Employment Regulations
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 Factors to Consider When Employing 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.
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
Statutory 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.
Medical Leave
There is no mandated medical leave under the law.
Annual Leave Accrual Entitlement
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.
Maternity Leave in Mozambique
Mozambican female employees are entitled to fully-paid maternity leave of up to 60 days.
Probation Period
Probationary periods may not exceed the following statutory limits:
The trial period has the following maximum duration:
- Term employment contract – 90 days for fixed-term contracts lasting more than one year; 30 days, for fixed-term contracts lasting between six months and one year; 15 days for fixed-term contracts lasting up to six months; and 15 days for unfixed-term contracts whose expected duration is equal to or greater than 90 days;
- Permanent employment contract – 180 days for mid-level and senior technicians and employees engaged in leadership and management positions jobs, and 90 days for employees as a whole.
Either party can terminate an employment contract at will during the probationary period, provided that he or she gives advance notice of at least seven days.
If the duration of the trial period is not set out in writing in the employment contract, it is presumed that the parties wished to exclude it.
Pension Requirements
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 (Act 4/2007 of February 7 and Decree 53/2007 of December 3).
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.
The current contribution rate is 7% [4% (employer) and 3% (employee)].
