Employment and Labor Law Compliance

The Mozambican labor market is undergoing a period of significant change, with new legislation and an emerging regulatory framework aimed at formalizing employment and increasing national participation in the economy.

5.1. Hiring Foreign and Local Staff

Any foreign national seeking employment in Mozambique must obtain a work permit. Employers are responsible for sponsoring this permit, a process that can take between 30 and 90 days and requires a valid passport, an employment contract, and proof of the employee's qualifications.

For companies seeking to enter the market with a lower administrative burden, alternative strategies are available. The use of an Employer of Record (EOR) or a Professional Employer Organization (PEO) allows a company to hire employees in Mozambique without establishing a full legal entity. This model shifts the responsibility for payroll, tax compliance, and benefits administration to the third-party provider, mitigating legal risk and reducing administrative complexities.

5.2. Key Labor Law Developments

A new Labour Law, Law No. 13/2023, which came into force on February 21, 2024, has introduced several relevant changes that will continue to shape the labor landscape in 2025. These include:

• Extended Leave: Maternity leave has been extended from 60 to 90 days, while paternity leave has been extended from one to seven days.

• Modern Work Models: The new law makes provisions for modern work arrangements, including intermittent work, seasonal work, and telework, reflecting the changing nature of employment.

• Fixed-Term Contracts: The new regulations specify that fixed-term employment contracts are permitted for a period not exceeding two years, with a maximum of two renewals, although micro, small, and medium-sized employers have greater flexibility in their first eight years of operation.

5.3. The Emerging Local Content Regulatory Framework

Perhaps the most significant development for investors, particularly those in the extractive industries, is the finalization of a draft Local Content Law, which is awaiting approval by the Council of Ministers in 2025. This legislation is a strategic move by the government to ensure that a greater portion of the value created by "mega-projects" remains within the country.

The proposed law mandates that companies in the petroleum and gas sectors prioritize Mozambican labor, goods, and services. It stipulates an "exclusivity regime" where national companies and workforces are given priority, particularly for goods and services produced with at least 80% domestic inputs. The law also requires mega-projects to submit a Local Content Plan and an annual performance report to a newly proposed Local Content Agency. This agency will be a public institution with the authority to regulate, monitor, and enforce compliance, with penalties for non-compliance ranging from fines to contract cancellation.

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