Employer of Record in Mozambique

Expanding your business into Mozambique in 2025 offers access to a growing market and diverse talent pool. When considering hiring employees in Mozambique, understanding the local employment landscape is crucial to ensure compliance and operational efficiency. Companies typically have a few primary routes to legally engage local talent, each with distinct implications for compliance, cost, and time-to-market.

Here are the common options for hiring employees in Mozambique:

• Establishing a local entity: This involves setting up a subsidiary, branch, or representative office in Mozambique. While it grants full operational control, it is a complex and time-consuming process involving legal registration, tax setup, and ongoing administrative overhead.
• Utilizing an Employer of Record (EOR): An EOR, such as Rivermate, acts as the legal employer for your workforce in Mozambique. This allows your company to onboard employees quickly and compliantly without needing a local entity.
• Hiring independent contractors: This option offers flexibility but carries significant risks if the relationship is later deemed an employment relationship by Mozambican authorities, potentially leading to substantial penalties and back-pay obligations.

How an EOR Works in Mozambique

An Employer of Record simplifies global expansion by handling the complexities of local employment on your behalf. In Mozambique, an EOR takes on the responsibilities of the legal employer, while you retain full control over your employees' day-to-day tasks and management.

An EOR in Mozambique typically takes care of:

• Legal employment: Serving as the legal employer for your staff, ensuring all contracts and practices align with Mozambican labor laws.
• Payroll processing: Managing salary disbursements, withholding, and remitting local income taxes, social security contributions, and other statutory deductions.
• Compliance: Ensuring adherence to all local employment regulations, including termination laws, severance, and working hour stipulations.
• Benefits administration: Administering locally compliant benefits packages, which may include health insurance, pension schemes, and other mandatory or customary benefits.
• HR support: Providing ongoing human resources and legal guidance related to employment in Mozambique.

Benefits for Companies Hiring in Mozambique

Partnering with an EOR offers several strategic advantages for businesses looking to tap into the Mozambican market without establishing a local entity.

• Speed to market: Onboard employees in Mozambique within days or weeks, rather than the months typically required to establish a local legal entity.
• Reduced risk: Mitigate compliance risks associated with navigating complex Mozambican labor laws, tax regulations, and social security obligations.
• Cost efficiency: Avoid the significant upfront and ongoing costs of entity registration, maintenance, and local HR and legal staff.
• Focus on core business: Free up internal resources by offloading administrative burdens, allowing your team to concentrate on strategic initiatives and growth.
• Access to talent: Instantly hire top talent across Mozambique, regardless of your company's physical presence, expanding your talent pool globally.

Rivermate's transparent pricing model eliminates complexity with a single, competitive monthly fee per employee. Unlike traditional PEO providers, our pricing in Mozambique includes comprehensive HR support, benefits administration, compliance management, and access to our proprietary dashboard for real-time workforce analytics. No hidden costs, no setup fees—just straightforward pricing that scales with your business needs while ensuring full legal compliance in Mozambique.

Employers in Mozambique must contribute 4% of each employee's gross salary to the National Social Security Institute (INSS), with employees contributing an additional 3%. They are also responsible for withholding and remitting income tax (IRPS) based on progressive rates for 2025, which range from 0% for incomes up to 22,500 MZN to 32% for incomes above 2,500,000 MZN. Additionally, employers must withhold and remit professional tax (IRPS) on behalf of employees.

Tax compliance requires remitting withheld taxes and social security contributions by the 20th of the following month, with annual reconciliation due in February. Employers must maintain payroll records for audits. Employees can reduce taxable income through deductions for social security contributions, dependents, healthcare, and education expenses. Foreign workers residing over 183 days are taxed on worldwide income, and foreign companies may face corporate tax obligations if they establish a permanent presence.

Mozambique's salary landscape varies by industry, role, and location, with higher compensation in sectors like mining, oil and gas, and finance. Typical annual salaries range from 600,000 MZN for accountants to 3,000,000 MZN for project managers, with Maputo generally offering higher pay. Minimum wages are sector-specific, for example, 6,500 MZN/month in agriculture and up to 12,000 MZN/month in financial services, and employers must ensure compliance.

Additional benefits commonly include a 13th-month salary, performance bonuses, transportation, housing, meal, and education allowances, which are often contractually specified. Salaries are paid monthly via bank transfer, cash, or mobile money, with tax and social security deductions mandatory. Salary trends indicate rising wages driven by economic growth, inflation, and increased demand for skilled labor, especially in technology and energy sectors, suggesting ongoing upward salary pressure for high-demand roles.

Mozambique's labor law guarantees employees at least 30 days of paid annual leave, which can be taken continuously or in parts upon mutual agreement. Public holidays, such as New Year's Day, Heroes' Day, and Independence Day, are paid days off, with specific dates listed below:

Sick leave is paid based on duration: full salary for up to 30 days, half salary from 31 to 90 days, and no pay beyond 90 days. Maternity leave lasts 60 days with full pay, while paternity leave is one day paid. Adoption leave mirrors maternity benefits. Additional leave types include bereavement, study, and sabbatical leave, with policies varying by employer.

Mozambique's labor law mandates key employee benefits, including a minimum wage (sector-dependent), social security contributions (employer 4%, employee 3%), paid annual leave (~30 days), public holidays, maternity leave (60 days pre- and post-delivery with partial salary), sick leave (with medical certification), and severance pay upon termination. Employers must comply with these minimum standards to ensure worker welfare.

Many employers enhance their packages with optional benefits such as private health insurance, life insurance, supplementary pension plans, housing and transportation allowances, meal subsidies, education assistance, and performance bonuses. Private health insurance is increasingly expected, especially in urban areas, with coverage typically including medical consultations, hospital stays, and prescriptions. Supplementary pension plans, either defined contribution or benefit, are valued for retirement savings, often offering tax advantages.

Benefit offerings vary by company size and industry, with large multinationals providing comprehensive packages (health, life, pensions, allowances), while SMEs tend to focus on mandatory benefits with limited extras. Industry and location influence benefit competitiveness, especially in sectors like mining or urban centers.

Employment agreements in Mozambique are essential for establishing clear legal employment relationships, outlining rights, responsibilities, and obligations of both parties. They must comply with specific legal requirements, including essential clauses, probation periods, and termination procedures, to be valid and enforceable. Properly drafted contracts help prevent disputes and promote workforce stability.

Mozambique recognizes two main contract types: fixed-term and indefinite-term. Fixed-term contracts have specified durations and can be renewed within legal limits, suitable for temporary needs. Indefinite contracts offer ongoing employment until legally terminated, providing greater job security.

Employment contracts must include essential clauses such as job description, salary, working hours, probation period, and termination procedures. These provisions ensure compliance and protect both parties' rights.

Mozambique is progressively adopting remote work, driven by technological improvements and the desire to attract talent and reduce costs. Although there is no specific remote work legislation, existing labor laws apply, requiring clear employment contracts, adherence to working hours, health and safety responsibilities, and compliance with social security and tax obligations for remote employees.

Flexible arrangements available include telecommuting, flextime, compressed workweeks, job sharing, and part-time work, allowing employers to tailor options to their needs. Key considerations for employers involve defining terms in contracts, ensuring health and safety, and managing legal compliance.

In Mozambique, employment termination must follow strict legal procedures outlined in the Labour Law, including specific notice periods, severance pay calculations, and justified grounds for dismissal. For indefinite contracts, notice periods depend on the employee's length of service: up to 6 months (15 days), 6 months to less than 1 year (30 days), 1 to less than 5 years (45 days), and 5 or more years (60 days). Severance pay is calculated as 20 days' salary per full year of service, plus proportional amounts for incomplete years, along with outstanding salary, benefits, accrued vacation, and possibly a proportional 13th-month salary.

Termination can be with or without just cause, with different entitlements and procedural steps. Just cause includes misconduct such as theft or insubordination, where the employee is entitled only to outstanding benefits, while without just cause, employees are eligible for severance pay and other entitlements. Employers must provide written notice, justify the grounds if applicable, allow employee response, and ensure proper documentation and final payments to avoid legal challenges. Employees are protected against wrongful dismissal, with legal recourse including reinstatement or compensation, especially in cases of unfair or discriminatory termination.

Mozambique's economy is witnessing a rise in freelancing and independent contracting, aligning with global trends towards flexible work arrangements. This shift allows businesses to access specialized skills without long-term employment commitments. Understanding the legal framework is crucial, as misclassifying workers can lead to penalties. Key distinctions between employees and contractors include autonomy, integration, and financial risk, with Mozambican law focusing on the substance of the relationship rather than contract labels.

Formal contracts are essential for defining the scope of work, payment terms, and intellectual property rights. Contractors are responsible for their own tax obligations, such as income tax (IRPS or IRPC) and potentially VAT, depending on turnover. While not mandatory, insurance like professional indemnity and public liability can protect contractors. Common sectors utilizing independent contractors include consulting, IT, creative industries, construction, and energy, where flexibility and specialized expertise are valued.

Foreign nationals seeking employment in Mozambique must obtain a valid visa and work permit before starting work. The primary work visa, called "Visa de Trabalho," is employer-sponsored and requires a formal job offer, relevant qualifications, and supporting documents such as a passport, employment contract, educational certificates, criminal record clearance, and medical certificate. Processing typically takes 2-3 months, with fees varying by nationality and duration. Employers must secure approval from the Ministry of Labour (MITESS) to hire foreigners, and the entire process, including applying for the work permit through the National Migration Service (SENAMI), can take several months.

In addition to work visas, Mozambique offers a Business Visa for short-term activities and a Short-Term Visa for specific projects, with processing times of 1-4 weeks. Foreign workers can also apply for permanent residency after legally residing and working in Mozambique for at least 10 years, provided they meet criteria such as good conduct, financial stability, and integration.

Employers are responsible for sponsoring foreign workers, ensuring legal compliance, and reporting changes to authorities. Employees must maintain valid documentation, adhere to regulations, and notify authorities of employment or personal status changes. Failure to comply can lead to fines, deportation, or future visa difficulties.