Expanding your business into Mozambique’s diverse and thriving economy offers a variety of benefits. Industries like mining and natural gas, agriculture, and tourism are booming, and reduced corporate taxes in certain sectors are currently in place to stimulate economic growth.

With its strong position along the Indian ocean as a trade hub in southeastern Africa, Mozambique presents an incredible opportunity for businesses looking to grow in this region.

Why Expand Your Business to Mozambique

Strategic Advantages of the Mozambique Market

The Mozambican market offers investors strong opportunities due to the country’s wealth of natural resources as well as its other emerging industries. The extractive sector alone accounts for about 42% of the country’s GDP as of 2023, but the agricultural industry currently employs about 70% of the population and contributes about 26% of the country’s GDP.

A large portion of the workforce is also involved in the informal sector, meaning that there is a significant pool of talent to draw from that may be attracted to more formalized and protected employment. 

Additionally, Mozambique is strategically located with 2,700 kilometers of Indian Ocean coastline that serves as a gateway for trade in southeast Africa. Of the six countries that border Mozambique (Tanzania, Malawi, Zambia, Zimbabwe, South Africa, and Eswatini), four are landlocked and depend on Mozambique to access global trade markets.

Importance of Being Aware of Mozambican Labor Laws

It is crucial to understand and comply with Mozambican labor laws when you are hiring employees in this nation. Mozambique recently introduced a new labor code (Law No. 13/2023), which codifies additional protections to the workforce, including new maternity leave protections, regulations on employee privacy, and stricter sanctions against harassment. 

Being aware of these legal requirements is essential for anyone hoping to avoid potential legal problems and build a positive reputation as an employer in Mozambique. Vetting your current employment practices against these new regulations is a good place to start.

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Step 1: Define Your Hiring Needs

Before you begin the hiring process in Mozambique, it’s important to clearly delineate the roles you need to fill. What skills do these roles require? How many employees will you need? What specific qualifications and experience are relevant or necessary for each distinct position?

Determining these criteria in advance will help with your efforts to recruit employees in Mozambique. You’ll be better equipped to find the right candidates and ensure that the roles you are hiring for correspond with your organization’s overall goals in Mozambique. You’ll also want to think about the long-term objectives of your business’ expansion into Mozambique.

Are you hoping to establish a small team tasked with managing local operations, or are you looking to initiate a larger-scale hiring process? Knowing the answers to these questions will help guide your Mozambican recruitment strategy.

Step 2: Understand Compliance Requirements

Understanding the labor laws, tax obligations, and mandatory benefits offered in Mozambique is essential. Workers in Mozambique are entitled to protections regarding working hours, overtime compensation, paid leave, social security, and minimum wage.

Social security contributions are shared between the employee and employer, who pay 3% and 4% of their annual pay/payroll, respectively. Residents in Mozambique are taxed on their worldwide income. All individual income is subject to individual tax rates, which range from 10% to 32% depending on the person’s income bracket.

Typically, companies in Mozambique are responsible for withholding the taxes from an individual’s paycheck and remitting them to the Mozambican tax authorities.

Step 3: Choose Your Hiring Method

The next step in hiring employees in Mozambique involves deciding on the best hiring method for your needs. Will you establish a legal entity in Mozambique, use an Employer of Record (EOR), or hire independent contractors? Each option comes with pros and cons.

Establishing a Legal Entity

Establishing a legal entity in Mozambique, such as a Limited Liability Company (LDA) or Public Limited Company (SA), allows you the most control over your operations and employees in Mozambique. However, it can be a lengthy and effortful process, and filing fees can be pricey.

Using an Employer of Record (EOR)

Utilizing an Employer of Record in Mozambique can help you simplify the process of bringing your business to Southeast Africa without establishing a legal entity – which can lead to time and cost savings.

The EOR acts as the legal employer of your Mozambican workforce and handles issues like compliance, onboarding, and administrative management. Plus, you can gain better access to a wider pool of local talent in Mozambique by working with an EOR that is experienced in the region.

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Hiring Independent Contractors

Independent contractors are typically treated as self-employed individuals in Mozambique under the country’s Civil Code. Employment contracts for independent contractors, like all employment contracts in Mozambique, must be in writing and signed by both participants.

Hiring foreign independent contractors in Mozambique can be more difficult and requires a work permit for engagements exceeding 90 days.

Step 4: Develop a Recruitment Strategy

The next question to ask yourself is, how am I going to find the right talent for this job? To begin with, you need to write an effective job description that is aligned with local market expectations. It’s ideal to post your job description in both English and Portuguese, which is the official language of Mozambique. You’ll also want to make sure the job description aligns with local anti-discrimination codes. 

In order to get your job description in front of potential employees, utilize popular local job boards and sites. In Mozambique, the Biscate app is popular and accessible to many local users. Additionally, Emprego.co.mz is a commonly used job search platform. You can also try attending local job fairs and events to meet prospective employees.

Our best tip? Work with a Mozambican recruitment agency or partner with an EOR experienced in Mozambique. These organizations have the local expertise you need to find candidates who are perfect for your unique roles. An experienced EOR can also help you navigate expectations on standard salaries, employment trends, and benefits that will attract potential employees in Mozambique. 

Step 5: Conduct Interviews and Assessments

Once you have identified some potential candidates for your position, you’ll want to conduct interviews that adhere to cultural norms. Mozambicans highly value politeness and indirect communication that demonstrates respect.

There is an emphasis on taking pride in African heritage and showing that you have some knowledge and appreciation of Mozambican culture. You will want to make sure that you structure interviews appropriately and assess candidates fairly.

Additionally, including written or practical assessments can help you better evaluate a candidate’s readiness to hit the ground running in their new position.

Step 6: Perform Background Checks

Conducting background checks on potential employees in Mozambique is permissible, but it is not a requirement.

It is up to you to choose whether or not you want to conduct a background check on your candidates for a job – benefits of doing a background check include ensuring safety and security in the workplace, verifying the authenticity of the applicant’s resume and information, and simply demonstrating due diligence during the hiring process. 

To conduct a background check in Mozambique, you must gain written permission from the candidate. Some of the typical types of background checks you can do include verifying employment history, checking references, and checking for a criminal record.

To check a person’s criminal record, you’ll need to obtain the person’s Mozambique Police Clearance Certificate, also known as a Criminal Record Certificate.

Step 7: Draft Employment Contracts

All employment contracts in Mozambique are required to be in writing, unless that contract is for a fixed-term position that will last less than 90 days. Per the Mozambican Civil Code, these contracts must include:

  • Names of both parties and their identities (i.e. type of business)
  • Nature of the job and duties to be performed, including working hours and employment type (fixed-term, specific-purpose, temporary, permanent)
  • Remuneration, or the fee/salary to be paid 
  • Place of work
  • Date of commencement
  • Other terms and conditions such as leave entitlements, notice periods, and more

These contracts must then be signed and dated by both parties. The terms and conditions of the contract cannot violate other existing Mozambican laws, including workforce protections such as sick leave, maternity leave, etc.

Working with a Mozambican EOR can help you ensure that your contracts are legally sound and meet all of the regulatory requirements.

Step 8: Register with Authorities and Set Up Payroll

Before any of your employees begin work, it’s important to complete a few registration steps with the Mozambican authorities. You already incorporated your company in Mozambique or chose another way to hire in Step 3, but now you need to.

  • Register with the Mozambican tax authority in order to obtain a Tax ID Number
  • Obtain any necessary licensure for your business
  • Register your employees with the Labour Directorate and Social Security

When you’re setting up a payroll system, make sure it is compliant with your responsibility to withhold taxes and remit those payments to the Mozambican tax collection agency. You also need to ensure that you are correctly handling social security contributions, which should be 4% from the company and 3% from the employee.

If you need assistance with payroll compliance in Mozambique, consider an outsourced payroll solution.

Step 9: Onboard Your New Employees

Onboarding your new employees effectively will help them smoothly integrate into your company’s unique culture. Forbes reports that a strong onboarding strategy will increase employee engagement and retention rates, which will in turn impact customer satisfaction.

With that in mind, it’s crucial to design an onboarding process that includes the following:

  • Provide the necessary training and resources
  • Introduce the new team member to peers and key stakeholders
  • Explain company policies, procedures, and expectations
  • Immerse the new hire in the company culture and discuss company values
  • Set clear objectives and goals for the new hire’s role

Understanding the Mozambican Employment Landscape

The Mozambican Civil Code Law on Labour

Mozambique approved a new labor law that took effect in February 2024: Law No. 13/2023. This law added new protections for the workforce and modernized previous regulations to touch on issues like teleworking.

It essentially repealed the prior labor code, replacing it with updated requirements meant to fit the modern era. It’s crucial to ensure any hiring in Mozambique complies with this law.

Social Security Regulations

Mozambique implements a compulsory social security system that covers both traditionally employed and self-employed individuals. The benefits include old-age pensions, sick leave, and maternity benefits. Recent revisions include paternity leave benefits.

Mozambique’s social security system includes both social insurance for workers (INSS) and social assistance for vulnerable populations (PSSB). Both employers and employees pay into the program, at rates of 4% and 3%, respectively.

Types of Employment Contracts

Understanding the different types of employment contracts in Mozambique is important when hiring in the country.

Permanent Employment Contracts

Permanent contracts are the most common type of employment in Mozambique. These offer ongoing employment without a fixed end date, and they provide employees with a sense of security and stability in their income.

Fixed-Term Employment Contracts

These are temporary contracts with a defined duration. They are used for work with a defined end date, and typically can last for up to 90 days. Fixed-term contracts are often used if a company is trying to cover an employee who is out on sick or maternity leave, or if an organization needs extra hands working on a specific project.

Unfixed-Term Employment Contracts

These are permissible only when it is not possible to predict the end date of the engagement, within reasonable justification. Unfixed-term employment contracts are sometimes used for intermittent or seasonal employment.

Working Hours and Overtime

Standard Working Hours

Regular working hours in Mozambique are 48 hours per week and 8 hours per day, making for a six-day workweek. For minors between the ages of 15 and 18, maximum working hours are 25 hours per week and are limited to 5 hours per day.

Overtime Regulations

According to Mozambican labor laws, a maximum of 200 overtime hours is allowed per year. Compensation for overtime clocks in at an additional 50% extra per hour until 8 p.m. and an additional 100% of wages every hour thereafter.

Leave Entitlements

In order to comply with Mozambican employment law, it is paramount to provide the appropriate leave entitlements to your employees.

Annual Leave

Annual leave given in Mozambique is 12 calendar days for the first year of employment with an organization and 30 days per year thereafter.

Sick Leave

Employees in Mozambique are entitled to 15 days of paid sick leave (or five nonconsecutive days per quarter) that is covered by the employer.

If there are extenuating circumstances, an additional paid sick leave request can be filed with the country’s health board, which then may be covered by Social Security (INSS) for up to 365 days of continuous paid sick leave.

Maternity and Paternity Leave

Recent changes in Mozambican labor laws increased maternity leave from 60 days to 90 days. The first 60 days are paid for by the country’s social security program, and the remaining 30 days are unpaid – however, job security is guaranteed.

Paternity leave was expanded to seven days of unpaid leave within an 18-month period following the birth of the child.

Termination and Severance

Notice Periods

Advance notice is required in Mozambique for terminating an employment contract, although no notice is required for dismissal due to “gross misconduct.” If an employee is being terminated due to “just causes” regarding the person’s performance, seven days of notice is required.

For layoffs or cases in which “just causes” cannot be demonstrated, the notice period depends on the length of employment: 

  • Permanent employment, 6 months to 3 years – 15 days notice
  • Permanent or fixed-term employment, 3+ years – 30 days

Severance Pay

If dismissal is deemed lawful, severance pay is not required. If the dismissal is found to be unlawful, then the Labour Law states that severance pay will be remitted based on the amount that the person makes as compared with the country’s minimum wage.

Mandatory Contributions

Social Security and Pension Contributions

In Mozambique, both employers and employees contribute to the social security system (INSS). Employers are responsible for withholding the employee’s share, which amounts to 3% of the employee’s salary. The employer then contributes an additional 4% of the employee’s salary and remits the total contribution to the INSS authorities. 

The pension regime in Mozambique is included in this social security scheme and is therefore not subject to separate registration requirements.

13th Month Pay

Paying a 13th-month bonus (an additional month’s salary usually offered in December as an end-of-year or Christmas bonus) is a mandatory practice in Mozambique for full-time, permanent employees. For fixed-term or temporary employees, this is not required.

Optional Benefits

In addition to providing the guaranteed benefits in Mozambique (which include social security contributions and leave entitlements), adding supplemental benefits can help your company boost employee retention and attract skilled talent to your workforce. 

One optional benefit in Mozambique is healthcare. Employers may choose to provide a healthcare plan or offer a stipend for their employees to find their own plan. While not required, healthcare is a common benefit in Mozambique – only 14% of companies do not offer it.

How to Hire Employees in Mozambique — Our Take

When you are hiring employees in Mozambique – or any foreign country, for that matter – you will have to work with a complex set of legal requirements, including labor laws, mandatory contributions, and employee protections set in stone by civic codes.

Being familiar with these regulations and ensuring you are complying with the country’s legal considerations is crucial for avoiding lawsuits and building a positive reputation in Mozambique. 

If juggling these requirements on your own sounds daunting, working with an Employer of Record (EOR) in Mozambique can simplify the process, saving you time, money, and effort.