Permanent Contract Dismissal in Morocco 2026: Compensation, Calculation and Full Procedure

Permanent contract dismissal in Morocco is governed primarily by Law No. 65-99 establishing the Labour Code, promulgated by Dahir No. 1-03-194 of 11 September 2003. An indefinite-term employment contract cannot be terminated freely by the employer. The employer must establish valid grounds, comply with the adversarial procedure, and pay the amounts due. The rules on dismissal appear in particular in Articles 35 to 65, while annual leave is addressed in Articles 231 et seq.

Article 41 recognises grounds related to the employee’s ability or conduct, as well as grounds based on the operational requirements of the business. Serious misconduct is subject to a stricter regime, particularly under Articles 39 and 61: it may result in immediate departure without notice or statutory dismissal compensation. However, accrued untaken leave and wages already earned remain payable. The employer therefore cannot withhold the entire final settlement merely by alleging serious misconduct.

Statutory dismissal compensation is provided for in Articles 52 to 60 of the Labour Code. Contrary to information frequently repeated online, its brackets are set by Article 53: 96 hours of wages for each of the first five years, 144 hours for years six to ten, 192 hours for years eleven to fifteen, and 240 hours beyond fifteen years. Decree No. 2-04-469 of 29 December 2004 concerns notice periods.

A collective agreement, employment contract, internal regulations, or established practice may grant more than the statutory minimum. It cannot deprive the employee of the mandatory safeguards under the Code. In practice, the various applicable instruments must be compared before accepting the employer’s calculation. Some large companies, for example, provide for one month’s salary per year of service, a formula that may be more favourable than the statutory calculation expressed in hours.

Announcements concerning reform of the Labour Code do not, by themselves, change employees’ rights. Only legislation that has been finally adopted, promulgated, and published in the Official Gazette becomes applicable, subject to its transitional provisions. In September 2026, any estimate must therefore be checked against the legislation actually published on the date of dismissal. A draft reported in the press cannot be used either to cap compensation or to replace the current procedure.

For a disciplinary dismissal, Article 62 requires that the employee be given an opportunity to be heard within eight days after the alleged act is identified. The employee may be assisted by an employee representative or a trade union representative of their choice from within the company. Written notice is not prescribed in a single statutory form, but it provides the best evidence of the date, place, and purpose of the hearing and of the opportunity to receive assistance.

During the hearing, the employer sets out the allegations, and the employee presents their explanations, documents, or witnesses. Minutes must be drawn up and signed by both parties, after which a copy must be given to the employee. If either party refuses to continue or sign, the matter is referred to the officer responsible for the Labour Inspectorate in accordance with Article 62. In practice, the employee may write beside their signature that they dispute the allegations or that the minutes do not fully reflect their statements.

The dismissal decision must be delivered to the employee by hand against receipt or sent by registered letter with acknowledgement of receipt within forty-eight hours after it is made, in accordance with Article 63. A copy is sent to the Labour Inspectorate. The letter must state the grounds justifying the decision, the date of the hearing, and the ninety-day period for bringing the matter before the competent court. The employer is subsequently bound by the grounds stated in that letter.

For an ordinary dismissal not based on serious misconduct, the notice period must be worked or paid in lieu. Article 47 allows the employee to take time off to seek employment during the notice period, within the statutory limits and without any reduction in pay. If the employer requires immediate departure, Article 51 entitles the employee to payment in lieu of notice equal to the remuneration they would have received up to the end of the notice period.

A procedural irregularity does not always have the same consequence as an absence of grounds. The judge assesses the case as a whole, including the absence of a hearing, incomplete minutes, late notification, or the inability to present a defence. For an employee representative benefiting from special protection, the absence of prior authorisation from the Labour Inspectorate is far more serious and may render the termination unenforceable or void. However, the employee must never allow the judicial deadline to expire while waiting for the employer to rectify the procedure.

Statutory severance pay is owed to an employee under a permanent employment contract who has completed at least six months of work with the same company, except where gross misconduct is established. Under Article 53, each of the first five years is worth 96 hours of salary; each year from the sixth through the tenth is worth 144 hours; each year from the eleventh through the fifteenth is worth 192 hours; and each year beyond fifteen years is worth 240 hours. Fractions of a year are taken into account proportionally.

The reference hourly wage does not necessarily consist solely of the basic salary. Articles 55 and 56 use the average wages received during the fifty-two weeks preceding termination and prevent the calculation basis from being lower than the normal wage. Bonuses and benefits constituting regular remuneration must be examined, including seniority bonuses, regular performance bonuses, recurring commissions, and benefits in kind. Reimbursements of actual business expenses are different in nature and are not normally included as salary.

To convert a monthly salary into an hourly rate, a common practice is to divide it by 191 hours for non-agricultural activities, subject to the applicable working hours, collective agreement, and payroll components. Thus, with a reference salary of 6,000 DH, the indicative rate is 31.41 DH. For eight years of seniority, the number of compensated hours is 5 × 96, plus 3 × 144, totaling 912 hours. The indicative statutory severance pay therefore amounts to approximately 28,646 DH.

The notice period is calculated separately. For managerial and equivalent staff, Decree No. 2-04-469 provides for one month where seniority is less than one year, two months where it is between one and five years, and three months where it exceeds five years. For employees and workers, it provides for eight days where seniority is less than one year, one month where it is between one and five years, and two months where it exceeds five years. A collective agreement or contract may provide for a more favorable period.

Accrued and unused leave gives rise to payment in lieu upon termination, including where gross misconduct deprives the employee of the two preceding payments. Article 231 provides, in principle, for one and a half days of actual leave per month of service, with more favorable rules for underage employees and increases based on seniority. The exact amount depends on the balance of leave days and the remuneration that would have been received during the leave, pursuant to Articles 249 et seq.

The final settlement may therefore include outstanding salary, statutory severance pay, payment in lieu of notice, unused leave, earned bonuses, commissions, overtime, or benefits under a collective agreement. Damages for unfair dismissal are a separate item. There is no absolute cap in dirhams on statutory severance pay: its amount increases with salary and seniority. The thirty-six-month cap applies to the damages formula under Article 41, not to the severance pay under Article 53.

The challenge is brought before the Social Division of the Court of First Instance having territorial jurisdiction. Under the rules of the Code of Civil Procedure, the employee may, in particular, bring proceedings before the court for the place of the establishment or the place where the contract was performed, subject to the circumstances of the case. The application sets out the facts, irregularities, amounts claimed, and evidence. It must distinguish each item: dismissal, notice, leave, wages, damages, and other benefits.

Article 65 of the Labour Code sets a ninety-day time limit from receipt of the dismissal decision for bringing the matter before the court. The letter must also state this time limit. This is a very short period, and missing it creates a risk that the challenge to the termination will be held inadmissible. A complaint to the labour inspectorate, informal discussions, a promise of payment, or a request for documents does not provide sufficient protection against its expiry.

Social proceedings include an attempt at conciliation, followed by examination of the case if no agreement is reached. The employer must substantiate the grounds for dismissal and, when alleging job abandonment, demonstrate that the employee voluntarily left the job, in accordance with Article 63. The court may examine emails, attendance records, reports, evaluations, warnings, testimony, and payslips. An accounting expert assessment may be ordered where the reference salary or commissions are disputed.

If the dismissal is found to be unfair, the remedy may take the form of reinstatement or damages, depending on Article 41 and the circumstances. The statutory calculation benchmark is one and a half months’ salary per year or fraction of a year of seniority, capped at thirty-six months. This is not a minimum amount automatically added to every termination. The judge verifies the unfairness, salary, seniority, and the claims actually made in the application.

Social cases benefit from favorable rules regarding access to justice, but incidental expenses may remain, including copies, translations, service of process, expert assessments, or enforcement. Lawyers’ fees are not subject to a uniform tariff; in 2026, a commonly observed market range for a dismissal case is approximately 3,000 to 15,000 DH, depending on the city, hearings, and complexity. A written fee quote should specify appeals and enforcement.

The duration depends heavily on the court and procedural incidents. First-instance proceedings may take approximately six to eighteen months, and sometimes longer in courts with heavy caseloads; an appeal and an appeal on points of law extend the case. This range is a practical estimate, not a guaranteed statutory time limit. An employee experiencing financial hardship may ask the court registry about legal aid provided for by Dahir-Law No. 1-56-263 of 12 November 1966.