What Severance Pay Rules Must Employers Follow in Algeria?

Which Employees Qualify for Severance Pay?

• Employees on open-ended (CDI) contracts dismissed for reasons other than serious or gross misconduct generally qualify for severance.
• Workers with at least one year of continuous service in your company are the typical baseline for statutory severance eligibility.
• Employees terminated for economic, technological, or organizational reasons usually qualify, provided legal procedures are followed.
• Fixed-term (CDD) employees may be entitled to compensation if you terminate the contract early without a lawful, serious cause.
• Employees who resign for employer fault recognized as constructive dismissal can, in some cases, claim similar end-of-service compensation.
• Unionized employees or those covered by sectoral collective agreements may have enhanced severance rights beyond the Labor Code minimums.

What Are the Legal Timelines for Paying Severance?

In Algeria, you should pay severance at the same time you finalize the employee’s end-of-service payments, typically on or very shortly after the last working day. In practice, employers aim to settle within a few days of termination to avoid disputes and labor inspector scrutiny. Collective agreements or company policies may set specific deadlines, which then become binding on your company. If there is a dispute over the amount, it is safer to pay the undisputed portion immediately while documenting any ongoing calculation issues. Always provide a written breakdown of severance and other final payments to the employee.

What Penalties Apply if Severance Is Not Paid Correctly?

If your company fails to pay severance correctly in Algeria, you risk administrative sanctions, financial exposure, and potential criminal fines under the Labor Code. Employees can bring claims before the labor courts, and judges often interpret ambiguities in favor of the worker, which can significantly increase your total cost of non-compliance.

• Labor inspectors can issue warnings and require you to rectify unpaid or underpaid severance.
• Courts may order back payment of severance plus legal interest from the date it fell due.
• You can face additional damages for unfair or abusive dismissal if procedures were not followed.
• Non-compliance can trigger fines and, in serious or repeated cases, potential criminal liability for managers.
• Reputational damage and union disputes can disrupt operations and complicate future restructurings.

Does Outsourcing Employment via an EOR Change Severance Liability?

Using an Employer of Record (EOR) such as https://www.playroll.com/employer-of-record in Algeria generally means the EOR is the formal employer responsible for calculating and paying severance. However, your company, as the client, usually bears the economic cost under the commercial agreement with the EOR. Algerian authorities may still look at your level of control over the worker when assessing liability in contentious cases. You should ensure the EOR’s local contracts, policies, and termination procedures fully align with Algerian Labor Code requirements. Clear indemnity and cost-sharing clauses help avoid surprises if a severance dispute arises.

Be 100 Percent Compliant in Offering Severance with Playroll

Managing severance in Algeria requires you to align contract terms, internal policies, and collective agreements with the Labor Code, then apply them consistently at termination. Playroll helps your team translate these legal rules into clear, practical workflows, from documenting the reason for dismissal to calculating service length and eligible earnings. With localized expertise, you reduce the risk of overlooking sector-specific rules or customary practices that can influence severance outcomes.

When you work with Playroll, you keep strategic control over your workforce while we handle the operational complexity of compliant terminations. Our platform centralizes employment data, supports accurate severance calculations, and coordinates timely payments through vetted local partners. That means fewer disputes, cleaner audits, and a smoother exit experience for your departing employees in Algeria.