Employer of Record (EOR) Morocco

Employment Contracts in Morocco

At Mercans, we ensure that employment contracts are meticulously crafted in compliance with Moroccan labor laws, governed by the Labour Code and the Code of Obligations and Contracts. These contracts formalize the agreement where an individual commits to providing personal services to an employer in exchange for remuneration.

Definitions and Legal Framework

• Employee: An individual performing occupational activities under the direction of another party for remuneration.
• Employer: Any organization or individual hiring the services of one or more individuals.

Contract Validity and Responsibilities

An employment contract in Morocco is valid only if both parties have the capacity to enter into it freely, and the contract’s object is lawful. Mercans ensures that each contract clearly outlines:

• Compliance with Moroccan employment laws.
• Management of local payroll processes.
• Filing of employment-related taxes and necessary paperwork.
• Provision of payslips and timely salary distribution.

Employers have the duty to ensure employees’ safety, health, and dignity, while employees must adhere to the employer’s authority and maintain good condition of work-related items. Employees are also responsible for their actions and any negligence during their employment.

Employee Information Requirements

When employment commences, Mercans provides employees with written information on:

• Working time schedules.
• Weekly rest arrangements.
• Payment of wages.
• Health and safety rules.
• Applicable collective agreements.

Employees receive a “labour card” detailing the employer’s and employee’s information, job description, and wage, which is updated with any changes.

Contract Types

• Indefinite-Term Contracts: May be oral or written; written contracts must be in two copies, signed by both parties.
• Fixed-Term Contracts: Used for specific tasks such as replacing temporarily absent employees, handling temporary increases in activity, or seasonal work. These contracts generally have a maximum duration of one year and become indefinite if extended beyond this period.
• Temporary Agency Work Contracts: Involve assignments where employees work for a client company but are employed by a temporary work agency. These contracts must be in writing and state the assignment details, including the reason, duration, location, and wages.

Working Hours

In Morocco, the standard working hours for employees are governed by Article 184 of the Labour Code. The maximum standard workweek is set at 44 hours, with a legal daily limit of 10 hours. The workweek can be spread across five or six days.

Probation Period

In Morocco, probation periods depend on the type of employment contract. For indefinite-term contracts, the probation period is set at three months for executive positions, one and a half months for office employees, and 15 days for on-site laborers, with the possibility of renewal once. For fixed-term contracts, the probation period is one day per work week, up to a maximum of two weeks if the contract is less than six months, and one month if the contract exceeds six months.

13th Month Salary

In Morocco, there is no legal obligation to pay a 13th or 14th month salary or bonus. However, employers are required to provide seniority bonuses as follows:

• 5% of the salary after two years of service
• 10% after five years
• 15% after 12 years
• 20% after 20 years

Termination, Severance Pay and Notice Period

In Morocco, Mercans ensures that termination procedures are managed in compliance with local labor regulations. When terminating an employment contract, employers are not legally obligated to provide a 13th or 14th month salary or bonus. However, they must adhere to specific guidelines regarding severance pay and notice periods:

• Severance Pay: Severance pay is calculated based on the length of service:
  • Employees with less than one year of service are entitled to 1/12th of their annual wages per month worked.
  • Employees with one or more years of service are entitled to one month’s salary per year of service.
• Notice Period: The notice period required for termination varies depending on the length of service:
  • For less than two years of service, the notice period is one month.
  • For more than two years of service, the notice period is two months.

Employees vs Independent Contractors

Here’s a straightforward comparison table outlining key factors between employees and independent contractors in Morocco:

Social Security in Morocco

Employer

For employers in Morocco, contributing to social security through the CNSS (Caisse Nationale de Sécurité Sociale) is mandatory. Here are the current CNSS contribution rates, which apply to the gross salary (excluding exempted allowances and indemnities):

• Family allocation: There is no employee contribution; the employer contributes 6.40%.
• Social allocation: Employees contribute 4.29%, while employers contribute 8.60%. Contributions are based on a ceiling of 6,000 MAD.
• Professional tax: There is no employee contribution; the employer contributes 1.60%.
• Mandatory medical care: Employees contribute 2.26%, and employers contribute 4.11%.

These contributions ensure compliance with social security obligations and provide various benefits to employees under the CNSS regime in Morocco.

Employee

For employees in Morocco, the primary mandatory social security regime is managed by the Caisse Nationale de Sécurité Sociale (CNSS) fund. While other private social security organizations exist in Morocco, participation in CNSS is compulsory for employees. The CNSS contribution rates are determined based on the gross salary, excluding specific allowances and indemnities. Here are the current rates:

• Family allocation: There is no employee contribution; the employer contributes 6.40%.
• Social allocation: Employees contribute 4.48%, and employers contribute 8.98%. Contributions are applied up to a monthly salary limit of 6,000 MAD.
• Professional training: There is no employee contribution; the employer contributes 1.60%.
• Mandatory medical care: Employees contribute 2.26%, and employers contribute 4.11%.

Additionally, if there is a social security treaty between Morocco and another country, foreign assignees may be exempt from Moroccan social security contributions and continue contributing to their home country’s social security regime, subject to the conditions outlined in the treaty.

Payroll in Morocco

Minimum Wages

New Minimum Wage Rates:

Effective September 2022, the new SMIG will rise to 15.55 dirhams per hour, marking a 5% increase from the previous rate of 14.81 dirhams. Further increments are planned, with SMIG set to increase to 16.29 dirhams per hour starting September 1, 2023.

Payroll Cycle 

In Morocco, the typical payroll cycle is monthly, and employees receive their wages by the final working day of each month.

Overtime Pay

In Morocco, overtime refers to any hour of work performed at the employer’s request beyond the normal working hours specified by the labor code. Companies may require overtime due to heavier workloads, staff shortages, or national emergencies requiring extended hours.

Compensating for Overtime

According to Article 196 of the Moroccan Labor Code, overtime must be compensated with additional pay on top of the regular salary. This compensation should be provided alongside the regular salary payment, unless specified otherwise in the employment contract or company regulations. All components of the salary must be considered in calculating overtime pay, excluding transportation costs, work-related expenses, and family allowances.

How Overtime Pay is Calculated

Non-Agricultural Activities:

Regular Workdays:

• Between 6:00 a.m. and 21:00 p.m.: 25% increase on the basic hourly wage.
• Between 21:00 p.m. and 6:00 a.m.: 50% increase on the basic hourly wage.
• Sundays and Public Holidays:
• Between 6:00 a.m. and 21:00 p.m.: 50% increase on the basic hourly wage.
• Between 21:00 p.m. and 6:00 a.m.: 100% increase on the basic hourly wage.

Penalties for Non-Payment of Overtime

• Employees can file a complaint with the labor inspectorate if they are not compensated for overtime worked. Proof of overtime hours must be provided. According to Article 203 of the labor code, employers failing to pay overtime may face fines ranging from 300 to 500 MAD per instance. The fine increases depending on the number of employees affected, up to a maximum aggregate fine of 20,000 MAD.

Mercans’ Payroll Capabilities

In the dynamic employment landscape of Morocco, Mercans serves as your trusted Employer of Record (EOR) for comprehensive payroll solutions. We understand that payroll administration is crucial to your business operations, and our services are meticulously designed to meet your specific needs in Morocco.

• Payroll Cycle in Morocco: As your dedicated Employer of Record in Morocco, Mercans manages the entire payroll cycle with precision and efficiency. From data collection to timely salary disbursals for both employees and contractors, we handle every step of the process, ensuring accuracy and compliance with local regulations.
• Local Currency Payments: A key feature of our payroll expertise in Morocco is our ability to manage multi-currency payrolls. We guarantee that all payments are made in Moroccan dirham (MAD), aligning seamlessly with local labor laws and regulations. This simplifies payroll distribution and eliminates the complexities of currency conversion for your workforce.
• Payroll Setup, Processing, and Administration: Our experienced team as your Employer of Record in Morocco takes care of comprehensive payroll setup, processing, and administration. Whether you need assistance in establishing payroll systems, managing routine cycles, or administering various payroll components, we provide reliable support tailored to your business needs.
• Ensuring Statutory Compliance: Compliance is fundamental to our payroll services in Morocco. We handle all statutory filings and payments meticulously, ensuring your business adheres strictly to local tax laws and regulations. With our deep understanding of compliance requirements, we help maintain your organization’s credibility and compliance with authorities.

Personal Income Tax in Morocco

Individuals residing in Morocco are subject to personal income tax on their global income. Non-residents, however, are only taxed on income sourced within Morocco.

Personal Income Tax Rates in Morocco: The Moroccan individual income tax is applied according to a progressive scale based on annual taxable income:

• 0 to 30,000 MAD: Exempted
• 30,001 to 50,000 MAD: 10%
• 50,001 to 60,000 MAD: 20%
• 60,001 to 80,000 MAD: 30%
• 80,001 to 180,000 MAD: 34%
• More than 180,000 MAD: 38%

These rates determine the amount of tax owed by residents on their income earned worldwide.

Morocco Employee Hiring Cost

In Morocco, the cost of hiring an employee includes more than just their gross annual salary. Here’s a breakdown of the components involved to help you understand:

• Gross Annual Salary: This refers to the total amount paid to the employee annually before any deductions or taxes. In this example, the gross annual salary is MAD 100,000.00.
• Annual Employer Costs: These are additional expenses that the employer incurs beyond the gross salary. They typically cover contributions to social security, medical insurance, and other mandated or voluntary benefits. In Morocco, annual employer costs amount to MAD 19,425.00. This figure includes obligations such as social security contributions and potentially other benefits depending on the employer’s policies and legal requirements.
• Total Annual Cost: This is the combined sum of the gross annual salary and the annual employer costs. In this case, the total annual cost of employing this individual in Morocco is MAD 119,425.00.

Understanding these components is essential for businesses to accurately budget and plan for the total expenditure associated with hiring and retaining employees in Morocco, considering both mandatory and discretionary costs related to employment.

Employee Benefits in Morocco

Mandatory Benefits

In Morocco, labor laws mandate a robust set of benefits aimed at providing financial security, time off, and social protection for employees. Employers must adhere to these regulations to ensure compliance with the law.

Paid Time Off

• Employees accrue a minimum of 18 days of paid annual leave per year, with accrual based on service tenure.
• Additional leave may be granted based on factors like age and extended service.
• Paid time off is also provided for Morocco’s 13 official national holidays.

Leave for Medical Reasons

• Sick leave is available after 54 days of contributions within the last six months.
• It typically starts on the fourth day of illness and covers two-thirds of the employee’s average daily wage.
• Female employees are entitled to 14 weeks of paid maternity leave at full salary.

Social Security

• Both employers and employees contribute to Morocco’s social security system, covering pensions, health insurance, work injury insurance, and unemployment insurance.
• Contributions vary based on specific social security programs.

Probationary Periods and Overtime

• Employment contracts may include a probationary period, typically lasting three months for executives and six months for non-executive staff.
• Overtime work requires mutual agreement and is compensated at higher rates, especially for night shifts, weekends, and public holidays.
• Termination procedures involve specific notice periods and severance pay calculations based on tenure.

Optional Benefits

In addition to mandatory benefits, Moroccan employers often offer optional benefits to attract and retain talent:

• Financial Benefits
  • 13th-Month Bonus: Some companies provide an additional month’s salary as a bonus.
  • Seniority Bonuses: Additional bonuses may be granted based on an employee’s length of service.
  • Meal Vouchers and Transportation Allowances: Subsidies for meals and commuting costs may be offered.
• Health and Wellness
  • Supplemental Health Insurance: Private health insurance plans may supplement basic public health coverage.
  • Fitness Allowances: Reimbursements for gym memberships or fitness programs to promote employee well-being.
• Work-Life Balance
  • Flexible Work Arrangements: Options like flexible schedules or remote work may be available.
  • Childcare Allowances: Subsidies or on-site daycare facilities to support employees with children.
• Professional Development
  • Training and Development: Opportunities for job training, conferences, or educational courses to enhance skills and career advancement.

Health Insurance Requirements

• Assurance Maladie Obligatoire (AMO)
  • AMO, or Compulsory Health Insurance, covers medical expenses for all formal sector employees and their dependents.
  • Managed by CNOPS (public sector) and CNSS (private sector), contributions are mandatory and shared between employers and employees.
  • Coverage typically includes 70% to 90% of healthcare costs within the Moroccan public healthcare system.

Retirement Plans

• Caisse Marocaine de Retraite (CMR)
  • Public pension plans for civil servants, military personnel, and semi-public sector employees.
  • Benefits based on salary and years of service, funded through employer and employee contributions.
• Moroccan Inter-professional Retirement (CIMR)
  • Private pension scheme for private sector employees, offering supplementary retirement savings alongside public plans.
  • Provides flexibility and potential higher payouts compared to public schemes.
• Personal Retirement Savings Plans (PER)
  • Individual retirement savings plans offered by banks and insurance companies, allowing tax-advantaged savings for retirement.

Work Permit in Morocco

(EU) citizens are exempt from entry visa requirements for Morocco, determined by the Ministry of the Interior. For other countries, a tourist visa valid for three months is typically required for temporary visits.

Moroccan embassies or consulates provide details on necessary documents for tourist visa applications.

Work Permits and Self-Employment

Foreigners can work in Morocco after obtaining specific authorizations:

• Employment Contract: Foreigners can work for a Moroccan company or a foreign company’s Moroccan establishment. Prior approval from the national employment agency (ANAPEC) and the Ministry of Employment is required.
• Secondment: Foreigners seconded by a foreign parent company to its Moroccan subsidiary or branch must obtain approval from the Ministry of Employment.
• Self-Employment: Expatriates can establish independent businesses in Morocco. Valid work and residence permits are required. Minimum share capital varies (MAD300,000 for a PLC and no minimum for an LLC).

Residence Permits

Residence permits are issued for one to 10 years, renewable multiple times. Applications are filed in person with police authorities. Required documents include a work permit, lease agreement, and medical certificate from a Moroccan doctor.

Family and Personal Considerations

• Family Members: Dependents wishing to reside in Morocco must obtain residence permits. Applications can be submitted once the main applicant has their permit. Spouses or dependents seeking employment need separate work permits.
• Driver’s Permits: Foreigners can drive with their foreign driver’s license for one year after obtaining a residence permit. Moroccan driver’s licenses are required thereafter.

EOR Solutions in Morocco

• Employer of Record (EOR) Services: Mercans provides comprehensive Employer of Record solutions tailored for businesses expanding into Morocco. We manage the entire employee lifecycle, ensuring adherence to Morocco’s labor laws and regulations.
• Recruitment Support: In addition to EOR services, Mercans offers recruitment solutions to facilitate talent acquisition in Morocco. Leveraging our extensive network and expertise, we assist in identifying, onboarding, and retaining top talent to support your business growth.
• Visa and Immigration Services: Simplify global mobility with Mercans’ visa sponsorship and immigration services in Morocco. We navigate the complexities of expatriate employment, ensuring compliance with Moroccan immigration and employment regulations.
• Contractor Management: Our Assistance on Record (AOR) services cater to businesses managing contractor payments in Morocco. We ensure accurate and compliant payment processing, relieving your administrative burden.
• Employee Transition Services: Mercans facilitates the transition of freelancers to permanent employees in Morocco. We ensure smooth conversions while adhering to legal requirements, supporting your workforce integration strategy.
• HCM Integration: Integrate Mercans’ EOR services seamlessly with your Human Capital Management (HCM) system in Morocco. Benefit from real-time data exchange, enhanced compliance, and operational efficiency for streamlined workforce management and payroll operations.