What Severance Pay Rules Must Employers Follow in Jordan?

Which Employees Qualify for Severance Pay?

• Employees working under an open-ended or fixed-term employment contract governed by Jordanian Labour Law.
• Employees who are not covered by the Social Security Corporation and therefore are entitled to end-of-service benefits.
• Employees whose contracts are terminated by the employer without a lawful reason or in a way deemed arbitrary by the labour courts.
• Employees who complete at least one year of continuous service with your company, unless a more generous company policy applies earlier.
• Employees whose fixed-term contracts are ended early by the employer without a legally valid justification.
• Employees who resign for legally recognized reasons, such as serious employer breach, may also qualify for end-of-service pay in some cases.

What Are the Legal Timelines for Paying Severance?

In Jordan, the safest practice is to settle all severance and end-of-service entitlements on the employee’s final working day or within a few days of termination. Labour authorities expect you to pay promptly once the employment relationship ends and all dues are calculated. Delays can trigger complaints to the Ministry of Labour and expose your company to legal claims. To stay compliant, build severance calculations into your offboarding checklist and obtain written acknowledgment of receipt from the employee. Where a dispute exists, you should still pay the undisputed portion immediately and document the balance as under review.

What Penalties Apply if Severance Is Not Paid Correctly?

If your company fails to pay severance correctly in Jordan, you risk financial, administrative, and reputational consequences. The Ministry of Labour can investigate complaints, and labour courts can order back payments plus additional compensation, especially in cases of arbitrary dismissal. Non-compliance can also affect your ability to maintain a clean record with authorities and may complicate future inspections or licensing processes.

• You may be ordered to pay outstanding severance and other end-of-service benefits retroactively.
• Courts can award compensation for arbitrary or unlawful termination on top of statutory entitlements.
• The company can face fines and administrative sanctions under Jordanian Labour Law.
• Employees may file labour claims, leading to legal costs and management time spent on disputes.
• Repeated non-compliance can damage your employer brand and increase scrutiny from regulators.

Does Outsourcing Employment via an EOR Change Severance Liability?

Using an Employer of Record (EOR) such as https://www.playroll.com/employer-of-record does not remove the underlying obligation to respect Jordanian severance rules. In an EOR model, the EOR is typically the legal employer on paper and is responsible for calculating and paying severance in line with Jordanian Labour Law. However, your company usually funds these costs through service fees or pass-through charges, and you remain the economic decision-maker behind any termination. If the EOR mishandles severance, both the EOR and your company can face reputational and commercial consequences, and local authorities may still look to the party exercising real control over the employee.

Be 100 Percent Compliant in Offering Severance with Playroll

With Playroll, your company gets a structured approach to severance compliance in Jordan, from contract setup to offboarding. We help ensure that employment terms clearly address Social Security coverage, end-of-service benefits, and notice periods so you know upfront what severance exposure you carry. When a termination is on the table, our team supports you in mapping the reason for termination to Jordanian legal categories and estimating the safest severance package.

Playroll’s workflows are designed to minimize delays and errors in final payments, including severance, unused leave, and other statutory entitlements. We coordinate with in-country experts so your timelines, documentation, and calculations align with local practice and labour authority expectations. That way, your team can focus on business decisions while we help you stay compliant, reduce dispute risk, and protect your employer brand in Jordan.