LABOUR LAW IN TANZANIA

LECTURE ONE
INTRODUCTION
This subject deals with the relationship between the employers on one hand and employees
on the other. It is a subject of immense theoretical interest because of the great variety of
regulative techniques it employs and because in the study of this subject one so frequently
comes up against the question of what are the true limits of effective regulation by the law. 1

Another interesting thing in this subject is the use of special courts. It is argued that the use of
specialised and industrial tribunals have been adopted because they are thought to be able to
offer advantages of speed, informality and cheapness that normal courts cannot not provide.2

The approach to the subject is also remarkable. There are different approaches to labour law
depending on the level of development. Thus, while in Tanzania the labour law is less
developed in areas of organised labour, in the developed countries the principal purpose of
labour law is to regulate, to support and to restrain the power of management and the power
of organised labour.3 The field of organised labour is not as strong compared to the one
found in developed countries.

The origin of this law should not be ignored. Modern, Tanzanian labour law traces back to the
colonial period. The main source of this branch of law is statutory law although case law also
has played but only a significant role in the development of labour law in Tanzania. This is
not surprising because generally even in developed countries the case law has played a
minor role in formulating the labour laws. Explaining this situation, Kahn-Freund the
English writer argues that:-

“In the formulation of the rules which regulate the relationship

between employers and workers the Common Law has played a
minor role. The courts have had a small share in the evolution. …
This is because the rules and principles in which we are interested
are designed to govern the normal typical behaviour of the parties
(ie. hours of work, length of overtime, rates of wages etc.) which
case law can only deal with pathological situations …but rules
needed in labour relations must work ex-ante, while case law
operates ex-post.”4

1
Davies, P. et. al., Labour Law Text and Materials, London, Weidenfeld & Nicholson, 1979, p.1
2
Davies, P. et. al., Op. Cit. p. 9
3
Kahn-Freund, O. Labour and the Law, London, Stephen and Sons, 1972, p.5
4
Ibid. p. 21, See also Hepple & O’Higgins, Employment Law, 4th Edn., London, Sweet & Marxwell, 1981,p.3

1
In line with the above view, one can learn that most of labour regulation come from
enactments rather than case law.

Thus the main labour statute of the colonial time was the Master and Native Servants
Ordinance of 1929. This statute underwent various amendments before it was repealed and
replaced by the Employment Ordinance in 1955 (which came into force in 1957). Ever since,
the Employment Ordinance has been the main statute governing the relationship between
employers and employees until today subject to several amendments effected to it from time
to time. Other important statutes governing labour relations in Tanzania today include the
Permanent Labour Tribunal Act of 1967 (the Industrial Court Act), the Security of
Employment Act 1964, and the Workmen’s Compensation Ordinance Cap 263 to mention
but a few.

Sources of Labour Law in Tanzania

The sources of labour law in Tanzania include the Legislation (principal and subsidiary), the
Case Law and the International Conventions (including recommendations). These sources
are elaborated below:-

LEGISLATION (STATUTES)
This comprises of the laws made by the parliament (principal legislation) as well as the by-
laws made by various administrative bodies (subsidiary legislation). The principal legislation
are divided into two main groups namely Ordinances (those made during colonial times)
and Acts of Parliament (those made after independence). The Principal legislation governing
labour law in Tanzania today include: the Labour Institutions Act, 2004 and Employment
and Labour Relations Act, 2004 which are rather new legislation coming into force effectively
on December 20th 20065.

The Employment and Labour Relations Act, 2004 repealed and replaced a myriad of statutes
which used to govern labour relations in Tanzania. Among the repealed laws were the
Employment Act, Cap. 366, the Security of Employment Act, 1964, the Industrial Court of
Tanzania Act 1967, the Trade Unions Act, 1998 and the Workmen’s Compensation Act, Cap.
263 to mention but a few.

The other statutes which govern employment in Tanzania include the social security laws.
Here there are many statutes depending on who the employer is. In short the Public Service

5
See GN no. 1, 2007 published on the 5th January, 2007

2
Retirement Benefits Act governs the pensionable employees in the public sector; the National
Social Security Fund Act, 1997, governs the non-pensionable employees in the private sector,
The Public Parastatal’s Fund Act, 1978, governs the employees in the parastatal sector and
The Local Authorities Provident Fund to mention but a few. It should be noted that most of
the payments under these social security legislation are based on contribution from both the
employer and the employees.

There are also specific legislation which govern the public sector. Such legislation include the
Public Service Act, 2002 (repealed and replaced the Civil Service Act 1989 and the Local
Government Commission Act, 1982); the Public Service (Negotiating Machinery) Act, 2003
(which repealed the Civil Service (negotiating machinery) Act 1962 and the Local
government (negotiating machinery) Act 1982) and the National Defence Act of 1966.

CASE LAW
Various decisions of the courts have become sources of labour law in Tanzania. Many cases
come from the East African Court of Appeal, Tanzanian High, The Court of Appeal of
Tanzania and Industrial Court of Tanzania (trade disputes).

INTERNATIONAL CONVENTIONS AND RECOMMENDATIONS

These conventions and recommendations are sourced from the International Labour
Organisation (ILO). However, the conventions and recommendations made by the ILO
become binding on Tanzania only after ratification.

HISTORICAL DEVELOPMENT OF LABOUR LAW IN TANZANIA

The literature assumes that in the early societies the working class was inexistent but it
emerged during colonial period. This is the period when capital symbolised by the
colonialists was introduced into colonial Tanganyika. Before colonial period there was a class
of peasants and a class of landlords.

The colonialists regulated labour through legislation known as Ordinances. The colonial
masters passed a number of Ordinances to regulate the relationship between the newly
created classes of semi-proletariats (workers). The colonial statutes played a major role in
facilitating the aims of colonialism because of the nature of the relation between the
colonialists and the labourers. Thus, labour relations were imposed into the territory by force
and they carried penal sanctions through labour legislation.
Such colonial legislation include: -

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 The Master and Native Servant (Written Contracts) Ordinance Cap.79
 The Master and Native Servants Ordinance Cap. 78
 The Master and Native Servant (Recruitment ) Ordinance Cap. 80
 Employment of Women and Young Persons Ordinance Cap. 82
 The Porters (Restriction on Employment ) Ordinance Cap. 171

It can be observed that most of these statutes were of Criminal nature. That is to say, failure
to observe them amounted into a criminal liability. This reflects the objectives of colonial
labour legislation which were to safeguard the interests of the colonial masters. Therefore,
the laws were strict to ensure that the colonial interests are met even if this resulted to ill
treatment of the workers. Later on, all of the above named statutes were repealed and
replaced by the Employment Ordinance, Cap. 366 (now the Employment Act, Cap. 366 R.E.
2002)

The Employment Ordinance and the Change in Labour Relations

With the enactment of the Employment Ordinance, labour relations became more of a
contractual than criminal in nature although the criminal aspects were maintained. The
Employment Ordinance provides for the rights and obligations of Employers on one hand
and the rights and obligations of employees on the other. Under the former statutes, the
employers had only rights while the employees had no rights but only obligations. Therefore
with the enactment of Employment Ordinance the employer was accorded with obligations,
the breach of which would lead to criminal offences unlike the past where by it was only the
employee who were to be subjected to criminal punishment.

Position-wise, the Employment Ordinance is a kind of an umbrella legislation designed to

regulate relations between employers and employees by setting minimum standards. 6 This
legislation remains an umbrella legislation today providing for the minimum standards of a
contract of employment despite its novelty. Shivji, 7 groups the provisions of Employment
Ordinance in three categories at the enactment:
a) There are provisions specifically designed to cover long distance migrant labour
(contract labour and irregular local labour)
b) There are provisions which attempts to restrict and in some cases to eliminate, semi-
bondage features of wage labour which were recognised and reflected in the previous
legislation.

6
Shivji, I. G. Law, State and the Working Class in Tanzania, Dar es Salaam, TPH, 1986, p.120
7
Ibid., p.121

4
 c) Provisions which attempts to come to grips with the development of a permanent
labour force.
Most of these provisions have hardly been repealed, and this makes the Employment
Ordinance to be an old piece of legislation with some provisions which are inapplicable in
the modern contract of employment. A good example of the obsolete provisions includes
those which cover the migrant worker and those which concern relocation.

The Current trends

Generally the law concerning the labour relations has changed. Formerly it was based more
on employee side and this will be noticed in the older cases due to populist policies- Ujamaa.
But today the relation favours the employers due to liberalisation policies. The state has been
losing the grip of becoming the largest employer and it is remaining with the work of
regulating the employment relations between the parties to the contract of employment. The
liberal policy of privatisation coupled with the world trends of globalization reflected the
need to have a new labour law regime.

Responding to these demands, in 2004 the Tanzanian parliament enacted two new labour
legislation namely the Employment and Labour Relations Act, 2004 and the Labour
Institutions Act, 2004. This legislation compliment each other in the sense that while the
latter establishes the necessary organs, provides for the appointment of staff, vests them with
jurisdiction and declares their functions and delimits their powers, the former promulgates
substantive law which is supposed to be administered by the said organs. It is important
therefore to note that the two statutes work together. The new statutes attempt to consolidate
all the existing labour statutory law and in the process aim at a more streamlined regime that
avoids most of the shortcomings of the previous regime. The new regime came into force in
two stages ie. the Labour Institution Act 2004 became operational on 01/07/2005 while the
Employment and Labour Relations Act, 2004 came into force on 20/12/2006.

That being the case, in these lectures we shall deal with the old position of the law and
wherever possible make a cross reference to the new labour regime which is has just come
into force. What is important is to understand the labour law principles since the statutes
may change over time but the principles remain the same.

Refferences:
Woddis, J., Africa the roots of revolt, London, Lawrence & Wishert, 1960.
Woddis, J., Africa relic awaits, London, Lawrence & Wishert, 1960.

5
Orde-Brown, G., The African Labourer, London, Cass, 1933.
Illife, J., A modern History of Tanganyika, London, Cambridge University Press, 1979.
Shivji, I.G., Law, State and the Working Class in Tanzania, Dar es Salaam, TPH, 1986.
Shivji, I.G., “Semi-Proletariat Labour and the use of Penal Sanctions in the Labour Law of
Colonial Tanganyika,” In Crime Justice and Underdevelopment,1920-1938, Summer Edition,
London, Heinmann, 1982.

THE CONCEPT OF A CONTRACT OF SERVICE / EMPLOYMENT.

For the reasons which you will learn as we go along in labour law it is very important to
grasp the understanding of the concept of a contract of service/employment and be able to
distinguish it from a contract for service. Labour law it should be noted is all about the
contract of service. For that reason let us begin with the definitional understanding of the
phrase:

What is a contract of employment? /service?

Section 2 of Employment Ordinance defines a contract of service as:

“Any contract, whether in writing or oral, whether expressed or
implied to employ or to serve as an employee for any period or
number of days to be worked, or to execute any task or peace-
work or perform any journey and include a foreign contract of
service.”

Important Terms in the Definition:

Contract:
The term Contract is not defined in the Employment Ordinance. Therefore, to define the term
contract one has to refer to the Law of Contract Act, Cap. 345. The Law of Contract Act
defines a contract as:-

“An agreement which is enforceable by law.” (s.2(1) (h))

However, some authors have defined a contract of employment as merely an agreement

between employer and employee under which the employee agrees to give service to the
employer and the employer engage the employee.8 Noteworthy is the fact that the word

8
Janner, G. The Employer’s and Personnel Manager’s Hand Book of Draft Letters of Employment Law, London,
Business Books Ltd., 1977, p.3

6
used in the Employment Act is contract and not agreement. Therefore, any employment
agreement must be enforceable by law. But again, this depends on the laws of a particular
country. Under the Tanzanian law, it can be observed that the term agreement was not
preferred because not all agreements are enforceable by law. Eg. An agreement to employ a
person to work as a prostitute or drug dealer is not enforceable under the Tanzanian law and
therefore it will not amount into a contract.

It is argued that, since there was no contractual tradition at the time of the enactment of the
Employment Ordinance, the statute had to provide for such elementary rules of contract as
the time of its commencement, period of contract, termination and ways of terminating a
contract of employment.9 Otherwise these are matters which are to be agreed upon by the
parties to the contract themselves.

ESSENTIALS OF A CONTRACT OF EMPLOYMENT

Employment contract like any other contract require the essential elements such as offer and
acceptance, parties, capacity, consideration, lawful object, free consent and intention to create
legal relation. In this part the discussion is centred on the elements which vary from the
normal contracts element. These elements include parties, capacity, free consent and
consideration.

Parties: the parties to a contract of employment are the employer and the employee. The
employer can be a natural or artificial person (eg a limited liability company, the government
etc) while the employee is usually a natural person.

Capacity: In employment contract like in any other contract, the parties must be competent
to contract. However, there are differences when we look at the capacity as required by
labour laws for a contract of employment and capacity to contract generally. While the
general contracts refer to the age of majority (18 years) under the Age of Majority Act, Cap
348 as a peg for capacity, the labour laws do vary with such requirement in some instances.
Moreover, the employment laws concerns much with the employee’s capacity rather than the
employer’s capacity. The capacity to employment also depends on sex of a particular
employee.

Under the Employment law capacity to enter into contract varies with the type of
employment. Thus, the Employment Ordinance, defines a child as a person below 15 years

9
Shivji, Op. Cit. p.125

7
and it provides that a child of the age of 12 and above can be employed to do light work
where he works with his parent(s). The Ordinance provides further that a child shall not be
employed in industries, mining or in hazardous works (see s. 77 and 78 Employment
Ordinance). The Ordinance also defines a young person as a person between the age of 15 to
18 years and it provides that such a person shall not enter into employments which are
injurious to health, dangerous or otherwise unsuitable (ss. 79, 88, 89 Employment
Ordinance).

The Ordinance also provides that a woman shall not be employed in any industrial
undertaking between 6pm and 6am except in certain circumstances. These circumstances
include:-
a) Cases of emergency which could not have been foreseen and which are not of
periodical nature
b) Cases of work connected with raw materials or materials in the course of treatment
and which are subject to rapid deterioration
c) Cases in which a woman holds a responsible position of management not normally
engaged in manual work. (s. 83 Employment Ordinance)

Free Consent: Employment is a consensual arrangement. The parties are supposed to have
entered to such arrangement out of their free volition or free will. Thus, the Ordinance
prohibits forced labour. This came as a result of the ratification of the Forced Labour
Convention, 1930 and the Abolition of Forced Labour Convention, 1957 on the 30 th January
1962. However, forced labour is defined to mean all work/service which is exacted from any
person under the menace/threat of any penalty and for which the said person has not
offered himself voluntarily. But this does not include:
a) any work/service exacted/obtained by virtue of any compulsory military service law
for work of a purely military character
b) work/service exacted/obtained form a person as a consequence of a conviction in a
court of law
c) work/service exacted/obtained in case of emergency eg. During war, natural
calamity etc
d) minor communal services of a kind to be performed by members of community in the
direct interest of that community. Eg. Sanitation, maintenance and clearing of local
roads, repairing village fences etc. But before the exaction of such minor communal
services, consultation shall have been had with the inhabitants of the place.

8
Consideration: the legal consideration in employment contracts are wages in
monetary/pecuniary form. Under s. 61 of the Employment Ordinance, the wages are
supposed to be paid in currency which is legal tender at the place where the wages are paid.
There is no part or whole part of the wages shall be payable in any other form but the law
does not prohibit remuneration in addition to wages (s.65). Wages are protected by law so
that when earned no one even the employer shall have the right to deduct the said wages
(s.63)

Position under the Employment and Labour Relations Act, 2004

There is no much difference between the old legislation and the new legislation in so far as
the requirements of a contract of employment is concerned. However, there are some
variations in the element of capacity and consent.

Capacity: s. 5 prohibits child labour. Section 4 on the other hand defines a child as a person
under the age of 14 years but in case of hazardous sectors a child is defined to mean a person
under the age of 18 years. Under s. 5(2) a child of 14 years can be employed to do light work
which is not likely to be harmful to the child’s development health wise and does not
prejudice the child’s attendance to school. Likewise, under s.5 (3) a child under 18 years of
age is prohibited to be employed in a mine, factory or as a crew in a ship … where work
conditions may be considered hazardous by the minister. The minister is empowered to
make regulations to prohibit or place conditions on employment of children under 18 years
of age (s.5 (3). The Act makes it an offence for a person to employ a child in contravention of
these provisions as well as to procure a child for employment in contravention of these
provisions. (s.5 (7)

Consent: S. 6 of the Act prohibits forced labour. Under s.6 (2) forced labour is defined to
include bonded labour or any work exacted from a person under threat of penalty. It should
be noted that the Act excludes certain types of labour from forced labour category in which
case it reproduces the position under the Employment Ordinance s.122. Thus work exacted
under the National Defence Act, work exacted in consequence of conviction in a court of law,
work exacted in emergency and minor communal works are accepted from the category of
forced labour. The Act adds a new category to be excluded namely work that forms part of
the normal civic obligations of citizen of the URT s.6 (2) (b)

WRITTEN AND ORAL CONTRACTS OF EMPLOYMENT

Written

9
The normal English interpretation of the word means reduced into writing. However, the
phrase “written contract of service,” it should be noted, has a technical meaning under the
Employment Ordinance. The Ordinance defines a written contract of service as a contract
which under the provisions of part V of the Ordinance is required to be made in writing. This brings
us to the following question: What are the types of contracts of service that are required to be
in writing?

Section 42 of Employment Ordinance mentions the contracts of service which are required to
be made in writing. These include:-
1. A contract which is made for a period of or exceeding 6 months or a number of working
days equivalent to 6 months.
2. A contract which stipulate conditions of employment which differ materially from those
customary in the district of employment for similar work.
3. The foreign contract of service: This is defined by cap 366 as a contract of service made
within the territory (Tanganyika) and to be performed wholly or partially outside the
territory. And any contract of service with the foreign state.
4. A contract which is made between a recruiter, whether on his own behalf or on behalf of
some other person, and an employee who is recruited.
Note:
a) This section was enacted to cover migrant workers who came on contracts. 10 It is
therefore argued that written contracts dealt mainly with long distance migrant
labour and foreign contracts of service while oral contracts referred to all contracts of
service other than written contracts.11
b) The fourth category of contracts is no longer in existent. Although recruitment in
practice came to an end around 1965, this provision continued to be on the statute
book until 196912 when they were repealed and recruitment (whether by an employer
or by a professional recruiter) was made illegal.

Oral contract
Like most contracts (with exception of hire purchase, insurance, share transfer, transfer of
interests in land and contracts of guarantee), contracts of employment are just as binding if
made orally as if every term is set out in writing.13 The Ordinance doesn’t tell us much about
the concept of oral contracts of service. However, the Ordinance defines the oral contract of

10
Shivji, Op. Cit. p.121
11
Shivji, Op. Cit. p.125
12
See Act no. 5 of 1969, s. 2
13
Janner, G. Op. Cit., p.3

10
service as any contract of service other than a written contract. This is rather a non-definitive
definition. From this definition therefore it can be correctly inferred that the oral contract of
service is a contract which is not the type stipulated for under section 42. (Refer to above
categories of written contracts of service).

It should not be overemphasized that the distinctions between oral and written contracts of
service are very important under the Ordinance. This is because the Employment Ordinance
is divided into 2 main parts, one governing written contracts of service and the other
governing oral contracts of service. Conversely, if a contract is supposed to be in a written
form but it was made orally in ignorance of the law, the contract is valid as a written contract.

To Employ:
The Employment Ordinance defines the term to employ as to use as an employer the service of
any person under a contract of service. Thus the services must relate to the contract of service. A
condition precedent in employing a person is a contract of service. A contract for service
doesn’t amount to employment. A person using the service under a contract for service is not
an employer and likewise a person performing the service is not an employee but an
independent Contractor.

Employee:
The Employment Ordinance defines an employee as any person who has entered into or
work under a contract of service with an employer whether by way of manual labour,
Clerical work or otherwise and whether the contract is express or is oral or in writing.

The Execution Of Task Or Piecework Or Journey

This relate to the type of contract which is determined not on the basis of time but on a basis
of task, piecework or journey. Here wages are calculated on the basis of the amount of work
done. The contract period is immaterial in determining the wages to be paid to the employee.

There is no definition for the term contract for task in the Employment Ordinance but there is
a definition for the term task. Task is defined as such amount of work as in any area which is
customarily performed in the trade, industry, occupation or undertaking concerned in an
ordinary working day. Historically, contracts for task relate to a period during which
employees were recruited elsewhere to work in another place. Migrant Labour system
during colonial times used this system in plantations. Eg. The sisal plantations and cotton

11
plantations used to be worked by migrant labourers. However the idea of task is still
applicable to date.

The Employment Ordinance also does not define the term contract for piece work but there
is a definition for piece work. Piece work is defined as any work the pay for which is estimated by
the amount of work performed irrespective of the time occupied in its performance.

Again, the Employment Ordinance is silent on what journey is. Examples of this type are to
date, the tourist business, mountain climbing etc. The escoters / porters and safari business
carriers enter into a contract for journey.

Position under the New Labour Legislation

The Employment and Labour Relations Act does not define the terms contract, contract of
service, employ or employment. It defines an employee as an individual who has entered into a
contract of employment or has entered into any other contract under which he undertakes to
work personally for the other party to the contract where the other party is not a client or
customer of any profession, business or undertaking carried on by the individual. Under
s.98(3) the minister for labour may also deem a person as an employee. The employer is
defined to as any person who employs an employee. Thus, the rules of determining whether
a person is an employee or a self employee/independent contractor remain the same.

Under the Employment and Labour Relations Act, 2004, the issue of form of contract of
employment is dealt with under part III which deals with employment standards. Here it
seems that the employment contract can either be written or oral. However under s.14 (2)
there is a mandatory requirement that the contract for employment which is to be performed
outside the URT shall be in writing.

Under s. 15 it is a mandatory requirement that an employer shall supply an employee with

the written statement of particulars at the commencement of employment. The particulars to
be included are name, age, permanent address and sex of the employee, place of recruitment,
job description, date of commencement, form and duration of the contract, place of work,
hours of work, remuneration, method of its calculation, details of any benefit or payment in
kind and any other prescribed matter. This statement may not be supplied to the employee
if these matters are provided for in the written contract.

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The particular employer is supposed to keep the written statement of particulars for a period
of 5 years after the termination of the contract of employment (s.15(5) Employment and
Labour Relations Act). It should be borne in mind that the particulars of the statement are
more or less the same as the provisions of s. 35 of Employment Ordinance as repealed and
replaced by the Security of Employment Act 1964 which represents the record of oral
contracts. But unlike the record of oral contracts the written statement of particulars also
applies to written contracts unless the same is provided for in the written contract.

The common argument about whether there exists a difference between oral and written
contracts may not be so much sound since the Act does not address itself into defining what
a written contract is or what an oral contract is and neither is it divided into two parts like
the Employment Ordinance, Cap. 366. The Act mentions about a contract of employment
exercisable outside the URT to be in writing but talks nothing about the other former
categories under the Employment Ordinance s. 42.

Any Period Or Number Of Days To Be Worked

The expression refers to what is known as a contract period. The expression assumes that a
contract of service is made for a particular period namely the contract period. The Common
Law recognises two principal methods of defining the duration of employment. The first one
is by the setting of a fixed term and the other is by provision for determination by notice of
a given length.14 It should be understood that under the Common Law duration of
employment is a matter which the employer will normally have determined by express
stipulations and where this is not the case, the Common Law looks to employment practice
to determine whether the employment concerned should be viewed as of the fixed term type
or not, or to determine the appropriate length of notice to be given.

The Employment Ordinance defines contract period as a period of time or number of days or
hours to be worked for which expressly or by implication a contract of service is made. Here one can
see that the provision has permitted both express and implied contract period. It is express
where there are stipulations on the contract period and it is implied where there are no
express stipulations.

14
Davies, P. Labour Law: Text and Materials, London, Weidenfeld and Nicholson, 1979, p. 329

13
The contract period can be computed on an hourly, daily, weekly, fortnightly, monthly or
even yearly basis and more. Ordinarily, the contract period is determined by reference to the
time at which wages are calculated.

Presumptions as to Contract Period in Contracts for Task, Piecework and Journey

Here the time expended by the employee is irrelevant but what is relevant is the amount of
work done.15 Originally this was section 4 but through the 1964 (The Security of Employment
Act) amendment the section was repealed and replaced by section 34 which provides that:-

“Contracts for task, piece work or journey shall have effect as if they
were and shall for all purposes be deemed to be, contract for service
for the performance of work of the kind envisaged under such
contracts or for a period of time which, the absence of any
agreement between the parties for a lesser period be deemed to be
monthly contracts.”

Explanation:
The contract period for a contract for task, piecework, or journey is deemed to be a month.
The provisions of this section do not however prevent the parties (employer and employee)
from concluding an agreement for a lesser period. Ie. A period less than a month. This means
that the presumption for a monthly contract is not absolute it can be displaced by an
agreement to the contrary. Furthermore, although the law presumes contracts for task,
piecework and journey to be monthly contracts, it does not prevent the calculation of wages
according to piece rates or work performed. To this effect therefore, the remuneration under
these contracts is not affected by the presumption as to monthly contracts.

Section 34(3)Employment Ordinance has one exception to the presumption as to monthly

contracts i.e. the presumption does not apply to CASUAL Employees. Casual employees are
defined under section 2 of the employment ordinance as any employee the terms of whose
engagement provide for his payment at the end of each day and who is not engaged for a
longer period than 24 hours at a time.

In the definition of casual employee there are two ingredients which apply cumulatively:
a) Time of payment
b) Contract period

15
Section 34 of the Employment Ordinance.
14
Time of Payment
A casual employee is usually paid at the end of each day.
Contract Period
The contract period does not exceed 24 hours at any given time
NB: All the two ingredients must be present in order for a person to infer casual
employment.
Conversely, a person who receives payment at the end of each day will not be a casual
employee if the contract period exceeds 24 hours.

Contract Period Under the New Labour Legislation

The Employment and Labour Relations Act, 2004 provides for three types of employment
contracts namely:
a) contracts for an unspecified period of time,
b) contracts for a specified period of time for professional and managerial cadre
c) contracts for a specific task (see s. 14)

CONTRACT FOR SERVICE AND CONTRACT OF SERVICE

The determination of whether an individual is an employee or a contractor is a question of
law for the courts rather than giving the sole reliance on the description of the contract given
by the parties. There are a number of tests which are used to determine whether a particular
person is serving under a contract of service or a contract for service. 16 The tests include
control test, organisation test and multiple/mixed/economic reality test.

1. Control Test:
This is an old test. It dates back to the 19 th C. The test evolved under circumstances in which
industrialization was being fulfilled. Under this test in order to recognize that there exists a
contract of service or a contract for service the following question is asked.
“Whether the Employer controls not only what a person does but also the manner
of doing it.”17

If the answer is yes, then there is an existence of a contract of service. Otherwise the contract
is taken to be a contract for service. However, this test is suitable to only certain categories of

16
See Kahn-Fround, O. “Servants and independent contractors.” 14 Modern Law Review.
P. 504.
17
See Rideout, R., Principles of Labour Law, 4th edn. London, Sweet & Maxwell, 1983, p. 4

15
employees e.g. House-employees, agricultural workers, clerks etc. These are employees
whose employments do not require highly specialized skills. In these circumstances, the
employer provides the tools of work. For the most specialized skills the control test is
insufficient. After the industrial revolution the control test failed to operate since most of the
services were more technical. Therefore the employer could not dictate the manner of
performing that service. E.g. A surgeon, Pilot, Architect. In fact the test became irrelevant to
all professionals. This is logical because it is not practicable for someone to employ a
professional and dictate to him how to perform his duty.

2. Organisation Test/ integration test

This is sometimes known as integration test. This test developed later after the control test.
Under this test the question for determining whether there is an existence of a contract of
service or a contract for service is:
“Whether the person is an integral part of a given organisation in which he
works.”18
If the answer is yes then the law assumes that there is a contract of service. If the answer is
negative then there is a contract for service. This is a test which has brought many
professionals to serve under a contract of service. A good reference is found in the case of
Cassidy V. Ministry of Health19
In this case Denning, L.J. (as he then was) argued as follows:

“The hospital authority is liable for the negligence of professional men

employed by the authority under contract for services as well as under
contracts of service. The authority owes a duty to give proper treatment –
medical, surgical, nursing and the like and though it may delegate the
performance of that duty to those who are not its servants, it remains
liable if that duty is improperly or inadequately performed by its
delegates.”

In considering a distinction to be drawn between a contract of service and a contract for

service Lord Somarrel, referred to Simmons V. Health Laurendly Co. in which it was
argued that a servant is a subject to the command of his master as to the manner in which he
shall do his work. He quoted Hilbery J. in that case and said:
“In a contract for service the master can order or require what is to be done while in
a contract of service he can not only order or require what is to be done but how it
shall be done…”

18
Ibid. p. 6
19
(1951)2 KB 343

16
He proceeded,
“With respect I think that in the first case, the word master is inappropriate and the
later case would I think, if applied in the ordinary meaning of the words exclude
many cases where the relationship of master and servant clearly exist. To take the
example given by Mackinnon L.J. in Gould’s case of a certified master of a ship: the
owner can of course tell him where to go but not how to navigate.”

In the case of Rosen V. Queen20 the organisation test was used to determine whether a
university professor who used to lecture in three universities was serving under a contract
for service or a contract of service. This was important for income tax purposes. It was
argued by the professor that he was an independent contractor. This submission was
dismissed by the court on the ground that he was doing what any university professor
would do and so he was serving under a contract of service because what he did formed an
integral part of the business of the university.

In Gould V. Minister of National Insurance and Another 21 it was held that it is easy to say
that this is a contract of service and this is a contract for service but there are cases in
between the two extremes where it is not easy to draw a line.

“… It is clear that the real question is one of degree of control exercised by

the person employing and this … means not only the amount of control but
the nature of that control and the direction in which it is exercised. In this
case Lord Thakerton quoted from Lord Justice Clerk the indicia of the
contract of service. These are:-
a) The master’s power of selecting his employees,
b) The payment of wages or other remunerations,
c) The master’s right to control the method of doing the work and
d) The master’s right of suspension or dismissal.”

Also in Stevenson Jordan and Harrison Ltd. V. Macdonald and Evans 22 the court discussed
of the distinctions between the two concepts. In this case Sir Raymond Evershed (as he then
was) held;
“… the distinctions between a contract of service and a contract for service
lies on the following; the case of a man engaged to do some specific work
under a considerable measure of control extending not only to the work
which he does but to the way in which he does it on the other hand and
that of a man engaged more in the capacity of an independent contract or
for example a man engaged professionally.”

In the same case Denning L.J (as he then was) held as follows:

20
(1976) CTC 462
21
(1951)All ER 363
22
(1952) 1 TLR 101.

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 “… The test applied is whether the employer has the right to control the manner of
doing work ... the distinctions between a contract for service and a contract of
service can be summarised as follows … In the one case the master can order or
require what is to be done while in the other case he cannot only order or require
what is to be done but how it shall be done …referring to Cassidy’s case he
proceeded … Under the contract of service, a man is employed as a part of
the business whereas, under a contract for service his work although done,
for the business is not integrated into it but only an accessory to it.”

3. Multiple/pragmatic/mixed/economic reality test:

This test is a response to the inadequacies of the 2 foregoing tests ie. Control and
organisational test. It is called pragmatic because it is not based on rigid doctrines and also it
is practical because it calls the court to consider all circumstances in totality and infer
whether there is a contract of service. It is multiple because it draws it’s conclusion from
multiplicity of factors. Thus some scholars refer to this test as multiple factor tests. 23

In order to draw a conclusion whether there is a contract of service or a contract for service
the answers to the following indicators are important:-
1. Whether the person performing the services in a given concern is doing so in his own
account.
2. Whether there is power to hire and fire the employee
3. Whether there is a direct payment of some form of remuneration. This indicator is open
to criticisms because no service is rendered freely so it seems to be inadequate.
4. Whether there are any deductions made on remuneration.

The case of D.P.P. V. Eliatosha Mosha and another 24 explains this point more clearly. In this
case the respondents were charged with various offences under the Employment Ordinance,
The Regulation of Wages and Terms of Employment Ordinance and the Workmen’s
Compensation Ordinance. They were acquitted in the lower court and the High court. The
charges were premised on assumptions that the respondents were employers who
committed offences under the above named ordinances. They were alleged to have
employed someone to drive a taxi but they didn’t prepare as the law required a proper
contract of service. They didn’t keep records of wages, they did not ensure themselves in
respect of liability arising under the workmen’s compensation ordinance and stating the
minimum wage. The taxi Driver would receive a commission on presentation of he income
he would have collected. The respondents argued that there was no contract of service and
the issue was whether there was a relationship of employer and employee. Unfortunately

23
Rideout, R., Op. Cit. p.7
24
(1984) TLR 28; see also Market Investigation Ltd. V. Minister of social security (1969) 2WLR 1
18
there was no time to have the court of appeal of Tanzania to make an investigation to
positively determine the liability.

However the court made the following obiter:-

“If the prosecution had proved that the respondent controlled the business
for which the taxi driver was employed then there would have been a
contract of service.”

The court tells us that the control test is still very much part of the law in Tanzania and the
obiter is an indication that one could site this in future as an authority in a similar case.

Conclusively it can be argued that there is no single test to infer the contract of service.

Legal and Economic Implications of contracts of service and contracts for service
1. Liability: In a contract of service the employer may be vicariously liable for the
wrongful acts of employees committed during the course of their employment. While
in a contract for service he may not be liable for the wrongful acts of contractors he
employs other than in exceptional cases.
2. Health and Safety: In a contract of service there is a high standard of care owed by
the employer both under the statutory and the common law with regard to the safety
and health of his employees. While in a contract for service there is a lesser standard
of duty of care in relation to health and safety of his contracting parties.
3. Statutory employment rights: In a contract of service there is a large number of
individual employment rights conferred on employees by statute which generally
arise after a period of service. Eg. Redundancy payments, right to belong to a trade
union, security of employment, maternity and other leaves etc. While in contracts for
service, the contractors are excluded from the mass of individual employment rights
conferred by statute.
4. Income Tax: In a contract of service the income tax payable by an employee is
deducted at source by the employer under the pay as you earn scheme. While in a
contract for employment the income tax of a self employed person is not paid by the
employer but by the taxpayer himself.
5. Welfare benefits: In a contract of service there is normally a duty under the social
security laws to both the employer and employee to contribute to the social security
funds for such benefits like retirement pension etc. In a contract for service a self
employed person is individually responsible for his welfare if he wishes and he has
limited right to claim welfare benefits, eg. statutory sick pay

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