Tax News – New Labour Law
The Parliament has recently enacted Law No. 13/2023, of 25 August, the new Labour Law (NLL), which revokes Law No. 23/2007, of 1 August (the previous Labour Law or previous law) and introduces several changes to the Mozambican legal and labour framework, in order to keep pace with the current dynamic of the country’s economic life.
The NLL clarifies the scope of the presumption of the existence of a legal employment relationship by stating that same exists in the factual situation where an employee performs paid work with the knowledge and without the objection of the employer, or where the employee is economically dependent to the employer, defining economic dependence as a situation where the provider of the activity (employee) is dependent for his or her livelihood on the income received from the beneficiary of the service (employer), and indexing the employees in this circumstance to the indefinite term employment contract regime. Therefore, employers should be particularly careful when entering into service agreements, mandate contracts, agency contracts, and others with natural persons, especially those who have no other sources of income or who work exclusively for the organisation in question.
Although the NLL maintains the prohibition on the installation of remote surveillance (namely, surveillance cameras and other technological devices) when the sole purpose is to monitor the employee’s professional performance (it remains acceptable when the purpose is the safety of persons and property, as well as when its existence is part of the normal production process), it now allows its use as a means of evidence (namely, in disciplinary proceedings), provided that the employer informs the employee in writing of its existence and purpose.
New employment arrangements are introduced, namely intermittent work (work performed in an intermittent or variable manner, with alternating periods of activity and inactivity) and telework (usually carried out away from the employer’s premises, with the use of technological and communications equipment), although the law has referred all the regulation of these to special legislation yet to be approved (as it does for the regulation of certain types of work (domestic, maritime, mining, oil, port, rural and private security) or service provision types (retainer, construction, freelance, seasonal and private employment agency).
For the purposes of harmonisation with the new Commercial Code approved by Decree-Law No. 1/2022 of 25 May, the NLL establishes a new classification of employers by introducing the figure of the micro-employer, whose classification is now as follows, with implications for the regime governing the hiring of foreign employees:
With regard to the types of the employment contract, the NLL essentially maintains the regime of the previous law, but introduces some significant changes, namely the prior notice period of 15 days (for contracts of between three months and one year) and 30 days (for contracts of more than one year), which requires the party who does not intend to renew the fixed term employment contract to give (as opposed to the automatic expiry provided for in the previous law), and the reduction from 10 to 8 years (first years of activity) of the period during which micro, small and medium-sized employers are free to enter into fixed term contracts.?
In respect of employment contracts with an uncertain term, a maximum duration of 6 consecutive or interpolated years has been introduced (as opposed to the total silence of the previous law on this matter, which could theoretically lead to this type of contract being extended almost indefinitely), in addition to the establishment of a prior notice period of 15 days (for contracts in force for a period of more than six months but not more than three years) and 30 days (for contracts in force for a period of more than three years but not more than six years), the obligation to inform the employee of the expiry of the contract (unless otherwise provided for in the employment contract) and, once the above maximum period (6 years) has been exceeded, the automatic conversion of the contract into an indefinite term employment contract, as is the case with fixed term contracts, establishing also a penalty for the employer who fails to observe the prior notice period, as well as clear criteria for calculating compensation in the event of termination of the contract or dismissal without just cause (which was not the case under the previous law).
The NLL introduces the following changes to probation period, which is now counted in months (rather than days), in the following terms:
New employee rights have been introduced to which employers must pay due attention, namely the right to present a defence before any disciplinary sanction is applied (including those that can be applied without the need for disciplinary proceedings), the right to be evaluated on a regular basis (which requires employers to introduce periodic evaluation systems or mechanisms), and the right to benefit from a daily subsistence allowance or a daily food allowance and lodging when travelling away from the usual work place for work purposes over a distance of 30 km or more and for a period of 8 hours or more, on the other hand, the employee is required to fulfil duties that were not (explicitly provided for in the previous labour law), such as contributing to the promotion of a work culture and increasing the company’s production and productivity, contributing to the maintenance of a good work environment and (very importantly) reporting any act that harms the company’s activity, the safety of people and goods and the work environment.
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With regard to employees’ rights, it is worth highlighting that the NLL also establishes the extension of the maternity leave period to 90 consecutive days (previously 60 days) and paternity leave to 7 days (previously 1 day), every 1 year and 6 months, or 60 days, in the event of death or certified incapacity of the mother? of the male employees child.
A new holiday regime is also being introduced, with employees now entitled to 12 days’ paid holiday in their first year of employment and 30 days in subsequent years, as opposed to the previous regime of 12, 24 and 30 days’ holiday in the first three years of employment.?
It is also worth highlighting that the NLL introduces the regime of suspension of the employment contract for reasons of force majeure and unforeseeable circumstances.
The NLL also establishes a new remuneration regime in cases of suspension of the employment contract for reasons related to the employer, as it allows micro, small, and medium-sized employers to pay an amount lower than the minimum wage in the sector of activity, as long as it is not less than 50% of the minimum wage.
The NLL introduces a change in the regime for the calculation of compensation in the event of termination of the employment contract at the initiative of the employer with prior notice (due to structural, technological, or market reasons), which gives the employee with an indefinite term employment contract the right to a compensation, equivalent to:
The compensations referred to above also applies in the event of termination without just cause of uncertain term employment contracts that do not establish a termination clause.
In the case of an employee with a fixed term contract, the rule for calculating the compensation based on the remuneration to which the employee would be entitled to receive between the date of termination of the contract and the date agreed for term of the contract.
There are also numerous and significant changes in the disciplinary area, which will be the subject of a special article to be published soon.
Finally, it is important to note that this law will enter into force, tomorrow, the 21st of February 2024, that is, 180 days from the date of its publication. However, jornal Notícias newspaper reports today that some aspects of it are undergoing review with the aim of correcting some inaccuracies.