What Severance Pay Rules Must Employers Follow in Morocco?

Which Employees Qualify for Severance Pay?

• Employees with an indefinite-term contract dismissed for reasons other than serious or gross misconduct.
• Employees with at least six months of continuous service in your company, regardless of working time.
• Employees terminated for economic, technological, or structural reasons, following legal procedure.
• Employees whose fixed-term contracts are ended early by the employer without a lawful justification.
• Employees who resign for employer fault treated as constructive dismissal by a court.
• Employees excluded from social security coverage may still qualify if they meet Labour Code criteria.

What Are the Legal Timelines for Paying Severance?

In Morocco, 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. The Labour Code requires you to settle all amounts due without unjustified delay once the contract ends. In practice, many employers aim to pay within a few days of termination, especially when handing over the work certificate and other documents. If there is a dispute about the amount, you should still pay the undisputed portion promptly and document your calculation. Any court-ordered adjustments later will be added on top, often with interest.

What Penalties Apply if Severance Is Not Paid Correctly?

If your company fails to pay severance correctly in Morocco, you risk financial, administrative, and reputational consequences. Labour inspectors and courts can intervene, and employees can claim back pay, damages, and interest. Non-compliance also increases the chance of a dismissal being reclassified as unfair, which can multiply your total liability.

• Courts can order payment of outstanding severance plus legal interest from the date it fell due.
• You may owe additional compensation for unfair or abusive dismissal if procedures or amounts were not respected.
• Labour inspectors can record violations that support employee claims and damage your compliance record.
• Legal disputes increase legal fees, management time, and the risk of negotiated settlements above statutory levels.
• Persistent non-compliance can harm your employer brand and complicate future workforce relations.

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 need to follow Moroccan severance rules, but it shifts who is the legal employer of record in-country. In Morocco, the local EOR entity is typically responsible for calculating and paying severance in line with the Labour Code. However, your company usually bears the economic cost through your service agreement with the EOR. If you instruct an unlawful or abusive termination, you can still face indirect exposure through indemnities, contract claims, or reputational damage. A well-structured EOR arrangement should clearly allocate severance responsibilities and ensure compliant documentation.

Be 100 Percent Compliant in Offering Severance with Playroll

Managing Moroccan severance correctly means tracking seniority, salary components, and the legal per-year-of-service rates for each employee. Playroll helps your team automate these calculations, apply statutory caps, and distinguish between severance, notice pay, and other end-of-service amounts. You get clear breakdowns for each termination so you can explain and document payments confidently to employees and auditors.

With Playroll, your company also benefits from local legal expertise and up-to-date monitoring of Moroccan Labour Code changes. Our Employer of Record and global payroll tools coordinate timelines, approvals, and payment execution so severance is paid on time and in the right currency. That way, you reduce the risk of disputes, penalties, and surprise liabilities while keeping your offboarding process professional and compliant.