Introduction
The distinction between an employee and an independent contractor is a critical issue in labour law as it determines the applicability of statutory protections such as minimum wage, termination procedures, and social security benefits. In Tanzania, this distinction is governed by key legislation, namely the Employment and Labour Relations Act, CAP 366 R.E. 2023, and the Labour Institutions Act, CAP 300 R.E. 2023. Additionally, Tanzanian courts draw on common law principles inherited from England, adapting judicial tests to local contexts. This essay explores six key factors that distinguish an employee from an independent contractor in Tanzania: control and supervision, integration into the employer’s business, mutuality of obligation, economic reality, exclusivity, and provision of tools and equipment. By examining relevant statutes and case law from both Tanzania and England, this analysis aims to provide a comprehensive understanding of how courts determine employment status, highlighting the multi-factor approach that prioritises substance over form in defining working relationships.
Control and Supervision
One of the primary factors distinguishing an employee from an independent contractor is the degree of control and supervision exerted by the employer. An employee typically works under the direct control of the employer, who dictates not only the tasks to be performed but also the manner, timing, and location of the work. In contrast, an independent contractor enjoys autonomy in deciding how to achieve the agreed result. This principle was articulated in the English case of Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance [1968] 2 QB 497, where MacKenna J held that a contract of employment exists when the worker is subject to the employer’s control in performing the work (MacKenna, 1968). Tanzanian courts have adopted this test, as seen in Hashim Shamte & Another v Feisal Mohamed Nahad [2021] TZHCLD 189 (HC). In this case, the High Court of Tanzania determined that welders who controlled their working methods and were not subject to close supervision were independent contractors rather than employees. The court’s reasoning illustrates that the absence of effective control is a strong indicator against an employment relationship in Tanzanian law, aligning with international common law principles.
Integration into the Employer’s Business
Another distinguishing factor is the extent to which a worker is integrated into the employer’s organisational structure. Employees are typically embedded within the business, forming an integral part of its operations and often subject to internal policies and hierarchies. Independent contractors, however, operate externally, providing services without being part of the core business. This test was clarified in the English case of Lane v Shire Roofing Co (Oxford) Ltd [1995] EWCA Civ 37, where the Court of Appeal ruled that a roofer was an employee due to his integral role in the company’s primary activities (Court of Appeal, 1995). Similarly, in Hashim Shamte & Another v Feisal Mohamed Nahad [2021] TZHCLD 189 (HC), the Tanzanian High Court noted that the claimants were not part of the respondent’s organisational hierarchy and were exempt from internal disciplinary mechanisms, reinforcing the conclusion that they were independent contractors. This shows that integration remains a key consideration in Tanzanian judicial decisions, reflecting the practical reality of the working relationship.
Mutuality of Obligation
Mutuality of obligation refers to the reciprocal commitment between the employer and worker, where the employer is obliged to provide work, and the worker is obliged to accept and perform it. This continuous obligation is a hallmark of an employment relationship, whereas independent contractors are typically engaged on a task-by-task basis with no expectation of ongoing work. The English case of Nethermere (St Neots) Ltd v Gardiner [1984] ICR 612 established that mutual obligations are decisive in identifying employment status (Court of Appeal, 1984). Although the term “mutuality of obligation” is not explicitly mentioned in Tanzanian statutes, Section 61 of the Labour Institutions Act, CAP 300 R.E. 2023, implies this concept by presuming employment where a person works for remuneration on a continuous basis (Government of Tanzania, 2023a). Tanzanian courts, therefore, assess mutuality through the factual circumstances of the arrangement, ensuring that the nature of the obligations reflects the true relationship rather than any superficial label assigned by the parties.
Economic Reality and Business on One’s Own Account
The economic reality test examines whether a worker is economically dependent on the employer or operates as a business entity bearing financial risks. Employees generally rely on the employer for income and do not assume business risks, while independent contractors may face financial gains or losses based on their performance. This principle was highlighted in the English case of Hall v Lorimer [1993] EWCA Civ 25, where the claimant was deemed self-employed due to working for multiple clients and managing his own business risks (Court of Appeal, 1993). In Tanzania, the High Court in Hashim Shamte & Another v Feisal Mohamed Nahad [2021] TZHCLD 189 (HC) applied similar reasoning, noting that the claimants were paid per task rather than a regular wage and bore their own financial risks, supporting the finding of independent contractor status. This test underscores the importance of economic dependence in Tanzanian labour law, ensuring that protections are reserved for those genuinely reliant on an employer.
Exclusivity and Ability to Work for Others
Exclusivity, or the expectation that a worker serves one employer primarily or solely, is another important factor. Employees are often restricted from working for others during their employment, while independent contractors retain the freedom to engage with multiple clients. Section 61 of the Labour Institutions Act, CAP 300 R.E. 2023 explicitly lists exclusivity as an indicator of employment status (Government of Tanzania, 2023a). In Hashim Shamte & Another v Feisal Mohamed Nahad [2021] TZHCLD 189 (HC), the Tanzanian High Court observed that the claimants were free to provide similar services to others, which strongly suggested an independent contractor relationship. This factor, therefore, plays a significant role in distinguishing employment types, particularly in a Tanzanian context where statutory guidance explicitly acknowledges its relevance.
Provision of Tools and Equipment
Finally, the provision of tools and equipment serves as a practical indicator of employment status. Employees typically use tools and materials supplied by the employer, reflecting their dependence on the business’s resources. Independent contractors, on the other hand, often provide their own equipment, underscoring their operational independence. In Hall v Lorimer [1993] EWCA Civ 25, the English Court of Appeal considered the claimant’s provision of his own tools and coverage of expenses as evidence of self-employment (Court of Appeal, 1993). Similarly, in Hashim Shamte & Another v Feisal Mohamed Nahad [2021] TZHCLD 189 (HC), the Tanzanian High Court noted that the claimants supplied their own tools and controlled their materials, further supporting the finding of independent contractor status. This factor, though not decisive on its own, contributes to the overall assessment of the relationship in both Tanzanian and English legal frameworks.
Conclusion
In conclusion, the distinction between an employee and an independent contractor in Tanzania is determined through a multi-factor approach that considers control, integration, mutuality of obligation, economic reality, exclusivity, and provision of tools and equipment. Guided by statutory provisions such as Section 61 of the Labour Institutions Act, CAP 300 R.E. 2023, and the protections under the Employment and Labour Relations Act, CAP 366 R.E. 2023, Tanzanian courts adopt a holistic perspective, often drawing on persuasive English common law principles from cases like Ready Mixed Concrete and Hall v Lorimer. Decisions such as Hashim Shamte & Another v Feisal Mohamed Nahad demonstrate that no single factor is conclusive; instead, the substance of the relationship prevails over any formal labels used by the parties. This nuanced approach ensures that statutory labour protections are applied appropriately, safeguarding vulnerable workers while respecting the autonomy of genuine independent contractors. The implications of this distinction are profound, as it directly impacts access to rights and benefits in an evolving labour market where flexible working arrangements are increasingly common.
References
- Court of Appeal. (1984) Nethermere (St Neots) Ltd v Gardiner. Industrial Case Reports, ICR 612.
- Court of Appeal. (1993) Hall v Lorimer. England and Wales Court of Appeal (Civil Division), EWCA Civ 25.
- Court of Appeal. (1995) Lane v Shire Roofing Co (Oxford) Ltd. England and Wales Court of Appeal (Civil Division), EWCA Civ 37.
- Government of Tanzania. (2023a) Labour Institutions Act, CAP 300 R.E. 2023. Government Printer, Dar es Salaam.
- Government of Tanzania. (2023b) Employment and Labour Relations Act, CAP 366 R.E. 2023. Government Printer, Dar es Salaam.
- High Court of Tanzania. (2021) Hashim Shamte & Another v Feisal Mohamed Nahad. Tanzania High Court Labour Division, TZHCLD 189 (HC).
- MacKenna, J. (1968) Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance. Queen’s Bench Division, 2 QB 497.
