What you need to know about the labour law in Mozambique before expanding there

How much will an expansion to Mozambique cost your company? Will the number of workers you employ affect your tax spending dramatically? What allowances do employees expect to receive, even beyond what is legally required?

In this quick guide to Mozambique’s labour law, we equip you with the correct data to inform your decisions and expand into Mozambique confidently:

Why expand to Mozambique?

If expanding to Mozambique sounds effort-intensive at first, the potential growth and profits can prove to be well worth your time and investment.

Mozambique’s key industries and resources

1.      Mining and natural resources

Mozambique houses abundant mineral reserves of coal, aluminium, copper, gold, gemstones, iron, and other minerals such as graphite, titanium, lithium, as well as other rare earth metals. Natural gas fields can also be found there.

2.      Agriculture

It is one of the country’s main economic pillars, employing a significant portion of the population.

3.      Aquaculture & Fishing

Mozambique’s waters house lobster, tuna, mackerel, and anchovies as well as shrimps which are an important export commodity.

4.      Tourism

Mozambique’s natural beauty is attractive to tourists. Beaches, wildlife parks, and cultural attractions all make the country a tourist-worthy destination. This means opportunities for hotels, resorts, and tourism-related businesses.

Mozambique’s Labour Law

Mozambique’s labour law is primarily governed by the Labour Law No. 23/2007, which outlines the rights and obligations of both employers and employees. However, other notable amendments to the law were brought about in 2023. The entirety of the local labour law is enforced by the Ministry of Labour, Employment and Social Security (MITESS). Where francophone African countries tend to side more with workers, Mozambique has Portuguese colonial heritage and rather seeks to balance worker protections with the flexibility businesses need.

All the same, compliance is non-negotiable: violations can result in fines, legal delays, or reputational damage.

1. Employment Contracts in Mozambique

Types of contracts:

• Fixed-term contracts
  This type of contract is allowed under specific circumstances such as temporary projects or seasonal work. However, they must be justified and cannot exceed two years in total, which includes renewals.
• Open-ended or indefinite contracts
  These are the most common contracts and offer employees greater protections.

Probation Period:

• The law allows a probation period of up to 90 days for most roles, or up to 180 days for positions of complexity or trust. Contracts must be written in Portuguese, and should clearly state job responsibilities, compensation, working hours, and other key terms.

The probation period also varies depending on the position:

Mid-level and senior technicians, as well as employees in leadership and management roles, have a probation period of 180 days.

For all other employees, the probation period is 90 days.

2. Working Hours & Overtime in Mozambique

Standard workweek: 8 hours per day, 48 hours per week.

Overtime: Permitted but regulated. Typically paid at a premium rate:

• 50% above normal pay for regular overtime
• 100% for overtime on holidays or weekends

Employees are entitled to at least one full day of rest per week, usually on Sunday.

3. Minimum Wage in Mozambique

In Mozambique, the minimum wage ranges from MZN 4.941,68 to MZN 17.881,32, depending on the sector.

4. Leave & Holidays in Mozambique

Paid Leave:

• Annual leave
  1 day per month of effective service in the first year, and 30 days per year after one full year of service.
• Sick leave
  Employees are entitled to 15 days of paid sick leave per year, allowing for up to 5 non-consecutive days per quarter. If additional time is required, the employee must consult the health board. Social security covers up to 365 days of continuous sick leave for non-occupational illnesses or accidents.
• Maternity leave
  60 consecutive days, fully paid. Employers are prohibited from terminating an employee during pregnancy or maternity leave.
• Paternity leave
  1 day, though additional time may be negotiated.

5. Termination & Severance in Mozambique

Termination must be carried out according to the procedures set by the law, which vary depending on the reason:

• Just cause (misconduct, for example) requires documentation and formal process.
• Redundancy or economic reasons requires MITESS notification and possibly negotiation with unions or employee representatives.

Severance

Employees dismissed without cause may be entitled to severance pay. This typically ranges from 30 to 90 days’ salary, depending on the tenure and circumstances of termination.

To terminate an employee for just cause, the employer is required to issue a written notice to both the employee and the trade union within 30 days of identifying the issue. The employee then has 15 days to reply, while the trade union is given a further 5 days for consultation. Afterwards, the employer has 30 days to reach a decision.

6. Social Security & Payroll Taxes in Mozambique

Both employers and employees must contribute to the National Social Security Institute (INSS):

• Employer: 4% of the employee’s gross salary
• Employee: 3% of gross salary (withheld at source)

Additionally, employers must withhold and remit income tax according to progressive tax brackets set annually by the government.

7. Unionisation & Employee Rights in Mozambique

Mozambique recognises the right to form and join trade unions. Collective bargaining is common in sectors like mining, construction, and public services. Employers must respect collective agreements where applicable.

Hiring expatriate employees come with a level of complexity in Mozambique. Firstly, employers wishing to hire expatriates must navigate Mozambique’s quota system:

• Companies can hire a limited percentage of foreign workers without special approval (usually 5–10% depending on company size).
• Hiring outside the quota requires a work permit and justification based on skill shortage or project needs.

Employer of Record (EOR) in Mozambique – how it helps

Even with these facts about Mozambican labour law in hand, actually managing these requirements in real-time is labour-intensive and requires a greater understanding of how local official systems work in Mozambique. With an EOR partner in Mozambique like Africa HR Solutions, you outsource all these complexities and their associated risks. We take care of employee onboarding, payroll, taxation, and benefits administration so you can focus on making your expansion a success.

Chat with one of our consultants today to find out how we can help you.