What Severance Pay Rules Must Employers Follow in Martinique?

Which Employees Qualify for Severance Pay?

• Employees on an open-ended contract (CDI) with at least 8 months of continuous service generally qualify for statutory severance on dismissal.
• Severance is usually owed when you terminate for personal or economic reasons, excluding serious (faute grave) or gross misconduct (faute lourde).
• Fixed-term employees may receive an end-of-contract indemnity, unless an exception applies, but this is distinct from dismissal severance.
• Employees covered by a collective bargaining agreement may qualify for higher or more favorable severance terms than the statutory minimum.
• Part-time employees and those with variable hours qualify on a pro rata basis, using their average reference pay to calculate severance.
• Employees who resign, retire voluntarily, or whose probation is ended generally do not qualify for statutory dismissal severance, unless a specific agreement provides otherwise.

What Are the Legal Timelines for Paying Severance?

In Martinique, you should treat severance payment as due at the effective end of the employment contract, in line with French Labour Code practice. In most cases, the indemnity is paid together with the employee’s final paycheck and other closing amounts (unused leave, bonuses due, etc.). Delaying payment beyond the contract end date can expose your company to late-payment interest and potential damages. Where a collective agreement or settlement sets a specific schedule, you must follow that timetable strictly. Always document the calculation and payment date on the final payslip and in the termination documents so you can evidence compliance in any later dispute.

What Penalties Apply if Severance Is Not Paid Correctly?

If your company fails to pay severance correctly in Martinique, you risk both financial and procedural sanctions under French labor law. Employees can challenge the termination before the labour court (Conseil de prud’hommes), which can award unpaid severance, interest, and additional damages. Non-compliance with dismissal procedures, such as not giving proper notice or reasons, can also increase your liability even if some severance was paid.

• Courts can order payment of the outstanding severance plus statutory interest.
• You may owe damages for unfair or abusive dismissal, which can exceed the severance amount.
• Failure to follow consultation or information duties can trigger additional penalties under collective or statutory rules.
• Reputational damage and strained employee relations can impact future hiring and negotiations.
• Legal and advisory costs will rise if disputes escalate or multiple employees bring claims.

Does Outsourcing Employment via an EOR Change Severance Liability?

Using an Employer of Record (EOR) in Martinique, such as through a global platform, does not remove the need to respect French labour law on severance. The EOR is typically the legal employer on paper, but your company still drives day-to-day management decisions, including performance expectations and restructuring. If an employee challenges a dismissal, courts may look at both the EOR and your company to determine who is responsible for any unpaid severance or wrongful termination damages. Your service agreement with the EOR should clearly allocate who calculates severance, who funds it, and who manages legal disputes. You should still understand the statutory and collective agreement rules so you can budget correctly and avoid instructing the EOR to implement an unlawful termination.

Be 100 Percent Compliant in Offering Severance with Playroll

Be 100 percent compliant in offering severance with Playroll by centralizing your employment data, contracts, and termination workflows in one place. Playroll helps your team map French Labour Code rules to each employee in Martinique, including seniority, contract type, and applicable collective agreements. With clear records of salary history and working time, you can calculate statutory and enhanced severance quickly and defend your decisions if they are ever challenged.

Playroll’s Employer of Record and global payroll tools keep your processes aligned with local notice rules, documentation standards, and payment deadlines. Your HR and finance teams can coordinate final pay, severance, and certificates so everything is issued on or before the contract end date. With automated reminders, localized templates, and expert support, you reduce the risk of costly disputes and ensure every termination in Martinique is handled fairly and compliantly.