Ending an employment contract in Algeria: resignation, dismissal, retirement and the papers you hand over

The nine ways a contract ends under the law

Article 66 of Law No. 90-11 of 21 April 1990 on employment relations lists the cases in which the employment relationship ends. In a small business, three situations come up most often: the end of a fixed-term contract (CDD), a resignation and a dismissal for serious misconduct. Each has its own rules. The table below sums them up, and the sections that follow give the detail.

End of a fixed-term contract: check the contract first

A fixed-term contract ends on the date set in the contract (art. 66). Before that date, read it again. Law No. 90-11 allows a fixed-term contract in five cases only (art. 12), for example to replace an absent employee or to cope with extra work. A fixed-term contract signed outside these cases is treated as a contract of indefinite duration (art. 14). Its "end" then becomes the termination of a permanent contract, and the dismissal rules apply.

Resignation: a letter and a notice period

Resigning is the employee's right (art. 68). An employee who wants to leave hands in a written resignation and leaves the job after a notice period, whose length is set by the applicable collective agreement. Keep the dated and signed letter: it proves that the employee chose to leave.

Dismissal for serious misconduct

A disciplinary dismissal is only possible for serious misconduct (art. 73), and serious misconduct means dismissal with no notice period and no severance pay. Besides serious offences punished by criminal law and committed at work, the law lists in particular an employee who:

• refuses without valid reason to carry out instructions linked to their duties, given by their managers in the normal exercise of their authority
• discloses work information without permission, such as techniques, production processes, organisation or internal documents
• takes part in a collective, concerted work stoppage that breaks the law
• commits acts of violence
• deliberately damages buildings, machines, raw materials or other objects used for work
• refuses to carry out a requisition order served under the law
• drinks alcohol or takes drugs at the workplace

To decide whether the misconduct is serious, the law asks you to weigh the circumstances, how far it went and how grave it was, the harm caused, and how the employee behaved up to that date (art. 73-1). One late arrival from an employee with a clean record does not weigh the same as an act of violence.

The procedure, step by step

1. 1

   Gather the facts

   Write the facts down with the date, the place and any witnesses, and keep the evidence. A dismissal that breaks the law is presumed unfair, and you must prove otherwise (art. 73-3).

2. 2

   Invite the employee

   Invite them in writing to a meeting, stating what they are accused of, the date and the place. Remind them that they may bring a co-worker of their choice from the business.

3. 3

   Hear them

   The law requires the employer to hear the employee (art. 73-2). Listen to their explanation and write up a record of the meeting.

4. 4

   Give the decision in writing

   Hand over the dismissal decision in writing (art. 73-2), against signature or by registered letter, stating the misconduct and the end date of the contract.

5. 5

   Settle the departure

   Hand over the work certificate, pay the salary due and the leave earned, then report the exit to CNAS.

Dismissal without serious misconduct: notice and severance pay

A dismissed employee who has not committed serious misconduct is entitled to a dismissal notice period (délai-congé), whose minimum length is set by collective agreements (art. 73-5). During this period they get two paid hours a day, which can be added up, to look for another job. You may also release them from working the notice period by paying the full pay they would have earned over that time (art. 73-6).

Example: an employee on a permanent contract for 4 years, whose best monthly average over the last three years is 40,000 DA, is entitled to 4 months, or 160,000 DA of severance pay, on top of the notice period and any untaken leave.

Workforce reduction (economic grounds)

When economic reasons justify it, the employer may reduce its workforce (art. 69). The decision is taken after collective bargaining, and afterwards you may not recruit again at the same workplaces in the job categories affected. Before that, the law requires you to use every means of limiting job losses, such as shorter hours, part-time work, retiring staff who qualify, or a transfer to another activity or business (art. 70). An employee who turns down a transfer is entitled to severance pay for workforce reduction. The staff affected are selected in particular on length of service, experience and qualifications (art. 71).

Above 9 employees, Legislative Decree No. 94-09 of 26 May 1994 adds a duty: the reduction must be part of a "social component" presented to the participation committee and the representative unions at meetings called for that purpose (art. 5 and 10). Employees who lose their job for economic reasons may be covered by the unemployment insurance scheme created by Legislative Decree No. 94-11 of the same day.

Retirement

Retirement ends the employment relationship (art. 66). Since Law No. 16-15 of 31 December 2016, an employee may claim a pension from age 60 after at least 15 years of work, and a female employee may retire at her request from age 55 (Law No. 83-12, art. 6). The employee may also choose to keep working for up to five years beyond that age. During that period you cannot retire them.

Other cases

• Business closure: it ends the contracts (art. 66) but does not release you from the dismissal notice period (art. 73-6).
• Total incapacity for work, as defined by law (art. 66).
• Death of the employee (art. 66).
• The contract being void or legally revoked (art. 66).

An employee who leaves to start a business

Since Law No. 22-16 of 20 July 2022, an employee may take, once in their career, unpaid leave or part-time work to start a business, for up to one year, which can exceptionally be extended by up to 6 months (art. 56 bis and 56 bis 1). If their absence could seriously harm the business, you may postpone their departure by up to 6 months, after consulting the participation committee (art. 56 bis 2). If they start their business and do not ask to return at least one month before the leave ends, the employment relationship ends (art. 56 bis 4 and 56 bis 5).

What you must pay on departure

An employee cannot give up their annual leave (art. 39). They earn two and a half days per month worked, up to 30 calendar days a year (art. 41), and leave pay equals one twelfth of the pay received during the reference year (art. 52). Count the days earned but not taken and pay them with the last salary. The employment relationship can be neither suspended nor ended during annual leave (art. 49): wait until the employee is back before ending the contract.

Documents to hand over and to keep

CNAS and tax formalities

You report an employee's departure on the CNAS e-declaration portal. After each contribution return, the portal takes you to the staff movements statement (EMS, état des mouvements des salariés). There you add the employee who left during the period and select "Sortie" (exit). The annual declaration of salaries (DAS) also has an entry date and an exit date for each employee.

After your last employee leaves

If your company carries on with no staff, it may no longer need an office, only a registered office address. Neuron Cowork offers business domiciliation in Dely Brahim for 6,000 DA a month, with a notarised contract for one or two years. If you stop trading, closure ends the remaining contracts (art. 66), but the dismissal notice period is still owed (art. 73-6). Our company closure guide covers the next steps.

Common mistakes

• Dismissing on the spot after an incident, with no invitation, no hearing and nothing in writing.
• Calling something serious misconduct when you cannot prove it.
• Accepting a spoken resignation, with no dated and signed letter.
• Letting a fixed-term contract "run out" when it did not fit any case of article 12.
• Leaving untaken leave out of the final payment.
• Not handing over the work certificate.
• Forgetting to report the exit in the CNAS staff movements statement.
• Retiring an employee before they have received notice that their pension is granted.