Dismissal is a delicate decision that can have significant consequences for the person concerned, both professionally and personally. Under Moroccan law, wrongful dismissal is strictly regulated. When an employee is dismissed wrongfully, they are awarded compensation intended to make up for the sudden loss of their job. How this compensation is calculated is a frequently asked question. This article sets out to answer it.
1. What is wrongful dismissal in Morocco?
In Morocco, a dismissal is considered wrongful when the employer terminates the contract without complying with the legal provisions of the Labor Code. The main grounds regarded as wrongful include dismissal without a valid reason, particularly in the absence of established serious misconduct, discriminatory dismissal, and dismissal carried out without strict compliance with the prescribed procedure. For a more in-depth understanding of the legal aspects of employment in Morocco, see our guide on labor law and social procedures.
2. Statutory severance payments
In the event of wrongful dismissal, the employee is entitled to compensation, the amount of which depends on their length of service and remuneration. Here is a detailed explanation of how it is calculated:
Notice pay:
This payment corresponds to the remuneration the employee would have received had they continued working during the notice period. The length of the notice period depends on the employee’s length of service with the company.
The period and duration of notice are governed by laws and regulations, the employment contract, the collective bargaining agreement, internal regulations or customary practice.
Any termination of a permanent employment contract without notice, or without the notice period being fully observed, obliges the party responsible, unless it is justified by serious misconduct, to pay the other party compensation in lieu of notice equal to the remuneration the employee would have received had they remained in their position.
The notice period for the unilateral termination of a permanent employment contract, as set out in paragraph 2 of Article 43 of Law No. 65-99 on the Labor Code, is as follows:
For managers and similar staff, according to seniority :
- Less than one year of service: One month.
- One to five years of service: Two months.
- More than five years of service: Three months.
For white-collar and blue-collar workers, according to seniority :
- Less than one year of service: Eight days.
- One to five years of service: One month.
- More than five years of service: Two months.
Severance payment:
An employee hired on a permanent employment contract is entitled to compensation in the event of wrongful dismissal, provided they have completed their probationary period with the employer.
The severance payment is calculated as follows:
- 96 hours of salary per year for the first five years of service;
- 144 hours of salary per year for the sixth to the tenth year of service;
- 192 hours of salary per year for the eleventh to the fifteenth year of service;
- 240 hours of salary per year for seniority exceeding fifteen years.
Damages for wrongful dismissal:
In addition to the payments mentioned above, the employee may also claim damages to compensate for the harm suffered because of the wrongful nature of their dismissal. These damages are intended to compensate for the moral and material harm resulting from the unjustified termination of their employment contract. For complex situations involving court proceedings, our team of lawyers can assist you.
The employee has the right to bring the matter before the competent court. If the dismissal is found to be wrongful, the court may order the payment of damages, calculated on the basis of an amount equal to one and a half months’ salary per year or part of a year of servicewhile observing a maximum ceiling of 36 months.
3. What is included in the salary?
The severance payment is calculated on the basis of the average remuneration received by the employee during the fifty-two weeks (12 months) preceding the termination of the employment contract, provided that the salary taken into account cannot be lower than the statutory minimum wage.
To calculate the severance payment, not only the employee’s basic salary but also various related elements must be taken into account. These elements are listed below:
Bonuses and allowances related to the job:
Bonuses and allowances directly related to the performance of the employee’s job are included. However, some allowances are excluded from the calculation, in particular:
- Allowances intended to reimburse costs or expenses incurred by the employee in the course of their work;
- Responsibility allowances, except for function allowances such as those paid to team leaders or group leaders;
- Allowances for arduous or dangerous work;
- Allowances paid as compensation for work carried out in hazardous areas;
- Allowances paid for temporarily replacing an employee in a higher-grade position or for temporary or exceptional work, except those relating to overtime.
Benefits in kind:
Benefits in kind granted to the employee, such as housing or a company car, must also be taken into account when calculating the severance payment.
Commissions and tips:
Commissions and tips received by the employee in the course of their duties are also included in the basis for calculating the severance payment.
4. Calculation examples
Example 1: A manager with 3 years of service and a monthly salary of MAD 20,000
Notice pay for a manager with 1 to 5 years of service:
- Notice period: 2 months
- Monthly remuneration: 20,000 MAD
- Compensation in lieu of notice = 2 months x 20,000 MAD = 40,000 MAD
Severance payment for an employee with 3 years of service:
- Seniority: 3 years
- Hourly wage: 20,000 / 190 = MAD 105.26
- Severance payment = 20,000 / 190 x 96 x 3 = MAD 30,315.79
Damages for wrongful dismissal:
- Compensation = 1.5 months’ salary per year of service
- Damages = 1.5 x 20,000 MAD x 3 = 90,000 MAD
Total compensation: MAD 40,000 (notice) + MAD 30,315.79 (severance) + MAD 90,000 (damages) = MAD 160,315.79
Example 2: An employee with 7 years of service and a monthly salary of MAD 10,000
Notice pay for an employee with more than 5 years of service:
- Notice period: 2 months
- Monthly remuneration: 10,000 MAD
- Compensation in lieu of notice = 2 months x MAD 10,000 = MAD 20,000
Severance payment for an employee with 7 years of service:
- 96 hours of salary per year for the first five years: 96 x 5 = 480 hours
- 144 hours of salary per year for the 6 to 7 year period: 144 x 2 = 288 hours
- Severance payment = (480 + 288) x MAD 10,000 / 190 = MAD 40,421.05
Damages for wrongful dismissal:
- Compensation = 1.5 months’ salary per year of service
- Damages = 1.5 x 10,000 MAD x 7 = 105,000 MAD
Total compensation: MAD 20,000 (notice) + MAD 40,421.05 (severance) + MAD 105,000 (damages) = MAD 165,421.05
Example 3: A worker with 12 years of service and a monthly salary of MAD 8,000
Notice pay for a worker with more than 5 years of service:
- Notice period: 2 months
- Monthly salary: 8,000 MAD
- Compensation in lieu of notice = 2 months x 8,000 MAD = 16,000 MAD
Severance payment for an employee with 12 years of service:
- 96 hours of salary per year for the first five years: 96 x 5 = 480 hours
- 144 hours of salary per year for the period from 6 to 10 years: 144 x 5 = 720 hours
- 192 hours of salary per year for the 11 to 12 year period: 192 x 2 = 384 hours
- Severance payment = (480 + 720 + 384) x MAD 8,000 / 190 = MAD 66,694.74
Damages for wrongful dismissal:
- Compensation = 1.5 months’ salary per year of service
- Damages = 1.5 x 8,000 MAD x 12 = 144,000 MAD
Total compensation: MAD 16,000 (notice) + MAD 66,694.74 (severance) + MAD 144,000 (damages) = MAD 226,694.74
Example 4: A manager with 9 years of service and a monthly salary of MAD 25,000
Notice pay:
- Notice period for a manager with more than 5 years of service: 3 months
- Notice pay = 3 months x MAD 25,000 = MAD 75,000
Severance payment:
- 96 hours of salary per year for the first 5 years: 96 x 5 = 480 hours
- 144 hours of salary per year for the next 4 years: 144 x 4 = 576 hours
- Severance payment = (480 + 576) x MAD 25,000 / 190 = MAD 138,947.37
Damages for wrongful dismissal:
- Compensation = 1.5 months’ salary per year of service
- Damages = 1.5 x 25,000 MAD x 9 = 337,500 MAD
Total compensation: MAD 75,000 (notice) + MAD 138,947.37 (severance) + MAD 337,500 (damages) = MAD 551,447.37
Example 5: An employee with 4 years of service and a monthly salary of MAD 12,000
Notice pay:
- Notice period for 1 to 5 years of service: 1 month
- Compensation in lieu of notice = 1 month x MAD 12,000 = MAD 12,000
Severance payment:
- 96 hours of salary per year for the first 4 years: 96 x 4 = 384 hours
- Severance payment = 384 x MAD 12,000 / 190 = MAD 24,252.63
Damages for wrongful dismissal:
- Compensation = 1.5 months’ salary per year of service
- Damages = 1.5 x 12,000 MAD x 4 = 72,000 MAD
Total compensation: MAD 12,000 (notice) + MAD 24,252.63 (severance) + MAD 72,000 (damages) = 108,252.63 MAD
Example 6: A worker with 15 years of service and a monthly salary of MAD 9,000
Notice pay:
- Notice period for more than 5 years of service: 2 months
- Compensation in lieu of notice = 2 months x 9,000 MAD = 18,000 MAD
Severance payment:
- 96 hours of salary per year for the first 5 years: 96 x 5 = 480 hours
- 144 hours of salary per year for the next 5 years: 144 x 5 = 720 hours
- 192 hours of salary per year for the last 5 years: 192 x 5 = 960 hours
- Severance payment = (480 + 720 + 960) x MAD 9,000 / 190 = MAD 102,315.79
Damages for wrongful dismissal:
- Compensation = 1.5 months’ salary per year of service
- Damages = 1.5 x 9,000 MAD x 15 = 202,500 MAD
Total compensation: MAD 18,000 (notice) + MAD 102,315.79 (severance) + MAD 202,500 (damages) = MAD 322,815.79
5. Conclusion
Dismissal, a serious act with multiple consequences, is strictly regulated by Moroccan labor law. When the termination of an employment contract is considered wrongful on the part of the employer, it entitles the employee to financial compensation for the sudden loss of their job and the harm suffered. The complexity of calculating this compensation, which combines various elements of remuneration and length of service, raises many questions. This article has sought to shed comprehensive light on this crucial subject.
The definition of wrongful dismissal in Morocco under the Labor Code highlights situations in which the employer has terminated the contract without complying with the legal provisions. These situations may result from unproven serious misconduct, discrimination or failure to follow the prescribed procedures. Each of these cases requires careful analysis to ensure that the employee’s rights are protected and that appropriate compensation is awarded.
Statutory severance payments are calculated taking into account the employee’s length of service and remuneration. Notice pay, for example, depends on length of service and is based on the remuneration the employee would have received had they worked during the notice period. The precise amounts and periods are clearly set by the regulations, which provides a degree of predictability for the parties.
The severance payment is based on a number of hours of salary per year of service, which varies according to length-of-service bands. This formula aims to reward the employee’s loyalty to the company and to compensate for the loss of their job in a progressive manner. In addition, damages for wrongful dismissal, intended to compensate for moral and material harm, are added to the statutory payments, reflecting the seriousness of the employer’s wrongful act.
Calculating this compensation is complex and requires careful consideration of the various elements of the employee’s remuneration. In addition to the basic salary, other elements such as bonuses, benefits in kind, commissions and tips are taken into account. This diversity requires particular attention to ensure that each employee receives fair and equitable compensation.
We have used a number of calculation examples to illustrate how these allowances can be determined for different employee profiles. These practical examples provide a better understanding of the methodology to be applied, and offer a concrete vision of the amounts that can be awarded.
It is essential to stress how important it is for employees to know their rights in the event of wrongful dismissal. Only a well-informed employee can assert their rights and obtain adequate compensation. Likewise, employers must be aware of their legal obligations and respect their employees’ rights when deciding to terminate an employment contract. For professional advice, see our labor law services.
In conclusion, calculating compensation for wrongful dismissal in Morocco is a complex but necessary exercise to ensure social justice. It aims to protect employees’ rights and compensate for the harm suffered, while taking into account the specific features of each situation. It is therefore crucial for employees and employers to understand these mechanisms properly and to seek assistance where necessary to ensure the fair and equitable application of labor law. Do not hesitate to contact us for any legal assistance.