MOZAMBIQUE

Compliant HR, Payroll, Immigration & Tax

OVERVIEW

Mozambique, a country in Southeast Africa with a coast on the Indian Ocean, is bordered by Tanzania to the north, Malawi and Zambia to the northwest, Zimbabwe to the west, and Swaziland and South Africa to the southwest. Mozambique existed for almost five centuries as a Portuguese colony until independence in 1975.

Approximately 66% of its population of 28 million (2017) live and work in rural areas. It is endowed with ample arable land, water, energy, as well as mineral resources and newly discovered natural gas offshore; three, deep seaports; and a relatively large potential pool of labour. It is also strategically located; four of the six countries its borders are landlocked, and hence dependent on Mozambique as a conduit to global markets. Mozambique’s strong ties to the region’s economic engine, South Africa, highlights the importance of its economic, political, and social development to the stability and growth of Southern Africa as a whole.

GENERAL INFORMATION

country capital

CAPITAL CITY

Maputo

language

OFFICIAL LANGUAGE

Portuguese

currency

CURRENCY

Mozambican metical (MZN)

dial code

DIALLING CODE

+258

tax calculator

TAX AUTHORITY

Autoridade Tributaria de Mozambique
www.at.gov.mz/eng

tax dates

TAX YEAR

1 January – 31 December

time zones

TIME ZONE

CAT (GMT + 2)

GENERAL INFORMATION

country capital

CAPITAL CITY
Maputo

language

OFFICIAL LANGUAGE
Portuguese

currency

CURRENCY
Mozambican metical (MZN)

dial code

DIALLING CODE
+258

tax calculator

TAX AUTHORITY
Autoridade Tributaria de Mozambique
www.at.gov.mz/eng

tax dates

TAX YEAR
1 January – 31 December

time zones

TIME ZONE
CAT (GMT + 2)

MORE INFORMATION

The country’s main challenges include maintaining the macroeconomic stability considering exposure to commodity price fluctuations and upcoming general elections, and re-establishing confidence through improved economic governance and increased transparency, including the transparent handling of the hidden debt investigation. Moreover, structural reforms are needed in support of the currently struggling private sector.

Another major challenge for the economy is to diversify away from the current focus on capital-intensive projects and low-productivity subsistence agriculture toward a more diverse and competitive economy, all the while strengthening the key drivers of inclusion, such as improved quality education and health service delivery, which could in turn improve social indicators.

Employment contracts with foreign nationals must be in writing and must include:
Identification of the parties;
Duties or activity agreed;
Place of work;
Duration;
Remuneration and method of payment; and
Employment start and end date.

Work permits
Foreign nationals wishing to work in Mozambique are required to obtain a work permit. However, work permits are generally only granted in instances where the employer can prove that the position cannot be filled by any suitable Mozambican applicants. Foreign nationals can mainly either be employed under the ‘quota’ or outside the ‘quota’ system.

Work permit requirements in Mozambique are lengthy and bureaucratic. The employment of foreigners requires approval of the Ministry of Labour. This process can be lengthy; but representation by Employ Africa will help facilitate obtaining a work permit.

Two types of permits exist, namely a Short-Term Work Permit (STWP) and a Long-Term Work Permit (LTWP). With a Short-Term Work Permit, the applicant may work in Mozambique for a maximum of 90 days.

A business visa serves as the de facto Short-Term Work Permit. A business visa is traditionally designed for people traveling to another country to attend meetings, conferences, seminars, corporate events, business prospecting missions, etc. On a business visa to Mozambique one may do to the same.

A Long-Term Work Permit is distinguished between in quota or above quota.

In Quota:

The quota system grants a company permission to employ a certain percentage of foreign nationals. This permission is in the form of a quota, as a percentage of the total number of the workforce. This percentage of foreign nationals allowed depends on the size of the company:

Small companies (1-10 employees): Are allowed a quota of 10% to be foreign staff members.
Medium companies (11-100 employees): May have 8% of their total staff to be compromised of non-Mozambicans.
Large companies (101+ employees): Are granted a quota of 5% of staff to be foreigners.

To obtain the Long-Term Work Permit in quota the applicant will need to follow the multi-step process.

The first step to obtaining a LTWP is to check the number of foreigners employed at the company.

The second step is to obtain a letter of authorisation from the Department of Labour. This letter is confirming that there is still the available quota to satisfy the Department of Labour and their requirements.

Step three is the application for a work visa at a Mozambican embassy. This gives the applicant permission to work in Mozambique.

Above Quota:

When the entity in Mozambique has filled their quota of foreign nationals working at the company, the above quota route must be taken. Mozambican officials will determine whether or not there are sufficient grounds to grant the permit request based on factors such as the sector the applicant has applied to work in, the intention to transfer skills to locals, and the number of local people benefitting from the applicants’ employers project.

Obtaining authorisation from the Department of Labour is far more challenging, time consuming, and less predictable than obtaining an in-quote permit as the application will need to be accompanied by a strong motivation stating why foreign skills are needed. All paperwork such as degrees, transcripts, and a CV of the applicant must be included with the submission.

Tax rates:

Personal income tax is payable by all individuals. Residents of Mozambique are subject to income tax on all their worldwide income earned, while non-residents are liable to income tax only on income earned in Mozambique.

Taxable Income (MZN)

Tax Rate (%)

Flat Rate Rebate

Up to 42,000

10

42,001 – 168,000

15

2,100

168,001 – 504,000

20

10,500

504,001 – 1,512,000

25

25,700

More than 1,512,000

32

141,540

Deductions:

Employees are required to contribute 3% of their gross salary to the Employee Social Security (EE SS). Employers are to contribute 4% of the gross monthly salary of the employee to the Employer Social Security (ER SS).

In certain conditions, national or foreign people aged between 18 and 60, residents in Mozambique, are subject to a personal local tax – Imposto Pessoal Autárquico. This tax is levied at a rate between 1% and 4% on the highest national minimum wage, determined on 30 June of the preceding year

Double taxation agreements:

Mozambique has concluded Double Taxation Agreements (DTA) with the following countries: Portugal, Italy, Mauritius, United Arab Emirates, Special Administrative Region of Macau, South Africa, India, Vietnam and Botswana. 

Employer of Record for Mozambique:

Although an Employer of Record often works with a staffing agency, the two are separate business entities. Each has specific roles and responsibilities in their symbiotic relationship.

Purpose

An employer of record serves as an employer for tax purposes while an employee performs work for the client, such as a staffing firm or other business. An employer of record handles all personnel functions, including payroll processing and funding; tax deposits and filing; and employment contracts and paperwork. Maintaining a Certificate of Insurance, and Verification forms; unemployment insurance; and employees’ compensation are done. An employer of record also performs background checks and drug screenings; administers benefits; terminates employees; and may handle worker issues. Conversely, a staffing firm recruits’ employee and assigns them to businesses for worker absences, temporary skill shortages, seasonal work, or special projects. Their focus is to match temporary, temp-to-hire, long-term, or permanent employees with clients in need.

Benefits

Using an employer of record allows the client company to free up time and cost-effectively outsource its necessary human resource functions, employee benefits, payroll, employees’ compensation, and compliance issues. The money saved by outsourcing these functions can be used to expand the business, provide steady income for the owner, or fill a variety of other purposes. Onboarding quality talent is done quickly by an employer of record so clients can quickly ramp up staff and staffing agencies can deliver top quality employees to their clients. Most staffing agency owners don’t have the HR training, payroll and accounting skills, compliance knowledge, or risk management, insurance, and employee benefits background to meet the demands of being an employer.

Responsibilities and Liabilities

The client company or staffing agency owner retains control over business operations and responsibility for workplace safety and compliance. The employer of record assumes responsibilities and liabilities for employment issues such as administration, payroll, taxes, benefits, and maintaining employee records. Because the employer of record assumes most of the responsibility for compliance and tax laws, the client or staffing services owner receives peace of mind, knowing their business is being taken care of by qualified professionals.

Whereas an employer of record and staffing agency often work together, they have diverse purposes in the workplace.

Foreign employees will only be employed when there are no nationals with the same mandatory academic or vocational qualifications and where there are no nationals having the same qualifications, or where such nationals are insufficient in number.

Within the framework of the rules and principles of international law and in compliance with the reciprocity provisions agreed to between Mozambique and any other country Foreigners performing occupational activities in Mozambique shall have the right to equal treatment and opportunities in relation to Mozambican employees.

Contracts:

Employment contracts should be in writing, be dated and signed by both the employer and the employee and contain the following clauses:

  • identification of the employer and the employee;
  • occupational grade, duties or activities agreed on;
  • place of work;
  • the duration of the contract and conditions for renewal;
  • amount, form and timing of wage payments;
  • date when performance of the contract begins;
  • term of the contract and the grounds justifying it, if it is a fixed
    term contract;
  • Date of signature of the contract, and its termination date if it is a fixed
    term contract.

Fixed-term contracts
Fixed-term employment contracts may only be entered for the performance of temporary duties, for as long as is strictly necessary for this purpose.

  • The following, among others, are temporary needs:
  • the replacement of employees who, for whatever reason, are temporarily unable to perform their duties;
  • the performance of duties aimed at responding to an exceptional or unusual increase in production, and the performance of seasonal work;
  • the performance of duties that are not aimed at meeting permanent needs of the employer;
  • The performance of a single piece of work, a project or other specific, temporary activity, including the performance, direction and supervision of civil construction works, public works and industrial repairs on a works-contract basis;
  • the provision of services in activities that are incidental to those referred to in the preceding paragraph, namely, subcontracting and tertiarization of services;
  • the performance of non-permanent activities.

Duration of the employment contract
Employment contracts may be permanent, or they may be entered for a fixed term or an unspecified term.
Employment contracts of which a duration is not indicated are presumed to be permanent, although the employer may rebut this presumption by giving evidence of the temporary or transient nature of the duties and/ or activities to which the contract pertains.

Restrictions on fixed term contracts

  • Fixed term contracts may be entered into for a period of up to two years, and this period may be renewed twice by agreement between the parties, without prejudice to the small and medium-sized enterprises rules.
  • A fixed term employment contract shall be considered a permanent contract if it exceeds the maximum periods of duration or the number of renewals permitted under the preceding paragraph, provided for in paragraph 4 of this article.
  • Small and medium-sized enterprises are free to enter into fixed term contracts during their first ten years of activity.
  • Where a fixed term contract is entered into outside the cases specifically contemplated in herein, or in breach of the limits set down in the provisions of this article, the employee shall be entitled to compensation.

Renewal of fixed term contracts

  • Fixed term employment contracts shall be renewed, at the end of the term agreed upon, for such period as the parties have expressly stated in the contract.
  • In the absence of the express statement referred to in the preceding paragraph, fixed term employment contracts shall be renewed for the same period as the original term, unless there is a contractual stipulation to the contrary.
  • A fixed term employment contract whose original term is renewed pursuant to paragraph 1 above shall be considered as a single contract.

Unspecified term contracts

Contracts for an unspecified term shall only be allowed where it is not possible to predict, with certainty, the period within which the reasons justifying the term, namely, the situations referred to in article 40(2) herein, will cease.

Denunciation of unspecified term contracts

  • For the denunciation referred to in the following paragraph to take effect, the notice period to which the denunciation is subject must have expired and, in any case, there must have occurred an event to which the parties have attributed extinctive effect.
  • Denunciation refers to termination of an employment contract by one party giving notice to the other that he does not wish to continue the employment relationship. The translator has elected to use “denunciation” instead of “termination” or “notice of termination”, in order to distinguish it from the other forms of termination listed in article 124.
  • An employee employed for an unspecified term shall be considered as employed permanently if he or she continues in the employer’s service after the date when the denunciation takes effect. Where there is no denunciation, the employee shall also be considered as a permanent employee if he or she continues in the employer’s service seven days after the return of the employee whom he or she was substituting, or after termination of the contract by completion of the activity, service, work or project for which the employee was hired.

Probationary periods

A probationary period is the initial period of execution of an employment contract, and its duration shall follow the rules laid down in the following article.
the parties shall, during the probation period act in such a way as to enable them to adjust and become acquainted with each other, in order to evaluate their interest in maintaining the employment contract.

Duration of probationary periods

Permanent employment contracts may be made subject to probationary periods that do not exceed:
90 days for employees not included in the following subparagraph;
180 days for intermediate and higher-level technicians, and employees who hold leadership and management positions.
Term employment contracts may be made subject to probationary periods that do not exceed:
90 days for fixed term contracts for longer than one-year, which period shall be reduced to thirty days in the case of contracts for a term of between six months and one year;
15 days for fixed term contracts for up to six months;
15 days for unspecified term contracts, when the term is expected to be ninety days or more.

Reduction or exclusion of probationary period

The probationary period duration may be reduced by collective labour regulation instruments or by individual employment contracts.
In the absence of a stipulation in writing as to the probationary period, it is presumed that the parties intended to exclude such period from the employment contract.

Running of the probationary period

The probationary period shall run from the beginning of the execution of the employment contract.
During the probationary period, days of absence, including justified absence, licence or leave, as well as days of contract suspension, shall not be considered for the purposes of the employee’s performance assessment, without prejudice to his or her rights to remuneration, length of service and holidays.

Denunciation during the probationary period

Either of the parties may during the probation period, denounce the contract without having to show just cause and without any right to compensation, save as agreed otherwise.

For the purposes of the preceding paragraph, either contracting party is obliged to give a minimum of seven days’ advance notice in writing to the other party.

Normal working hours

Normal working hours are the number of hours of actual work that the employee undertakes to perform for the employer.
Time of actual work is the time during which the employee is effectively performing services for the employer or is at the disposal of the employer.

Limits on normal working hours

Normal working hours should not exceed forty-eight hours per week and eight hours per day.

Without prejudice to the provisions of the preceding paragraph, the normal daily working hours may be extended to nine hours per day, provided that the employee is given an extra half day of rest per week, over and above the weekly day of rest prescribed by article 95 hereof.

Under collective labour regulation instruments, normal daily working hours may be increased in exceptional cases by up to a maximum of four hours, provided the weekly working time shall not exceed fifty-six hours. Only exceptional work and overtime performed for reasons of force majeure shall not count towards this limit.

The average weekly working time of forty-eight hours shall be calculated using a reference period not exceeding six months.

When calculating the average weekly working time mentioned in the preceding paragraph, the hours that an employee has worked previously may be offset by reductions in the employee’s daily or weekly work schedule.

Establishments engaged in industrial activity, except for those that work shifts, may adopt a normal working week of forty-five hours, spread out over five days in the week.

All establishments, except those whose services or activities are directed at meeting the essential needs of society referred to in article 205 hereof, and those which sell to the public, can for economic or other reasons, adopt a single, uninterrupted work schedule.

Employers shall inform the nearest office of the ministry in charge of labour about the implementation of new working hours, by the 15th day of the month following the month in which they are introduced, in accordance with the rules established in this law and other legislation on the matter.

Increases/reductions in the maximum limits on normal working hours

The maximum limits on normal working hours may be extended for employees whose duties are highly intermittent or consist of the mere presence of the employee, as well as for preparatory or ancillary work that must be performed outside normal working hours for technical reasons, without prejudice to the periods of rest prescribed by this law.

The maximum limits on normal working hours may be reduced whenever an increase in productivity permits and, provided there is no inconvenience of an economic or social nature, when priority is given to work involving greater physical or intellectual fatigue or increased risks to the health of employees.

Without prejudice to the provisions of the preceding paragraph, increases or reductions in the maximum limits on normal working hours may be established by a Government diploma on the recommendation of the minister in charge of labour and the minister that oversees the sector of activity in question, or by collective labour regulation instruments.

The increases or reductions referred to in the preceding paragraphs must not cause any economic disadvantage to the employee or unfavourable changes in his or her working conditions.

Schedule of working hours

The working hours schedule consists of the times established for the commencement and the end of the normal working day, including rest periods.

Employers shall, after prior consultation with the relevant trade union body, establish a working hours schedule for their employees. The respective timetables shall be endorsed by the relevant labour administration office and shall be displayed at a visible location in the workplace.

In establishing working hours schedules, employers are restricted by the legal or contractual limits on normal working hours and by the business hours of the enterprise.

To the extent that the requirements of the production process or the nature of the services provided so permit, employers shall establish a working hours schedule that is compatible with the interests of employees, particularly those who attend school or vocational training courses or whose working capacity is impaired.

The following employees may be exempt from the working hours schedule:

  • those in leadership or management positions, or positions of trust or supervision;
  • those whose duties are such that the performance thereof justifies such a regime.

Intervals

The normal working day shall be interrupted by an interval of at least half an hour, but not longer than two hours, without prejudice to work performed in shifts.

Collective regulation instruments may establish rest intervals of greater duration and frequency than those provided for in the preceding paragraph.

Where the work schedule is a single uninterrupted shift, an interval of at least half an hour shall be mandatory, and this interval shall be counted as actual working time.

Exceptional Work

Work which is performed on a weekly rest day, extra rest day or public holiday is considered exceptional work.

Employees may not refuse to perform exceptional work in cases of force majeure or foreseeable harm to the national economy, in the event of an accident that has occurred or is imminent or to carry out urgent and unforeseen work on machinery and materials needed for the normal functioning of the enterprise or establishment.

Employers must keep a register of exceptional work, in which relevant notes shall be recorded before the exceptional work begins and after it ends, and the reasons for the exceptional work shall be expressly stated and confirmed by the employee who performed it.

An employee who has performed exceptional work on a weekly rest day, additional rest day or public holiday shall be entitled to a compensatory full day of rest on one of the following three days, unless the exceptional work does not exceed five consecutive or intermittent hours, in which case the employee shall be compensated with a half day of rest.

Overtime

Work performed over and above the normal daily working hours is considered overtime.
Overtime may be performed only:

  • when employers are faced with workload increases that do not justify the admission of employees under term contracts or permanent contracts;
  • when there are material reasons.

Each employee may perform up to ninety-six hours of overtime per quarter, but no employee shall perform more than eight hours of overtime per week nor exceed two hundred hours per year.

In all cases, employers shall keep a register of overtime in a specific book.

Night work

  • Night work is work performed between eight o’clock at night and the time when normal working hours begin on the following day, except for shift work, which is provided for in the following article.
  • Collective regulation instruments may consider as night work, work performed during seven of the nine hours between eight o’clock at night and five o’clock in the morning of the following day.

Shift work
In enterprises where work is continuous and in those whose business hours are longer than the maximum limits on normal working hours, employers shall arrange shifts of different staff.

The length of each shift may not exceed the maximum limits on normal working hours established in this law.

Shifts shall always function in rotation, so that employees are replaced successively in regular periods of work.
Shifts performed where work is continuous and shifts of employees whose work cannot, because of its nature, be interrupted shall be arranged so that employees receive a compensatory rest period over and above the normal weekly rest period.

Annual Leave

Employees shall be entitled to the following periods of paid annual leave:

  1. One day for every month of actual service, during the first year of service;
  2. Two days for every month of actual service, during the second year of service;
  3. Thirty days for every year of actual service, from the third year onwards.

Marriage Leave

(5) Five days, for marriage;

Family Responsibility

(5) Five days, for the death of the employee’s spouse, father, mother, children, step
children, siblings, grandparents, stepfather or stepmother;

(2) Two days, for the death of the employee’s parents-in-law, uncles, aunts, cousins,
nieces, nephews, grandchildren, sons-in-law, daughters-in-law, brothers-in-law and
sisters-in-law;

A male employee qualifies for 1 day every 2 years for a birth of his child.

Maternity Leave

Mozambican women who have children and intend to enjoy the 90 days of maternity leave foreseen by law will only receive maternity allowance for 60 days, according to the new Regulation -Mandatory Social Security.

However, Mozambican women workers who decide to invoke this right will only receive maternity pay for 60 of these 90 days, since paragraph 2 of Article 27 of Decree 51/2017, of October 9, states that “Maternity allowance corresponds to sixty days of leave”.

A maternity allowance is granted to the worker at the time of delivery provided that she has a guarantee period of twelve consecutive months or interpolated contributions over the eighteen months reports as soon as possible, preceding the date of the event,” paragraph number 1 of Article 27 establishes.

  • A female employee may for 1 year interrupt her daily work in order to breastfeed the child for 2 x 30 min or 1 hour no loss of remuneration
  • May not be dismissed 1 year after birth
  • Should a female employee who has given birth be absent for up to 30 days to take care of minor in cases of accident/illness – just not remunerated
  • 60 days maternity for full term/prem/stillbirth
  • Should a Female employee be hospitalised Maternity leave is suspended
  • Clinical risk entitled to leave not ML

Sick Leave

Employees are 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.

Unjustified absence

Should an employee be away from work for 15 days and more it will result in loss of pay

Unpaid leave will be granted after authorisation

IOD

Workman’s Compensation

Cover against liability for work accident compensation

Mozambican businesses, by law must provide compensation to all employees in the event of a workplace accident and our Workman’s Compensation policy provides the required protection for your permanent, independent and voluntary workers, as well as apprentices, probationers and trainees.

Employee benefits which are inclusive of Workman’s Compensation cover for death, as well as permanent, partial or temporary disability, in the event of an accident that:

  • Caused the injury or disease to an employee while they are at work
  • Occurs while workers are being transported to or from the workplace, or in any vehicle that is owned by the business
  • Happen outside of work hours, if the workers reside at the workplace

Stipulated pension pay-outs and employee benefits will be provided to the insured, or the insured’s spouse – if the resulting widowhood continues. Under specific circumstances we will adjust pension pay-outs if the degree of disability changes drastically after the pension has been set up.

  • An employee is entitled to an advance for 1-month salary to the employee pension

Official Holidays:

1 January – New Year’s Day

3 February – Heroes’ Day

7 April – Mozambican Women’s Day

1 May – Employees’ Day

25 June – Independence Day

7 September -Victory Day

25 September – Armed Forces and Revolution Day

4 October – Peace and Reconciliation Day

10 November – Maputo City Anniversary

5 December – National Family Day