Redundancy in Tanzania: The Consultation File Before the Notices

This page is the redundancy operating file: what an employer does, in which order, so an operational-requirement termination survives arbitration. It is not a misconduct manual, and not a substitute for an advocate.

• Expatriate stay: residence permits
• Entry versus permission to work: visa and residence status
• Workplace registration: OSHA registration
• Shrinking or closing a site: building permits

As at 14 September 2026. This file rests on the Employment and Labour Relations Act Cap. 366 and its Code of Good Practice; disputes run to the Commission for Mediation and Arbitration under the Labour Institutions Act Cap. 300. Confirm the live wording on cma.go.tz.

Section 38 is the mandate, not the HR policy

Section 37 of Cap. 366 makes a termination unfair unless the employer proves a valid reason and a fair procedure; section 39 puts that burden on the employer. Section 38 supplies the procedure when the reason is operational: written notice of an intention to retrench, disclosure of the relevant information, and consultation on reasons, alternatives, selection, timing and severance.

The Employment and Labour Relations (Code of Good Practice) Rules, GN No. 42 of 2007, say what a reasonable employer does at each point. A board minute recording a cost problem is not compliance; the paper trail showing consultation happened while the outcome could still change is.

A disputed termination is referred to CMA within thirty days of the termination date. Remedies under section 40 run to reinstatement, re-engagement, or compensation of not less than twelve months’ remuneration.

Non-citizen staff: the permit dies with the post

Employing a non-citizen is licensed separately, and the licence is not portable. Work permits come from the Labour Commissioner under the Non-Citizens (Employment Regulation) Act No. 1 of 2015; the residence permit comes from Immigration. Each is tied to one named employer and post. Some activities are closed to foreign participation altogether under the reserved list in GN No. 487A of 2025. Check its scope before reallocating a departing expatriate’s duties.

Two consequences bite. A Class B permit is normally granted against a succession plan to train and hand over to Tanzanian staff; cutting local posts while renewing expatriate ones contradicts that plan, and renewal is where the contradiction surfaces. Permits do not lapse quietly: they are cancelled and surrendered, and lawful stay ends with the employment.

Consultation is a file, not a meeting

Section 38 names the counterparty in order of priority: a trade union recognised under section 67, failing that a registered union with members in the workplace, failing that an elected employees’ representative, failing that the affected staff. Talking to the wrong body is a procedural defect that survives to an award.

Disclosure means handing over what the other side needs to argue back: the commercial reason with its numbers, the count and categories of posts at risk, the method of choosing who goes, the dates, the severance formula, and the alternatives weighed.

Alternatives belong on the record: short time, a recruitment freeze, withdrawal of overtime, transfer, voluntary separation, natural attrition. The employer need not adopt them, only show it examined them before closing the door.

Selection criteria you can defend under cross-examination

Criteria must be objective and applied evenly across the affected pool: length of service, skill measured against the retained structure, documented attendance or disciplinary records. Anything agreed with the representatives displaces the default.

Two selections fail routinely. The first is a list written before consultation opened, then reverse-engineered onto criteria. The second is a criterion mapping onto a protected ground (pregnancy, union office, HIV status, a pending complaint) which turns an operational termination into an automatically unfair one. Keep the score sheet, and make sure whoever scored it can explain each line.

Which route are you actually on

The expensive error is mislabelling. A performance problem dressed as redundancy loses twice: the reason collapses when the post reappears under a new title, and the procedure collapses because nobody held a hearing.

The order the desks take it in

1. Fix the reason in a board minute: the economic, technological or structural need, with figures. The minute dates the contemplation.
2. Serve the written notice of intention on the union or the representatives, disclosure pack attached rather than promised.
3. Consult on every head disclosed (reason, alternatives, selection, timing, severance), and minute the disagreements.
4. Apply the criteria across the pool and retain the scoring matrix.
5. Compute each leaver’s terminal pay before any letter goes out: notice or pay in lieu, severance, untaken leave, transport, pro-rata salary.
6. Serve the individual notices, pay by the last working day, and issue a certificate of service.
7. Close the statutory accounts: final PAYE, levy and contribution returns, and the company’s own headcount position.
8. Close the immigration file for any non-citizen leaver with the Labour Commissioner and Immigration.

The papers the file needs

A board resolution recording the operational reason. The written notice of intention to retrench. The disclosure pack: structure before and after, post counts, and the figures supporting the reason. Attendance registers and signed minutes for every session. The scoring matrix with criteria, weightings and scores. Individual letters stating the reason, the last working day and the computation. A signed terminal-payment schedule per person. A certificate of service for each leaver. The union’s written response, or the record that no representative was elected. Where somebody settles, the deed and proof of registration.

A pack that stalls in arbitration usually holds all the letters and none of the minutes.

What is owed on the last day, and to whom

Notice under section 41 runs at twenty-eight days for a monthly-paid employee, seven days where it falls in the first month of employment, and four days on a daily or weekly engagement. Remuneration for that period may be paid instead of worked.

Severance under section 42 is at least seven days of basic wage for each completed year of continuous service, to a ceiling of ten years, and payable once twelve months of service are behind the employee. Untaken annual leave is cashed out; the entitlement under section 31 is twenty-eight consecutive days each leave cycle. Section 43 covers transport for the employee, family and effects back to the place of recruitment. A certificate of service is due to every leaver.

The employer side does not pause. The National Social Security Fund Act Cap. 50 sets contributions at twenty per cent of wage, split ten per cent each side, and Workers Compensation Fund charges under the Workers Compensation Act Cap. 263 continue on the same payroll. Confirm the rate WCF applies.

Illustrative arithmetic: one leaver, and a levy threshold

Take a monthly-paid employee on basic wage of TZS 1,800,000, six completed years, twelve days of leave untaken. A day of basic wage on the common thirty-day divisor is TZS 60,000. Severance: seven days over six years is forty-two days, so TZS 2,520,000. Pay in lieu of twenty-eight days’ notice: TZS 1,680,000. Leave: TZS 720,000. Terminal total before pro-rata salary and transport: TZS 4,920,000.

All of it is employment income in the month it is paid, so the top marginal PAYE band of 30% under the Income Tax Act Cap. 332 catches most of it; confirm the live schedule on tra.go.tz. PAYE is remitted within seven days after month end.

Now the company. Skills and Development Levy is charged under the Vocational Education and Training Act Cap. 82 at 3.5% of gross emoluments, payable by employers with ten or more employees. Twelve staff on TZS 14,400,000 of emoluments cost TZS 504,000 a month. Retrench four and the payroll carries eight, under the threshold, so the levy position changes from that month.

Illustrative arithmetic, not a quotation. The divisor for a day of wage is a matter of contract: settle it in writing, not in the payroll run on the day letters go out.

Zanzibar is a different labour jurisdiction

Labour is not a Union matter. An island workplace runs on Zanzibar’s own Employment Act No. 11 of 2005 and its Labour Relations Act of the same year, administered by the Zanzibar Labour Commission. Disputes go to the Dispute Handling Unit and on to the Industrial Court, not to CMA, and the notice, consultation and terminal-benefit provisions are not the Mainland’s.

Social security splits too: an island employee normally contributes to the Zanzibar Social Security Fund rather than NSSF, while income tax on employment stays a Union tax collected by TRA. A group cutting on both sides runs two files.

Where this file stalls

• Individual letters dated ahead of the earliest consultation minute. Arbitrators read dates before reasons.
• Consulting a management-appointed welfare committee while a recognised union sits in the same workplace.
• A “restructuring” that quietly refills the same post under a new job title months later.
• Severance computed on gross pay where the contract defines basic wage, or the reverse, with no written divisor.
• Terminal pay promised “when the money comes in”, which turns a lawful retrenchment into a debt claim.
• Expatriate permits never cancelled after the post disappeared, surfacing at the next renewal.

Mandate-holders this file does not replace

The Labour Commissioner, whose office sits under Cap. 300, registers, inspects, and holds the work-permit record. CMA mediates and arbitrates; the Labour Division of the High Court hears revisions. TRA owns PAYE and the levy. NSSF and WCF own their contributions and exit forms. OSHA owns workplace registration where a site shrinks or shuts. An advocate owns the notices, settlement deeds and anything lodged in arbitration.

Zatra prepares, structures and coordinates the pack (disclosure schedule, scoring matrix, terminal computations, returns), and hands drafting and representation to counsel. No adviser can promise how an arbitrator will read it.

What to confirm before you act

• The current wording of sections 37 to 44 of Cap. 366 and the Code of Good Practice, against whatever your HR manual repeats.
• Whether any union is recognised in your bargaining unit under section 67, and who else has standing if none is.
• The PAYE table, the levy rate and the ten-employee threshold with TRA, plus the contribution rate WCF is charging.
• The referral clock at CMA for the terminations you are about to make.
• Any collective agreement or contract term lifting the statutory floor.
• For an island site, the Zanzibar statute and the fund the staff belong to.
• Whether an affected post is held by a non-citizen, and what the lodged succession plan promised.