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Employment in Mozambique

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.

Key points on employment in Mozambique

The main labour law governing Mozambican employment is the Labour Law, which applies to both foreign and national employees. There is also a law which governs the hiring of foreign employees, under which foreign employees are hired in accordance with a prescribed quota. If no part of the quota is available, the procedure is more complex, as additional requirements must be met (for example, professional experience, academic level or professional training, and the respective evidentiary documentation, for example, a certificate or diploma).

The Labour Law is applicable to employment contracts both concluded and executed in Mozambique.

  1. Contracts

    All employment contracts must be made in writing (except those for a duration not exceeding 90 days). Contracts must be dated and signed by both parties and must contain the following clauses:

    • Identification of the employer and the employee.

    • Professional category, tasks or activities agreed.

    • Workplace.

    • Duration of the contract and conditions for its renewal.

    • Amount, form and periodicity of remuneration.

    • Date of commencement of execution of the employment contract.

    • The date of termination of the contract, and a justification of the form of contract utilised, in the case of fixed term contracts.

    • The date of signature of the contract, in the case of a fixed term contract for a determined period, and its termination date.

    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.

    If the employee continues his or her employment, fixed-term term contracts are assumed to be converted to permanent employment contracts following completion or the maximum number of renewals. As an alternative, both parties may opt for payment of compensation equivalent to 45 days wages for each year of service.

    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.

    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.

Employee Entitlements

Information Explanation
Medical Leave ?

There is no mandated medical leave under the law.

Outsourcing Employment Through a GEO Employer of Record Service

Compliance with local employment requirements is just one of the issues foreign companies face when employing staff in Mozambique. For companies which intend to employ their staff directly through their incorporated Mozambican entity, professional legal advice is recommended. Shield GEO provides an alternative path for companies to outsource the employment of their staff in Mozambique.

As a Global Employer Organization (GEO), Shield GEO acts as the Employer of Record and ensures the employment is compliant with host country regulations regarding employment. In addition Shield GEO will handle payroll processing, tax and immigration. Using Shield GEO is the fastest and most cost effective way to deploy local and foreign workers into Mozambique.

The Shield GEO solution is an attractive alternative where

– the company is looking to employ staff quickly

– the company doesn’t have an appropriately incorporated entity in Mozambique

– the company wants to work within a defined budget

– the company wants to limit its initial commitment in Mozambique

– the company needs help with tax, employment, immigration and payroll compliance in Mozambique

Mozambique

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