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Tanzania Retrenchment Guidelines

In the wake of economic uncertainty, employers in Tanzania are being forced to restructure their operations, leading to a surge in retrenchments across various sectors. As the country grapples with the challenges posed by the pandemic and global economic downturn, it is essential for employees and employers alike to understand the procedures governing retrenchment.

Selection of Employees for Retrenchment

The selection of employees for retrenchment in Tanzania is governed by Section 37 of the Employment Act. According to this section:

• An employer may retrench an employee if the employee’s services are no longer required or if the business can no longer sustain its operations.
• The employer must consult with the affected employees and their representatives before making a decision to retrench.

Timing of Retrenchments

In Tanzania, retrenchments can occur at any time during the year. However:

• Employers are advised to provide adequate notice to affected employees.
• The Employment Act requires employers to give employees a minimum of 30 days’ notice before retrenchment, unless an agreement is reached with the employee or their representative.

Severance Pay

According to Section 38 of the Employment Act, an employer who retrenches an employee must pay severance pay in accordance with the following criteria:

• One month’s salary for each year of service if the employee has completed at least one year of service.
• Half a month’s salary for each year of service if the employee has not completed at least one year of service.

Additionally, the act provides that:

• Severance pay may be paid in installments over a period not exceeding 12 months.
• Employers are advised to consult with their employees and their representatives to agree on the terms of severance pay, including the payment schedule and any other benefits that may be provided.

Conclusion

In conclusion, employers in Tanzania must adhere to specific guidelines when retrenching employees, including selecting employees fairly and providing adequate notice. Retrenched employees are entitled to receive severance pay, which is calculated based on their length of service and salary. As the country navigates the challenges posed by economic uncertainty, it is essential for all stakeholders to understand the procedures governing retrenchment in Tanzania.