Dismissal and severance pay in Morocco: the guide
If you have just been dismissed, or if you are an employer about to do so, one thing matters above all: the procedure. In Morocco, a poorly handled dismissal is costly, even when the grounds hold up. Here is what the Labour Code (Law No. 65-99) actually says about dismissal, notice and severance.
The essentials in brief
An employee on an open-ended contract (CDI) dismissed after six months with the same company is entitled to severance pay [1]. The amount is calculated by seniority bands, in hours of wages per year worked [2]. To this is added, except in cases of serious misconduct, a payment in lieu of notice [3]. If the dismissal is found to be wrongful, the court may order reinstatement or damages capped at 36 months' wages [4]. And it all starts with a preliminary hearing: skipping this step undermines the entire dismissal.
Who is entitled to severance pay
The basic rule is simple. An employee bound by an open-ended contract is entitled to compensation in the event of dismissal after six months of work with the same company, whatever the method of remuneration and the frequency of wage payment [1].
Six months. That is the threshold. Below it, there is no severance pay within the meaning of Article 52. Above it, the right is acquired as soon as the termination comes from the employer and is not justified by serious misconduct on the employee's part.
This compensation is not the same thing as payment in lieu of notice, nor as damages for wrongful dismissal. Many people confuse the three. They are separate amounts, which may be combined.
How severance pay is calculated
The Code sets a scale in hours of wages, by seniority band [2]:
- 96 hours of wages for the first five years of seniority;
- 144 hours of wages for the period from 6 to 10 years;
- 192 hours of wages for the period from 11 to 15 years;
- 240 hours of wages beyond 15 years.
The scale is progressive: each seniority band is calculated at its own rate, then the amounts are added together. An employee with 12 years of seniority therefore accumulates the first five years at 96 hours, years 6 to 10 at 144 hours, and years 11 and 12 at 192 hours.
On what wage basis? The average of the wages received during the fifty-two weeks preceding the termination of the contract [5]. Bonuses and accessory payments are therefore included in the calculation, provided they were actually received over the year.
Worth remembering about the minimums. The scale is a floor. The employment contract, the collective agreement or the internal regulations may provide for arrangements more favourable to the employee [2]. Always check your branch agreement before relying on the Code alone.
Notice: a payment in its own right
Terminating an open-ended contract without notice, or without fully observing the notice period, obliges the responsible party to pay the other a payment in lieu of notice [3]. Its amount? The remuneration the employee would have received had he remained in his post for the duration of the notice period.
It is a reciprocal obligation. An employee who resigns without notice owes it to the employer too. But one exception wipes it all out: serious misconduct. As long as the termination is not motivated by serious misconduct, the payment in lieu of notice remains due [3].
The procedure: the step everyone gets wrong
Here is where most employers go wrong. The grounds can be perfectly valid and the dismissal still fall through for a procedural defect.
Before any dismissal, the employee must be able to defend himself and be heard by the employer, in the presence of the staff delegate or the union representative of his choice, within a period not exceeding eight days from the finding of the alleged act [6]. A report is drawn up, signed by both parties, and a copy given to the employee [6].
The dismissal decision, for its part, must be handed over in person against a receipt or by registered letter with acknowledgement of receipt, within 48 hours of being taken [7]. It must state the grounds, the date of the hearing, and be accompanied by the report [8]. A decisive detail: the court may consider only the grounds mentioned in the decision [8]. A ground left out of the letter can no longer be invoked before the judge.
And the burden of proof? It falls on the employer. It is for him to justify the dismissal by an acceptable ground [7].
Serious misconduct: dismissing without compensation, but at your own risk
In cases of serious misconduct, the employee may be dismissed without notice, without compensation, and without payment of damages [9]. This is the employer's heavy weapon - and the most contested before the courts.
The misconduct must genuinely be serious. The Code draws up a precise list: theft, breach of trust, public drunkenness, consumption of narcotics, assault, serious insult, disclosure of a professional secret causing harm, unjustified absence of more than four days or eight half-days over twelve months, among others [10].
Before reaching that point for less serious misconduct, the employer applies disciplinary sanctions gradually. When they have been exhausted within the year, he may proceed with the dismissal, which is then considered justified [11]. The graduated approach is not a courtesy: it is what makes the dismissal defensible.
Wrongful dismissal: what the judge can order
This is where the amounts climb. In the event of wrongful termination of the contract by either party, the injured party is entitled to claim damages [4]. The employee cannot waive this right in advance.
The employee may first resort to preliminary conciliation before the Labour Inspectorate, to be reinstated in his post or to obtain damages; the agreement thus reached is final and not subject to appeal [4]. Failing an agreement, he refers the matter to the court, which may either order reinstatement or award damages set on the basis of one and a half months' wages per year or fraction of a year of work, up to a ceiling of 36 months [4].
In the event of wrongful dismissal, the employee combines: damages, payment in lieu of notice, and compensation for loss of employment [12].
One last point, and it is fatal if ignored. On pain of forfeiture, the legal action relating to the dismissal must be brought before the competent court within 90 days of the employee's receipt of the decision [13]. This period must, moreover, appear in the dismissal letter [13]. After this period, the action is time-barred.
Economic dismissal: a separate regime
When the dismissal is based on technological, structural or economic grounds, the rules change. In commercial, industrial, agricultural or craft businesses habitually employing ten or more employees, an employer who plans to dismiss all or part of his staff must inform the staff delegates - and, where applicable, the union representatives - at least one month beforehand, providing all relevant information and entering into negotiations to avoid or mitigate the dismissals [14].
The employees concerned receive payment in lieu of notice and severance pay, whether or not the employer has obtained administrative authorisation to dismiss [15]. In the event of dismissal without such authorisation, the damages of Article 41 are due to them only by court decision, if they are not reinstated [15]. The order of departures takes into account seniority, professional value and family responsibilities, and dismissed employees retain a priority right to re-hiring [16].
And if the employer does not pay?
Non-payment is not without consequence. Failure to observe the notice period, failure to pay severance pay or incorrect application of the calculation scale are punishable by a fine of 300 to 500 dirhams, applied as many times as there are employees concerned, without the total exceeding 20,000 dirhams [17]. Failure to observe the economic dismissal procedure, for its part, carries a fine of 10,000 to 20,000 dirhams [17].
A short practical reminder about the final settlement: wages paid by the hour or by the day must be settled within 24 hours when the employee is dismissed. Check your last payslip before signing anything.
---
Sources
- [1] Labour Code (Law No. 65-99), Article 52
- [2] Labour Code (Law No. 65-99), Article 53
- [3] Labour Code (Law No. 65-99), Article 51
- [4] Labour Code (Law No. 65-99), Article 41
- [5] Labour Code (Law No. 65-99), Article 55
- [6] Labour Code (Law No. 65-99), Article 62
- [7] Labour Code (Law No. 65-99), Article 63
- [8] Labour Code (Law No. 65-99), Article 64
- [9] Labour Code (Law No. 65-99), Article 61
- [10] Labour Code (Law No. 65-99), Article 39
- [11] Labour Code (Law No. 65-99), Article 38
- [12] Labour Code (Law No. 65-99), Article 59
- [13] Labour Code (Law No. 65-99), Article 65
- [14] Labour Code (Law No. 65-99), Article 66
- [15] Labour Code (Law No. 65-99), Article 70
- [16] Labour Code (Law No. 65-99), Article 71
- [17] Labour Code (Law No. 65-99), Article 78
Need to check your situation? Speak to a lawyer registered with a Bar in Morocco →