Mozambique PEO & Employer of Record

WeHG provides an International PEO and global Employer of Record service in Mozambique to companies willing to enter the Mozambique market or hire local/expat employees in this area.

Common approach requires establishing a subsidiary in Mozambique.  Still, our solution allows you to start the operations in Mozambique within days hence save time and money.  WeHG would hire job-seekers on your behalf whilst you keep full operational control of their activity. In addition, legally they would be our employees, on our local payroll, 100% compliant but will work on your behalf.

Mozambique fast facts

Population, million: 30
Land area: 801,590  km²
Capital: Maputo
Local currency: Mozambican metical (MZN)

GDP per capita:$ 1,331
GDP in currency:$ 41.473

Mozambique, a scenic country in southeastern Africa. Mozambique is rich in natural resources, is biologically and culturally diverse, and has a tropical climate. Its extensive coastline, fronting the Mozambique Channel, which separates mainland Africa from the island of Madagascar, offers some of Africa’s best natural harbors. These have allowed Mozambique an important role in the maritime economy of the Indian Ocean, while the country’s white sand beaches are an important attraction for the growing tourism industry. Fertile soils in the northern and central areas of Mozambique have yielded varied and abundant agriculture, and the great Zambezi River has provided ample water for irrigation and the basis for a regionally important hydroelectric power industry.

Hiring, Negotiating and Doing Business in Mozambique

Necessity of written employment contract

All employment contracts must be made in writing (except those for a duration not exceeding 90 days).

Different forms of engagement: employment, contracting, work with private entrepreneur

• Foreign employees

The general rules on hiring foreigners are set out in Decree 55/2008 of December 30. Employment contracts concluded with a foreign citizen must comply with the following rules:

• it must be reduced in writing;
• it must always be concluded for a fixed-term and for a period not exceeding two years, renewable by submitting a new application;
• it does not become a permanent employment contract, regardless of the number of renewals;

in the event of termination for any reason, the employer must give notice of the fact to the entity that oversees the employment area and migration services of the province of the place of work within 15 days of the date of termination.

• Collective bargaining agreements

Collective employment regulation instruments may be negotiated (collective bargaining agreement, accession agreement and voluntary arbitration decision) or not negotiated (compulsory arbitration decision). Collective bargaining agreements may be made by company agreement (signed by a trade union association and a single employer for one company), collective bargaining agreement (signed by a trade union association and several employers for various companies) or collective bargaining agreement (signed between trade union associations and employers’ associations).

Collective bargaining instruments are binding on employers parties thereto or covered thereby, as well as all employees of the company, regardless of their membership of the signatory union and date of joining the company.

Mozambique Employment Contract

Types of employment agreements

Under Mozambican labour law, there are 3 types of employment contracts:

• permanent employment contract;
• fixed-term employment contract;
• unfixed-term employment contract.

Term contracts are only allowed for the fulfilment of temporary tasks e.g. temporary replacement of an employee, performance of tasks required by an exceptional or abnormal increase of production, as well as to carry out seasonal activity; performance of activities that do not relate meeting the employer’s permanent needs; performance of construction work, a project or other specific, temporary activity, including execution, management and supervision of civil construction works, public works and industrial repairs, under a contract; and provision of services complementing the latter, in particular subcontracting and outsourcing services.

Fixed-term contracts are allowed a maximum duration of two years. They may be renewed twice by agreement of the parties. Small and medium enterprises are exempted from this requirement, being free to freely enter into fixed-term contracts without regard for the limitation on renewals for the first 10 years of their activity.

Unfixed-term employment contracts are only permissible when it is not possible to predict with certainty the date of termination, subject to a justifiable reason. Such contracts are deemed to be converted into a permanent employment contract if the employee remains in service after being given notice of termination or, in the absence thereof, after seven days following the return of the replaced employee or completion of the activity, service, construction work or project for which he had been hired.

Mozambique working hours

A normal employee is not permitted to work more than eight hours per day and 48 hours per week, spread over six week days. However, this may be extended up to nine hours a day, provided the employee is granted an extra half-day of rest per week.

For employees under a collective bargaining agreement, the normal daily work may exceptionally be extended up to 12 hours, provided that the weekly duration does not exceed 56 hours.

Overtime

Overtime of up to 200 hours per year is permitted, with compensation.

Vacation leave in Mozambique

Employees are entitled to statutory leave based on the type of contract they are under and the duration of service with the employer:

• fixed-term employment contract of a duration greater than three months and less than one year – one day of vacation for each month of active service;
• during the first year of work – one day of vacation for each month of actual work;
• during the second year of work – two days of vacation for each month of actual work;
• from the third year – 30 days of vacation each year of actual work.

Mozambique Maternity Leave

Mozambican female employees are entitled to fully-paid maternity leave of up to 60 days.

Fathers are entitled to one day of paid paternity leave.

Employees are also generally entitled to unpaid leave to be with hospitalized children under their care, such leave may be reimbursed by social security.

Mozambique Severance Laws

Fixed-term contracts of up to 90 days are permitted.

Employees may be terminated under grounds set forth in the labor law and are generally entitled to at least 30 days’ notice.

In general, employees on indefinite-term contracts are eligible for severance pay. Employees whose wages are :

• one to seven times the national minimum wage: receive 30 days pay per year of service
• eight-10 times the national minimum wage: receive 15 days pay per year of service
• 11-16 time the national minimum wage: receive 10 days pay per year of service
• 16+ times the national minimum wage: receive three days pay per year of service

To terminate an employee for just cause, the employer must provide a written indictment note to the employee and the trade union within 30 days of the fault. The employee has 15 days to respond and the trade union an additional five days to consul.  Afterwards, the employer has 30 days to make a decision.

Mozambique Tax

Non-residents are only subject to tax on their Mozambican-sourced income.

Individuals are considered resident in Mozambique for tax purposes if they meet any of the following conditions:

• They are present in Mozambique for less than 180 days in a tax year, but they maintain a residence in Mozambique under circumstances that indicate an intention to maintain and occupy the residence as a permanent residence.
• They perform functions of a public nature abroad for the Republic of Mozambique.
• They are crew members of a ship or aircraft that are at the ser- vice of entities that have their residence, head office or effective management in Mozambique.

Individuals are subject to Mozambican personal income tax on income from the following categories:

• Income from business and self-employment
• Income from employment
• Income from capital gains
• Income from investment

Employers are required to contribute 4% of the employee’s gross monthly remuneration.

Employees are required to contribute 3% of the employee’s gross monthly remuneration.

Health Insurance Benefits in Mozambique

Employees are generally eligible for up to 15 days of sick leave, or 5 non-consecutive days per quarter. If the employee needs more time s/he must go to the health board. Social security will pay for 365 days of continuous sick leave for a non-occupational illness or accident.

Additional Benefits in Mozambique

Resident foreign employees are not required to make social security contributions if they can prove to the National Institute of Social Security that they are contributing to a similar social security scheme in another country.

Under the law, the compulsory social security system includes protection in the events of sickness, maternity, disability, old-age and death, and covers all employees, both domestic and foreign, residing in the Mozambican territory, and their dependent relatives.

Registration of employees and employers at the National Social Security Institute (Instituto Nacional de Segurança Social/INSS) is mandatory. Registration of employers must take place within 15 days of the date of commencement of business or acquisition of the company.

Both employers and employees are required to make contributions to the INSS scheme. The base for the calculation of the contributions includes the basic wage, bonuses, commissions and other payments of a similar nature paid on a regular basis, as well as management bonuses. Performance-based bonuses are used in Mozambique

General market practice benefits/additional allowances

As Mozambique is one of the poorest and least developed nations in the world, it is not surprising that it has a largely unskilled workforce and high unemployment. A large majority of the Mozambican population is engaged in the informal or shadow economy. Accordingly, the current rate of unionisation is very low (estimated to be 2.5% of the labour force). Despite the introduction of the reformed Labour Law in 2007, the overall structure of the labour market remains rigid and an impediment to investment and business.

Mozambique Holidays

Mozambique celebrates 9 national holidays:

• New Year’s Day
• Heroes’ Day
• Women’s Day
• Worker’s Day
• Independence Day
• Victory Day
• Armed Forces Day
• Peace Day
• Christmas Day

Why Choose WeHireGlobally

WeHG takes care of all the onboarding hurdles, payroll, compensation and benefits, tax filing, and termination of employment. Our Employer of Record solution allows you to manage your overseas teams efficiently while minimizing cost and risk.