, No. 7 of 2004, section 61. That section creates a presumption: a person who works for or renders services to another is presumed, until the contrary is proved, to be an employee if the listed factors are present. Section 61 was read through the High Court's quotation of it, not from an official copy of the Act, so confirm the current numbering in the Revised Edition.
The factors, as the High Court quoted them in Paulo Joseph Mnyavano (Revision No. 281 of 2016, Labour Division, 17 August 2018), are seven. First, control over the manner of work. Second, control over the hours of work. Third, being part of the organisation. Fourth, working an average of at least 45 hours a month over the last three months. Fifth, economic dependence on the other person. Sixth, being given tools or equipment by that person. Seventh, working for only one person. The court did not treat any single factor as enough. It weighed them together and treated the presumption as rebuttable.
Fursa365 does not employ, place or pay anyone. It introduces qualified offers to demand verified by Zatra Consultants Limited, and it does not hold money. Who engages a professional, and on what terms, is a decision for the parties and their advisers. This guide is for the party that engages.
Who should read this
Owners and operators who plan to hire a surveyor, engineer, accountant, driver, geological adviser or project manager for a deal. Buyers and investors who bring in a specialist for due diligence. Directors who sign engagement letters. Professionals who are asked to work as a "consultant" and want to know what that means for leave, social security and tax. Foreign investors who plan to bring in a non-citizen specialist.
Does the contract title decide the status?
No. The presumption looks at what happens in practice. A signed "consultancy agreement" will not protect an engager if the person works fixed hours, under supervision, with the engager's laptop, for one client only. The Mnyavano court also noted that the true relationship may be disguised, and it looked behind the papers. The reverse also holds. A person with several clients, their own tools and their own hours is hard to treat as an employee, whatever an offer letter says.
The same court, citing the International Labour Organization's Employment Relationship Recommendation, 2006 (No. 198), set out four primary criteria: supervision and control, integration into the organisation, economic dependence, and working for one person only. These fit the statutory list closely. A sensible reading for planning purposes is that the more of these you can answer "yes" to, the more likely a tribunal is to find an employee.
Which facts push a relationship towards employment?
Use the table below as a screening aid before you sign. It is not a legal test and a tribunal will weigh the whole picture.
| Question to ask | Points to contractor | Points to employee |
|---|---|---|
| Who decides how the work is done? | The professional, using their own method | You direct the steps and review them as they happen |
| Who sets the hours? | The professional, against a deadline | You, with fixed days and attendance |
| Is the person part of your organisation? | No staff badge, email signature or reporting line | Yes, in your team chart and meetings |
| How long and how often? | A defined deliverable or short project | About 45 hours a month or more for three months in a row |
| How dependent is the person on you? | Other clients and income | You are most or all of their income |
| Who supplies tools? | The professional | You |
| Do they work for others? | Yes | Only for you |
Tick the right-hand column for four or five rows and treat the person as an employee for planning, unless an advocate advises otherwise.
What changes if the person is an employee?
The costs and duties arrive together. ELRA requires written particulars of the terms of employment, and its termination provisions require a fair reason and a fair procedure. Dismissal of an employee without these is an unfair termination, with remedies that can include compensation. Severance pay is due after the qualifying service. The rate is seven days' basic wage for each completed year up to ten years, as the Act is commonly summarised. The 2004 section numbers for these are ss.14, 15, 36 and 37, and the numbers in the Revised Edition were not checked, so cite them from the official text.
Social security follows. The register records the National Social Security Fund contribution for the private sector at 20% of wage. The employee share is not above 10%, so the split is 10 and 10 or 15 and 5. The employer may pay all 20% (register ID F0279). A late payment attracts 5% of the unpaid amount for each month or part of a month (register ID F0446). The employer also pays 0.5% of employees' gross monthly earnings to the Workers Compensation Fund (register ID F0281), a rate confirmed on the Fund's own FAQ. Other levies, such as the skills development levy, depend on your payroll size and are not added to the example below.
What changes if the person is a contractor?
The engager does not run payroll, pay the employer share of NSSF or the Workers Compensation Fund contribution on that person, or owe severance. The engager still has to deal with tax on the fee. The register lists withholding tax on service fees at 5% for a resident and 15% for a non-resident (register ID F0212, Income Tax Act Cap. 332 s.106(1)(c)). The Tanzania Revenue Authority's own page, read in July 2025, was reported at 10% for some professional services. Those two sources conflict, and it is a figure to confirm with the TRA before you pay.
The contractor must also be able to invoice and, where the turnover requires it, register for VAT. The Mainland VAT rate is 18% and the registration threshold is TZS 200 million of taxable turnover in 12 months. Zanzibar has a 15% rate under ZRA. A contractor who is in truth an employee does not remove the engager's exposure, because the presumption looks at facts.
Does the Workers Compensation Act reach contractors?
The Workers Compensation Fund lists, among the duties of an employer, ensuring that the contractors the employer uses comply with the Workers Compensation Act while doing the contracted work. That is a Fund FAQ item, in Swahili, and it does not say whether the principal is jointly liable. The Act's text on principal and contractor liability was not found for this guide, and a pinpoint section reported in secondary material was not verified.
The practical step is the same either way. Ask a contractor whose people work on your site for proof of their own cover, and ask your insurer or an advocate how the Act treats an injury on your premises. The Fund's contribution rate is set after an actuarial valuation and can change, so check the current rate with the Fund.
Do professional registration rules apply to contractors?
Yes, because they attach to the work, not to the contract type. A person who signs a valuation must be a registered valuer. Engineers, architects and quantity surveyors work under their statutory boards, and accountants under the National Board of Accountants and Auditors. Advocates, veterinary practitioners and others have their own registers. The licence a business needs for itself is separate from the registration of an individual professional.
No geologists board exists on the sources read. A bill to create one was reported in September 2026 as not yet enacted. A buyer who relies on a geological estimate should therefore set the competence it wants in the engagement letter. See the Documents desk guide on valuation reports and deal documents for how registration affects a valuation.
What about drivers and other regulated workers?
A driver who carries goods or passengers for reward needs a driving licence of the right class, and the vehicle and operator may need licensing from the Land Transport Regulatory Authority. The classes are set by the Road Traffic Act and regulations, and the LATRA regulations of 2020, Government Notice 77, were identified but the provision on drivers was not read for this guide. Check the licence class against the vehicle before you engage. See the Vehicles desk guide on hiring out idle trucks for the vehicle side.
A driver who works only for you, on your schedule, in your vehicle, with fuel and maintenance paid by you, ticks most boxes in the table above. An owner-driver with their own truck and several customers ticks few.
What is the minimum wage, and when does it matter?
It matters whenever the person is an employee. The Minimum Wage Order, Government Notice 605A, was reported as published on 13 October 2025 and effective from 1 January 2026, with sector rates and a catch-all rate of TZS 175,000. The period and the sector rate that applies to your business should be read in the Order itself. A skilled professional is usually paid well above the floor, but a junior assistant engaged as a "casual contractor" may not be, and the floor applies once the person is an employee.
Can a non-citizen be engaged as a contractor?
A foreign specialist needs permission to work, and the label does not change that. The Non-Citizens (Employment Regulation) Act, Cap. 436 R.E. 2023, makes it an offence for a non-citizen to engage in any occupation for reward without a valid work permit or exemption, and for any person to engage a non-citizen without one. The register lists a fine of not less than TZS 10,000,000 or imprisonment of not less than two years, or both (register ID F0422, s.9). A Class A permit for investors and the self-employed and a Class C permit for other professions each carry a fee of USD 1,000 (register IDs F0413 and F0415).
Foreign ownership of the engaging company is not a work permit, and a residence permit is a separate instrument from a work permit. Zanzibar has its own regime under the Employment Act, No. 11 of 2005, and a Mainland permit does not cover Zanzibar.
Is a matching platform an employment agency?
The National Employment Promotion Service Act, No. 9 of 1999, regulates private employment agencies, and the register lists a one-year private employment agency licence (register ID F0451, status Confirm, no published fee). The Government Notice 232 of 2014 regulations sit beneath it. Whether an online platform that introduces a skilled professional to a business is caught by that licensing is not settled on the sources read.
Fursa365's position is that introductions are not employment-agency activity. It does not recruit, place, employ or pay anyone, it takes no wage from a worker, and it matches qualified offers to demand verified by Zatra. If you are an agency yourself, or you want to place workers, take your own advice on the licence.
A worked example: a project manager engaged for a warehouse fit-out
A company in Dar es Salaam buys a warehouse through a Fursa365 match. It wants a project manager for six months at TZS 3,000,000 a month. The draft is a "consultancy agreement". The manager works from 8am to 5pm on site on weekdays, uses the company's laptop and email address, reports to the managing director and has no other client. All seven factors in the table point to employment.
Treated as a contractor, the company would deduct withholding tax at 5% on a resident's service fee (register ID F0212), which is TZS 150,000 a month, subject to the TRA's 10% conflict, which would make it TZS 300,000. Treated as an employee, the company pays the employer NSSF share, which at a 10% share is TZS 300,000 a month (register ID F0279), and the Workers Compensation Fund contribution of 0.5%, which is TZS 15,000 (register ID F0281). That is TZS 315,000 a month, or TZS 1,890,000 over six months, before the skills development levy and leave.
If the tribunal finds an employee, the contractor label saves nothing and adds back-payments with a 5% monthly penalty on late NSSF contributions (register ID F0446). The company decides to structure the role as a six-month fixed-term employment contract and budgets the TZS 1,890,000. The alternative, if it wants a true contractor, is a fixed-fee deliverable, the manager's own tools and hours, and freedom to serve other clients. These figures are illustrative. Totals are in TZS only.
What to do now
- Screen the role with the seven-row table and write down the answers with the date.
- Choose the structure that matches the facts: a fixed-term employment contract, or a deliverable-based service agreement.
- Write the terms so they match practice, and have an advocate review them before signature.
- Cost the employer side using the register lines for NSSF and the Workers Compensation Fund, and confirm other levies with your accountant.
- Confirm withholding tax on service fees with the TRA before the first payment.
- Check registration and licences of the individual and the vehicle or equipment, and obtain a work permit for any non-citizen.
- Keep the file: engagement letter, invoices, timesheets if any, and proof of the contractor's cover.
Key dates
| Item | Date or period |
|---|---|
| Minimum Wage Order, Government Notice 605A | Published 13 October 2025, effective 1 January 2026, as reported |
| Hours test in the presumption | Average of at least 45 hours a month over the last three months |
| Late NSSF contribution penalty | 5% of the unpaid amount for each month or part of a month |
| Mainland VAT registration threshold | TZS 200 million of taxable turnover in 12 months |
| Geologists Management Bill | Reported as submitted in September 2026, not enacted |
How Zatra helps
Zatra Consultants Limited screens the facts, prepares the checklist for the engager and the professional, and structures the file that the client's advocate and accountant use. Zatra does not employ or place workers, draft contracts as an advocate, give legal opinions, run payroll or hold money. The Labour Commissioner, the NSSF, the Workers Compensation Fund, the TRA and the professional boards decide their own matters, and Zatra does not decide or guarantee any authority's outcome. Read the professionals page, the fees page and the verification page for how Fursa365 works with advisers.
Related pages on Fursa365 include how Fursa365 works, regulatory boundaries and the Fursa365 FAQ.
Sources and status
Accurate as at 6 Nov 2026. Figures are from the sources below and from the Zatra government fees register, quoted with their register IDs so they can be checked line by line.
- Paulo Joseph Mnyavano case, Labour Revision No. 281 of 2016. High Court of Tanzania, Labour Division, Dar es Salaam, 17 August 2018; OCR text, applies Labour Institutions Act s.61. Accessed 6 Nov 2026.
- Employment and Labour Relations Act, Cap. 366. Policy Vault, third-party host; scope clause s.2(1) read in 2026, Mainland only. Accessed 6 Nov 2026.
- Workers Compensation Fund, home page and FAQ. Workers Compensation Fund, read 2026; 0.5% employer rate and contractor duty, in Swahili. Accessed 6 Nov 2026.
- Zatra Tanzania Government Fees Register 2026, employer and permit chapters. Zatra Consultants Limited, 2026 edition; IDs F0212, F0279, F0281, F0413, F0415, F0422, F0446, F0451. Accessed 6 Nov 2026.
- Tanzania Revenue Authority, withholding tax. Tanzania Revenue Authority, July 2025 rates as reported. Accessed 6 Nov 2026.
- National Social Security Fund. NSSF, contribution guidance, 2026. Accessed 6 Nov 2026.
- Ministry of Labour, work permits. Prime Minister's Office, Labour, work permit service, 2026. Accessed 6 Nov 2026.
- Immigration Services Department. Immigration Services Department, residence permits, 2026. Accessed 6 Nov 2026.
- Land Transport Regulatory Authority. LATRA, vehicle and operator licensing, 2026. Accessed 6 Nov 2026.
- Engineers Registration Board. Engineers Registration Board, register of engineers, 2026. Accessed 6 Nov 2026.
- National Board of Accountants and Auditors. NBAA, register of accountants and auditors, 2026. Accessed 6 Nov 2026.
- New law targets unqualified geologists. The Respondent Online, 16 September 2026. Accessed 6 Nov 2026.
Figures to confirm before you act
- Labour Institutions Act s.61 text and number were read from the High Court's quotation (2018); confirm in the Revised Edition
- ELRA section numbers (ss.14, 15, 36, 37) are 2004 numbering; Revised Edition numbers were not checked; Act number differs between sources
- Withholding tax on service fees: register ID F0212 says 5% resident and 15% non-resident; the TRA, July 2025, was reported at 10% for some professional services
- NSSF contribution split and Workers Compensation Fund 0.5% (register IDs F0279, F0281); the Fund's own FAQ confirms 0.5% but the Act section was not found
- Minimum Wage Order, Government Notice 605A: sector rates, period and the catch-all TZS 175,000 were not read in the Order itself
- Workers Compensation Act text on principal and contractor liability was not found; no pinpoint section is given
- Private employment agency licence (register ID F0451, status Confirm) and whether a matching platform is caught are unknown
- LATRA Government Notice 77 of 2020 provision on drivers and the licence classes in the Road Traffic Act were not read
General information prepared by the Fursa365 deal desk, Zatra Consultants Limited. It is not legal, tax or investment advice and does not decide or guarantee any authority's outcome. Confirm current rules and fees with the authority named and your own advocate before you act. Mainland Tanzania is described; Zanzibar has separate laws and bodies.
Questions readers ask
Can I call someone a contractor and avoid employment costs?
Not by the label alone. Section 61 of the Labour Institutions Act presumes that a person who works for another is an employee until the contrary is proved, and a tribunal looks at control, hours, tools and dependence. Match the structure to the facts.
How many of the seven factors make someone an employee?
The High Court in the 2018 Mnyavano case did not treat one factor as enough. It weighed them together and treated the presumption as rebuttable. For planning, four or five factors present is a strong sign of employment.
What does an employer pay on top of salary?
The register lists NSSF at 20% of wage with the employee share not above 10%, and 0.5% of gross earnings to the Workers Compensation Fund. Other levies depend on payroll size. Cost these before you decide.
What withholding tax applies to a contractor's fee?
The register lists 5% for a resident and 15% for a non-resident on service fees. The TRA was reported at 10% for some professional services in July 2025. Confirm with the TRA before the first payment.
Does a contractor need a professional registration?
If the work is regulated, yes. A valuation needs a registered valuer, engineering work an engineer registered with the board, and accounting work a registered accountant. The registration attaches to the work, whatever the contract type.
Can I engage a foreign specialist as a contractor?
Only with a valid work permit or exemption. Engaging a non-citizen without one carries a fine of not less than TZS 10,000,000 or imprisonment of at least two years (register ID F0422). Foreign ownership is not a permit.
Is Fursa365 an employment agency?
Fursa365 states that introductions are not employment-agency activity: it does not recruit, place, employ or pay anyone. Whether a licence applies to platforms generally is not settled on the sources read, so agencies should take their own advice.
Does this apply in Zanzibar?
No. The Employment and Labour Relations Act applies to Mainland Tanzania. Zanzibar has the Employment Act, No. 11 of 2005, its own labour approvals and a 15% VAT rate. Take Zanzibar advice before engaging staff there.
Tanzania market entry, corporate governance and regulated-sector route decisions. Certified Financial Educator with more than twelve years in the financial sector.
