Q&A – 27 May 2013
Outsourcing of employees
Having entered into a contract with a company to supply employees, TRA have come back and say that the amounts we have paid to this service provider are in fact salaries of the persons who have been supplied to us and hence should have been taxed, pension paid for including skills and development levy. How does the law define an employee and do TRA have a valid claim on us? Is it legal for our company to enter into such an arrangement?
TG, Dar
The Employment and Labour relations Act defines an employee as an individual who-(a) has entered into a contract of employment ;or (b) has entered into any other contract under which- (i) the individual undertakes to work personally for the other party to the contract; and (ii) the other party is not a client or customer of any profession , business, or undertaking carried on by the individual; or (c) is deemed to be an employee by the Minister under Section 98(3).
Section 98 (3) provides that “the Minister may after consultation with the council, may, by notice in the Gazette, deem any category of persons to be employees for the purpose of this section, any provisions of this Act or any other written law in respect of which the Minister is responsible”
Under the Tanzania Labour laws a person who renders service to any other person including for specific task is presumed to be an employee until the contrary is proved if one or more scenarios itemized under Section 61 of the Labour Institutions Act exists.
Section 61 of the Labour Institutions Act (LIA) Act No 7 of 2004 provides For the purpose of a labour law, a person who works for, or renders services to, any other person is presumed, until the contrary is proved, to be an employee, regardless of the form of the contract, if any one or more of the following factors is present: (a)The manner in which the person works is subject to the control or direction of another person, (b) The person’s hours of work are subject to the control or direction of another person, (c) In case of a person who works for an organization, the person is a part of that organization. (d) The person has worked for that other person for an average of at least 45 hours per month over the last three months. (e)The person is economically dependent on the other person for whom that person works or renders services, (f) The person is provided with tools of trade or work equipment by the other person; or (g) The person only works for or renders services to one person.
From your brief above, the service provider employs these staff who are stationed in your premises. We do not see any illegality with the contract you have entered into, so long as the service provider is registered for tax purposes and is paying its taxes. However if the service provider is not tax registered, TRA might end up coming after you. Your attorneys can guide you further.
Life insurance for military personal
I am a soldier in the Tanzanian armed forces and recently visited a European country whereby all soldiers have private life insurance contracts to protect their families. When I came to Tanzania, I approached an insurance broker for a life insurance policy and he said that since I was in the army I could not be covered. He further added that life insurance policies also don’t cover if the death is self-inflicted. Is this true? How do I get cover?
TC, Dar
The Insurance Act of 2009 clearly states in section 111 that (1) A life policy in which it is stated that the policy shall be void in the event the insured whether sane or insane dying by his own act or suffering capital punishment within a stipulated period shall be void- (a) in respect of any period that exceeds two years from the issue of the policy notwithstanding any policy conditions to the contrary; or (b) Where the insured dies by his own act or suffers capital punishment after the expiration of that stipulated period or after two years from the issue of the policy, whichever is sooner. (2) A life policy in which no provision such as referred to in subsection (1) is contained shall not be void by reason of the insured, whether sane or insane, dying by his own act or suffering capital punishment at any time after the issue of the policy.
You can see from the above, that if one dies by his or her own act within a period of two years of the policy, the insurance policy may not cover you. However the law protects the insured person by saying that after two years of the policy, any such wording in the policy that does not provide cover for a death caused by one’s own act, is void, meaning that you are covered. It is true that many insurers are unaware of this and their policies illegally provide such a clause.
Section 112(1) of the Insurance Act states that a life policy which states that the policy shall be void in the event of the policy-holder dying in the course of or as a result of any military service which he performs under the Government of Tanzania in any military action against a common enemy shall be void.
In subsection 2 the Act further states that (2) No insurer shall refuse to issue to any person a life policy on the grounds that he is performing or likely to perform military service in Tanzania.
Hence the refusal by your broker and/or your insurer is illegal. Hence the insurer cannot decline to insure you simply because you are a member of the armed forces.