Everything you need to know about redundancy in Morocco

This informative note describes the reasons, justification and calculation of severance pay in Morocco.

1. Possible reasons for dismissal and their justification:

A distinction is made between "redundancy for economic reasons" and "redundancy for personal reasons". Personal dismissal is linked to the employee's person, whereas economic dismissal is carried out by the employer for a reason outside the employee's person. Dismissal for personal reasons comprises two types of dismissal: those based on non-serious misconduct (non-disciplinary) and those based on serious misconduct as defined in article 39 of the Labor Code (disciplinary). Dismissal in this way presupposes compliance with substantive conditions (justification of the reason, ART 39 of the Labor Code) and compliance with a formal condition (a specific procedure).

Dismissal for non-disciplinary personal reasons is when it is not necessarily caused by a fault (serious or gross) on the part of the employee, although it remains inherent to his or her person. This type of dismissal can therefore be caused, for example, by the employee's inability to achieve an objective previously agreed with the employer.

To this end, the legislator requires the employer, before dismissing for this reason, to first adopt disciplinary sanctions against the employee for non-serious misconduct, namely a warning; a reprimand; a second reprimand or dismissal for a period not exceeding eight days; a third reprimand or transfer to another department.

Under article 38 of the French Labor Code, when disciplinary sanctions have been exhausted during the year, the employer may dismiss the employee. In this case, the dismissal is considered justified.

Disciplinary dismissal is, however, the case where the employee has committed a serious offence, as stipulated in article 39 of the French Labor Code. In this case, the employee may be dismissed without notice, compensation or payment of damages.

Article 39 cites offenses against honor, trust or public decency, the disclosure of a professional secret causing damage to the company, and the commission of a list of acts inside the establishment or during work. However, it is important to note that the French Supreme Court has ruled that the list provided for in Article 39 is not exhaustive (C. Supr., Soc., May 12, 2004, no. 467). Consequently, the employer may justify dismissal on grounds other than those listed in article 39.

2 Calculating severance pay in Morocco:

To be entitled to compensation, the employee must have been bound to his employer by an open-ended employment contract at the time his contract was terminated, in accordance with the provisions of articles 52 and 53 of the French Labor Code.

Also, the reason for terminating the employment contract must not be based on serious misconduct. The employee must also have worked for at least six months in the same company where he or she was dismissed. The following types of compensation must be taken into consideration:

- Compensation in lieu of notice :
This indemnity is provided for under article 51 of the new Labor Code. Its amount is equal to the salary that the dismissed employee would have received if he had remained in his job until the end of his notice period, as provided for in his employment contract or the relevant implementing decree.

- Legal severance pay:
This indemnity is provided for under article 53 of the French Labor Code, and is calculated on the basis of the employee's length of service with the company and hourly wage. Only employees dismissed for serious or gross misconduct may be deprived of this indemnity. The amount of severance pay for each year or fraction of a year of actual employment is equal to :

- 96 hours' salary for the first 5 years of seniority, or 2.5 months' salary for the first 5 years of seniority;

- 144 hours' salary for seniority between 6 and 10 years, or 3.8 months' salary for the next 10 years of seniority;

- 192 hours' salary for the period of seniority from 11 to 15 years, or 5 months' salary for the next 15 years of seniority; Preview(opens a new tab)

- 240 hours' pay for seniority exceeding 15 years.

- Damages :
Damages are provided for under article 41 of the French Labor Code. The amount is set at 1.5 months' salary per year of seniority, capped at 36 months' salary.

- Compensation for unused paid leave :
This indemnity is provided for under article 251 of the French Labor Code, and is paid for days not taken from the annual paid leave to which the employee is entitled.

 

Faithfully yours,

Ilham Taha-Bouamri
Independent chartered accountant and tax specialist

Share capital increase for a sarlau

Share capital increase for a SARLAU

In principle, a capital increase entails an amendment to the articles of association7. According to the first paragraph of article 77 of law no. 5-96, in the event of a capital increase, new shares may be paid up either: by contribution in cash or in kind; by set-off against liquid and due claims on the company; or by capitalization of reserves, profits or share premiums.

1. Capital increase through cash contribution :

A cash capital increase is an equity transaction whose purpose is to increase a company's share capital in exchange for a cash contribution from one or more individuals or legal entities (partners or third parties).

Cash capital increases in SARLs are governed primarily by articles 51 and 77 of Law 5-96. Under Moroccan law, the operation takes place in the following stages9:

➔ Check that the SARL's share capital has been paid up in full;

➔ Check that at least a quarter (or any proportion strengthened by the bylaws) of the amount of the capital increase is available from subscribers ;

➔ Analysis of the contractual documentation binding the company and associates (typically financing agreements and associates' pacts) to determine whether the capital increase operation does not require prior consents, which is not required in our case as it is a SARLAU.

➔ Valuation of the company in order to determine the terms of the capital increase (subscription price of newly-created shares, need for a share premium or not, etc.) ;

➔ Opening by the company of a blocked bank account ;

➔ Convocation of the Extraordinary General Meeting within the timeframe prescribed by the bylaws; ➔ Holding of the Extraordinary General Meeting to decide on and record the completion of the capital increase;

➔ Deposit of funds relating to the payment of new shares in the company's blocked bank account and obtain a certificate of blocking of funds ;

➔ Legalization of the minutes relating to the general meeting ;

➔ Complete tax registration formalities within 30 days ;

➔ Make the amending declaration to the trade register within 30 days; ➔ Publish the transaction in a legal gazette and the Bulletin officiel within 30 days.


2. Capital increase by offsetting liquid and due claims on the company:

From an economic point of view, the contribution of a receivable into a company's capital consists of "converting" a current account receivable into share capital. In accounting terms, the company's debt is thus transformed into equity (share capital), enabling it to post healthier accounts by raising its level of equity. For this to be possible, the current account receivable must be certain, liquid and due.

Law no. 5-96 requires only a statement of account for an increase by offsetting against debts, without any further clarification. For example, art. 77, para. 2 stipulates: "If the new shares are paid up by offsetting against the company's debts, these debts shall be the subject of a statement of account drawn up by the manager and certified as accurate by a chartered accountant or by the company's statutory auditor, as the case may be".

It should be noted, however, that under French law, the operation of increasing the share capital by offsetting it against receivables takes place in the following stages:

➔ the company's general meeting will decide on a cash capital increase, this decision will have to clearly state that the subscription can be made by offsetting against any existing debt ;

➔ The company director must draw up a statement of account for the receivable. This statement must be certified as accurate by the statutory auditor if there is one; (by a chartered accountant under Moroccan law).

➔ the partner concerned will sign a subscription form indicating that he is subscribing to the shares issued and that he is paying up the amount of his subscription by offsetting it against his receivable ;

➔ the paying-up of shares will be evidenced by a certificate drawn up, either by the company's statutory auditor, or by a notary (particularly if there is no statutory auditor) ;

➔ it may then be noted that the capital increase has been completed.

SHARE CAPITAL INCREASE FOR A SARLAU

3.combine the two increases on the EGM minutes No legal provision expressly regulates the cumulative use of the two means of capital increase, either in Moroccan law or in comparative law. It is assumed that opting for both means of capital increase will simply entail the obligation to deposit the funds in a blocked bank account and obtain a blocking certificate, and to have the receivables approved by a chartered accountant, so the procedure will be as follows:

➔ First: Provide proof of paid-up capital

◆ If in cash: Deposit the funds in a blocked bank account and obtain a blocking certificate ;

◆ If by offsetting receivables: Arrest the receivables by the management and have it certified by a chartered accountant (or the CAC if there is one) ;

➔ Secondly: Hold an Extraordinary General Meeting with a capital increase on the agenda;

➔ Then: sign, legalize and register the minutes of the EGM;

➔ After that: The minutes of the EGM are filed with the Clerk of the Commercial Court;

➔ In addition, Complete the amending declaration of the commercial register ;

➔ Next, Make the publication in a newspaper of legal announcements ;

➔ Finally, Make publication in the B.O ;

 

Our legal and tax team will be happy to provide you with any further information you may require on increasing the share capital of a SARLAU.

Faithfully yours,

Ilham Taha-Bouamri
Chartered accountant and tax specialist

Personal data protection in Morocco

A- Legal framework :

To understand the legal framework governing the protection of personal data in Morocco, we first need to clarify its nomenclature, before briefly presenting its fundamental principles, which guide procedural legal requirements.

Law no. 09-08 defines personal data as "any information of any kind and irrespective of its medium, including sound and image, concerning an identified or identifiable natural person". However, considering that the case in point concerns health data, the law qualifies them as sensitive data, requiring even greater protection.

Processing is defined in the law as any operation or set of operations, whether or not carried out using automated processes and applied to personal data, such as collection, recording and the like.

The controller is the natural or legal person, public authority, department or other body which, alone or jointly with others, determines the purposes and means of processing personal data.

The legal framework regulating the protection of personal data in Morocco is guided by certain fundamental principles, including the obligation of consent by the data subject, the clarity of the purpose of processing, which must be determined and must not be further processed in a way incompatible with that purpose. These principles are coupled with the obligation of proportionality and the fairness of such processing, implying that the personal data collected is appropriate to the purpose of the processing and that the data subjects are duly informed.

B- Rights and obligations of the persons concerned :

Machine users will have rights relating to the collection of their personal data, which must be protected in order to comply with legal requirements. Inherent

to the first principle mentioned above, users must express their consent freely, by accepting or refusing the collection of their personal information.

These people also have a Right to Information at the time of data collection, meaning that any person whose personal data it is intended to process has the right to be informed in a precise, express and unequivocal manner of the use or storage of data concerning him or her.

They also have a right of access, recognized by article 7 of law n° 09-08. This entitles any person to access information concerning him or her, in order to verify its accuracy. This right is supplemented by the right of rectification, which enables data subjects to request the rectification of inaccurate or incomplete information concerning them.

The law also preserves the right of data subjects to object to direct marketing, enabling anyone whose personal data is processed to object, free of charge, to their data being used for marketing purposes.

This range of user rights is guaranteed by the obligations incumbent on the data controller, who must first of all obtain the express consent of the data subject before processing. The data controller is also required to file prior declarations and authorizations with the CNDP. (See below).

Finally, the person responsible is bound by obligations of confidentiality, security of processing and professional secrecy, implementing all technical and organizational measures to protect personal data, in order to prevent it from being damaged, modified or used by a third party not authorized to access it.

These measures must be reinforced in the case of sensitive data or data relating to health, in accordance with the provisions of article 24.

C- Procedural approach :

Considering that the customer will be collecting health-related data, which the law classifies as sensitive, he is required to file not a prior declaration with the CNDP, but rather a prior authorization for the collection, which can be issued by the CNDP by filling out the form at the following link: https://www.cndp.ma/images/lois/CNDP-Autorisation-Prealable.pdf .

This prior authorization takes into account the delicate nature of sensitive personal data, and enables the CNDP to monitor the protection of personal data and ensure that the data controller complies with the provisions of law no. 09-08.

However, if this data is to be transferred outside Morocco, a transfer request must be made. As a first step, the data controller must ensure that he or she has obtained a receipt of authorization for the data to be transferred, before submitting the transfer request to the CNDP.

Once the receipt has been obtained, the data controller can fill in the CNDP foreign transfer request form on the following link:

https://www.cndp.ma/images/lois/CNDP-Transfert-Etranger.pdf pursuant to articles 43 and 44 of Law 09-08

All personal data collected in this context must be destroyed as soon as the declared or authorized purpose has been achieved.

Our legal and tax team will be happy to provide you with any further information you may require.

Faithfully yours,

Ilham Taha-Bouamri
Independent chartered accountant and tax specialist