Severance pay Morocco law grants is due to any employee on an open-ended contract (CDI) dismissed after six months in the same company, except for serious misconduct (Articles 52 and 61 of the Labour Code, Law n° 65-99). The amount is counted in hours of salary per year of service: 96 hours for each of the first five years, 144 hours from year 6 to 10, 192 hours from year 11 to 15 and 240 hours beyond (Article 53). For an employee on 9,000 DH a month with 12 years of service, it reaches 74,638.74 DH, as an illustration. Below are the conditions, the formula, the reference salary, what comes on top and the tax treatment.
Who is entitled to severance pay Morocco?
- An employee on a CDI, whatever the pay method and frequency, dismissed after at least six months’ work in the same company (Article 52).
- Not for serious misconduct: dismissal then takes place without notice, severance or damages (Article 61). Article 39 lists serious misconduct (theft, breach of trust, unjustified absence of more than four days over twelve months, deliberate refusal to perform work, etc.).
- Not for a fixed-term contract (CDD): early termination, other than for serious misconduct or force majeure, gives entitlement to damages equal to the salary remaining until the end date (Article 33).
- Not on resignation, nor on compulsory retirement at 60 (Article 526), which is not a dismissal; a collective agreement may however provide a retirement payment.
The contract, collective agreement or internal rules may provide more than the law (Article 53).
The severance pay Morocco scale (Article 53)
| Service band | Hours of salary per year | Cumulative at end of band |
|---|---|---|
| Years 1 to 5 | 96 hours | 480 hours |
| Years 6 to 10 | 144 hours | 1,200 hours |
| Years 11 to 15 | 192 hours | 2,160 hours |
| Beyond 15 years | 240 hours | 3,360 hours at 20 years |
The severance pay Morocco scale is progressive: each year is paid at the rate of its band, like a banded tax. An employee with 12 years does not receive 12 × 192 hours, but 5 × 96 + 5 × 144 + 2 × 192 hours.
Severance for an employee delegate or union representative dismissed during their term is increased by 100% (Article 58).
The reference salary
Severance pay Morocco is calculated on the average salary received over the 52 weeks before termination (Article 55), and can never be below the legal minimum wage (Article 56). The base includes (Article 57):
- salary itself and bonuses inherent to the work, including overtime and function allowances (team leader, group leader);
- benefits in kind;
- commissions and tips.
Excluded are expense reimbursements and allowances for responsibility, arduous or dangerous work, dangerous areas and temporary replacement.
From monthly average to hourly salary
Since the scale is expressed in hours, common practice divides the average monthly salary by 191 hours, the monthly reference for a 44-hour week. For an hourly-paid employee, the average hourly rate is used directly.
Service counted for severance pay Morocco
Paid leave, maternity leave, incapacity due to a work accident or occupational disease, and suspensions for authorised absence, illness or temporary closure all count as actual work (Article 54). Article 53 refers to “each year or fraction of a year”: have the method used for an incomplete final year validated, as it is often prorated.
A worked severance pay Morocco example
As an illustration, take an administrative employee dismissed for a non-disciplinary reason after exactly 12 years, with an average salary of 9,000 DH gross a month over the last 52 weeks, 10 days of untaken leave and notice the employer waives.
| Item | Calculation | Amount |
|---|---|---|
| Reference hourly salary | 9,000 / 191 | 47.12 DH |
| Hours due | 5 × 96 + 5 × 144 + 2 × 192 | 1,584 hours |
| Severance pay | 1,584 × 9,000 / 191 | 74,638.74 DH |
| Pay in lieu of notice (employee, over 5 years) | 2 months × 9,000 | 18,000.00 DH |
| Payment for untaken leave | 9,000 / 26 × 10 days | 3,461.54 DH |
| Total for a justified dismissal | 96,100.28 DH | |
| Damages if the dismissal is ruled unfair | 1.5 × 9,000 × 12 years | 162,000.00 DH |
Damages are not automatic: they result from conciliation or a court ruling.
What comes on top of severance pay Morocco
Notice
Except for serious misconduct, ending a CDI requires notice (Article 43). Decree n° 2-04-469 of 29 December 2004 sets minimum periods:
| Service | Managers and equivalent | Employees and manual workers |
|---|---|---|
| Under one year | 1 month | 8 days |
| 1 to 5 years | 2 months | 1 month |
| Over 5 years | 3 months | 2 months |
If notice is not worked, the responsible party pays compensation equal to the salary for the period (Article 51). During notice, the employee has two hours of paid absence a day to look for work (Articles 48 and 49).
Untaken leave
Payment for untaken leave is due whatever the reason for termination, serious misconduct included (Article 254). The rules are set out in our guide to leave management in Morocco.
Damages for unfair dismissal
A dismissal ruled unfair, for example for lack of a valid reason, gives entitlement before the court to reinstatement or to damages of one and a half months’ salary per year or fraction of a year, capped at 36 months (Article 41). The employee may also use preliminary conciliation before the labour inspectorate; a signed settlement is then final.
Job-loss benefit
Paid by CNSS (the social security fund) subject to contribution conditions, the IPE (indemnité pour perte d’emploi) comes on top of the sums owed by the employer (Articles 53 and 59) and is not a cost to the company.
Tax and contributions: how severance pay Morocco is treated
- IR (income tax): Article 57-7° of the CGI (tax code) exempts severance pay, voluntary departure payments and damages, within an overall limit of one million dirhams since the 2023 finance act; any excess is taxed on the scale.
- Labour Code: payments made for dismissal through conciliation or a court ruling are exempt from IR, CNSS contributions and registration duties (Article 76).
- Notice and untaken leave: these are salary, subject to contributions and IR like the final month. The path to net is explained in our guide to net salary calculation in Morocco, and social rates in our guide to CNSS contributions in Morocco.
Procedure and deadlines for paying severance pay Morocco
- Disciplinary dismissal: hearing of the employee, assisted by a delegate or union representative, within eight days of the facts being established, with written minutes (Article 62); decision delivered by hand or registered letter within 48 hours (Article 63); copy to the labour inspectorate, with the reasons (Article 64).
- Economic, technological or structural dismissal: consultation with employee representatives and authorisation from the governor, issued within two months at most (Articles 66 and 67); order of departures based on seniority, professional value and family responsibilities (Article 71).
- Leaving documents: work certificate within eight days (Article 72); detailed final settlement receipt in two copies, stating the 60-day period to contest it (Articles 73 to 75).
- Litigation: the employee has 90 days from receiving the decision to go to court (Article 65); other rights arising from the contract are time-barred after two years (Article 395).
Common severance pay Morocco mistakes
- Applying the top band rate to the entire length of service.
- Calculating on the last base salary instead of the 52-week average, bonuses and benefits included.
- Forgetting the 100% increase for an employee delegate.
- Confusing severance and pay in lieu of notice, which differ in calculation and tax treatment.
- Issuing a final settlement without the payment breakdown or the 60-day notice, which deprives it of effect.
Calculating and documenting without error
Payroll software for Morocco keeps the salary history, calculates the 52-week average, length of service and severance pay Morocco, then produces the final payslip in Morocco and the settlement. The reference salary never falls below the legal minimum set out in our article on the minimum wage in Morocco. And because a departure is often less costly when hiring goes right, our cost of a bad hire calculator helps quantify the stakes.
Frequently asked questions
How do I calculate severance pay Morocco quickly?
Multiply the average hourly salary by the hours due: 96 hours a year up to 5 years, 144 from 6 to 10, 192 from 11 to 15, 240 beyond, adding the bands together.
Is severance pay Morocco taxable?
It is exempt from IR, together with damages and voluntary departure payments, within an overall limit of one million dirhams; pay in lieu of notice remains taxable.
Is severance pay Morocco due for serious misconduct?
No severance, notice or damages (Article 61), provided the misconduct is established and the procedure followed. Payment for untaken leave remains due.
Where can I read the text?
Articles 52 to 60 are in the Labour Code (Law n° 65-99), with a full French copy available online.
Key takeaways
- Severance pay Morocco is due on a CDI after six months, except for serious misconduct.
- Progressive scale: 96, 144, 192 then 240 hours of salary per year.
- Base: average of the last 52 weeks, bonuses and benefits included, never below the SMIG.
- Notice, untaken leave and, for unfair dismissal, damages capped at 36 months come on top.
- IR exemption within an overall limit of one million dirhams.
To secure every departure, from the calculation to the final settlement, book a demo from the Morocco payroll page.
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