Foreign companies hiring in Morocco through an Employer of Record often ask the same question once a role needs to end quietly: can we agree on a mutual termination, the way we would in France or elsewhere in Europe? The honest answer disappoints most HR teams at first. Morocco's Labour Code never adopted a dedicated mutual termination procedure. And yet ending a permanent contract by agreement is still possible here, just not through a single, standardized mechanism.
No, Morocco has no equivalent of the French "rupture conventionnelle." The Labour Code (law 65-99) only codifies resignation, dismissal and the natural end of a fixed-term contract. A mutual agreement is legally mentioned but has no dedicated procedure. In practice, employers and employees use conciliation before the labour inspector or a private settlement agreement instead.
Does Morocco have an equivalent of the French mutual termination agreement?
Not in the strict sense. Morocco's Labour Code, under law 65-99, recognizes three ways to end an open-ended contract: resignation at the employee's initiative (article 34), dismissal at the employer's initiative (article 35 onward), and the natural expiry of a fixed-term contract. No article sets out a dedicated bilateral termination procedure, with a standard form, a cooling-off period and administrative approval, the way French law does.
Article 34 does mention a departure by mutual will, placed on the same legal footing as resignation and dismissal. But it builds no mechanism around that possibility. No form. No fifteen-day cooling-off period. No approval by a dedicated labour authority. The result is that a mutually agreed departure remains a recognized possibility on paper, without a user manual attached to it. It gets built case by case, through direct negotiation, or through a visit to the labour inspector once trust has already broken down.
What does article 34 of the Labour Code actually say about mutual agreement?
Article 34 of Morocco's Labour Code states that an open-ended contract ends through the will of one party, or both. The text places mutual agreement on the same legal level as resignation and dismissal, without granting it a procedure of its own. No written form is required for a mutual agreement, unlike resignation, which demands a legally authenticated signature.
In Moroccan practice, that freedom of form quickly becomes a trap. Without a solid written record, either side can later dispute what actually happened and have the departure reclassified as wrongful dismissal or a forced resignation before the labour court. Under Morocco's Labour Code, a verbal understanding on the principle of a negotiated departure offers no real protection on its own, neither to the employee hoping for compensation nor to the employer who thought the matter was closed.
"Mutual agreement exists in theory under article 34, but carries no procedural framework of its own: no form, no deadline, no official approval. That gap is exactly why Moroccan HR practitioners consistently steer negotiated departures toward article 41 conciliation or a written settlement, the two routes that leave an enforceable paper trail." This absence of a dedicated procedure explains why most negotiated exits in Morocco end up going through one of the two routes detailed below.
What are the three real ways to end a permanent contract by agreement in Morocco?
| Route | Legal basis | Who initiates it | What the employee gets |
|---|---|---|---|
| Negotiated resignation | Article 34 | The employee, with the employer's informal agreement on departure terms | Final settlement pay only, unless a separate written commitment says otherwise |
| Conciliation before the labour inspector | Article 41 | Either party, usually after a disagreement over a dismissal | Statutory severance plus negotiated damages, approved and tax-exempt |
| Private settlement agreement | Dahir des obligations et contrats (chapter on settlement) | Both parties, outside of any dispute already filed | A freely negotiated amount, formalized in writing by both sides |
The first route, negotiated resignation, is the weakest for the employee. Legally, it is still a resignation, which carries no right to severance pay. Anything beyond the standard final settlement pay needs its own written commitment signed before departure, not a verbal promise from HR.
The second, conciliation, offers the strongest protection. It generally assumes a dismissal has already been notified, or is being considered, and both sides want to avoid court. Our guide to wrongful dismissal in Morocco breaks down how those damages are calculated, capped at 36 months of salary under article 41.
The third, a private settlement, fits best when no dismissal has been notified yet and both sides simply want to close the chapter without a formal termination.
How does conciliation before the labour inspector actually work?
The process is administrative and fairly quick. Either party contacts the labour inspector covering the company, by simple letter or following a dismissal that has already been notified. A meeting is scheduled with the employer or its representative and the employee, sometimes assisted by an employee representative.
If the two sides agree on the severance and damages, the inspector drafts a conciliation record signed by both parties. That document has a sweeping effect: it becomes final and can no longer be challenged in court, barring a proven defect of consent. This is also its main tax advantage, since amounts paid under this route are exempt from income tax, unlike a purely private settlement, which stays taxable above the overall exemption cap.
If conciliation fails, nothing is lost. The file simply moves to the first-instance court's labour division, under the ordinary rules that apply to dismissal.
Article 41 conciliation remains, in practice, the sturdiest way to secure a negotiated exit in Morocco. It assumes a real or potential disagreement over a dismissal, not just a wish to part on good terms. The labour inspector sets no amount: their role is to witness the agreement and sign it, which gives it a legal weight that no email exchange or verbal deal can match. An employee who accepts an amount in conciliation cannot, barring proven fraud, go back to court for more on the same dismissal. That finality, combined with the tax exemption, is why Moroccan labour lawyers almost always steer clients toward this route rather than an unapproved private settlement.
"Under article 41 of Morocco's Labour Code, a conciliation agreement signed before the labour inspector becomes final, and the amounts paid under it are exempt from income tax, unlike a private settlement, which remains taxable above the overall exemption cap on termination payments."
How much does a negotiated departure actually cost? Rachid's case
Take Rachid, a logistics team lead in Tangier employed through an Employer of Record contract for nine years, with a gross monthly salary of 9,000 MAD. The foreign company he works for wants to end the role due to a reorganization, with no serious misconduct to invoke. Rather than notify a dismissal and risk a court challenge, both sides, through the EOR acting as the legal employer, go before the labour inspector.
The calculation starts from the statutory scale under article 53: 5 years at 96 hours plus 4 years at 144 hours, or 1,056 hours at an hourly rate of 47.12 MAD (9,000 divided by 191), roughly 49,750 MAD in statutory severance. Both sides then add, as negotiated damages, the equivalent of six months of net salary, around 48,600 MAD, to close the matter for good. The total comes to about 98,000 MAD, approved by the inspector and tax-exempt within the overall one-million-MAD cap detailed in our guide to severance pay in Morocco.
| Item | Estimated amount |
|---|---|
| Statutory severance (article 53, 9 years) | roughly 49,750 MAD |
| Negotiated damages (6 months net) | roughly 48,600 MAD |
| Total approved by the inspector | roughly 98,350 MAD |
This figure is a negotiation outcome, not a fixed scale. An employer nearly certain to lose a wrongful dismissal claim will often move closer to the theoretical 36-month ceiling under article 41. But an employer in a stronger position, facing a recently hired employee, will rarely offer more than the strict legal minimum.
What is a private settlement agreement under Moroccan contract law?
A settlement, governed by the chapter of the Dahir des obligations et contrats dedicated to it, is a contract through which parties end an existing dispute or prevent one from arising, in exchange for reciprocal concessions. Applied to an employment termination, it takes the form of a signed document where the employee waives any future claim in exchange for a set amount, and the employer commits to paying that amount by a specific date.
Once signed, a settlement carries, between the parties who signed it, a weight comparable to a final court judgment. It can only be challenged for error, fraud or duress, rare cases in practice. That is precisely why an employee should never sign a settlement under pressure on the same day it is presented, without first checking the proposed figures against what conciliation or a court would likely award.
What this means for umbrella companies and Employer of Record arrangements in Morocco
A consultant working through an umbrella company who wants to end a mission early does not negotiate with the end client, but with the umbrella company itself, their legal employer. The three routes described above apply in exactly the same way: negotiated resignation, conciliation, or settlement, depending on the relationship and the real reason for the split.
For a foreign company employing in Morocco through an Employer of Record, it is the EOR that handles this negotiation on the company's behalf, drafts the settlement, or represents the company before the labour inspector. A serious EOR provider documents this kind of exit clause before the initial contract is even signed, rather than improvising on the day a termination becomes necessary.
Before offering, or accepting, a termination "by mutual agreement" in Morocco, always check exactly which route it goes through. A resignation signed under pressure, with no separate written commitment on compensation, leaves the employee with no recourse at all. An approved conciliation or a written settlement, on the other hand, protect both sides and keep a good-faith agreement from turning into a labour court dispute six months later.