Employment law
Ending an open-ended contract: what is the employee entitled to?
The severance scale, notice, redundancy, procedural defects, with worked calculations.
Ending an open-ended contract means drawing up a final settlement and issuing the employee's end-of-employment documents. Entitlements vary according to the reason for leaving, seniority and the applicable collective provisions.
One principle governs the whole settlement: payments do not automatically add up. Each answers a distinct cause, and each must be checked separately. On the routes to termination themselves, see 1. Open-Ended Contract.
1. Acquired rights to be settled
Whatever the reason for leaving, the settlement includes:
- salary remaining due up to the end of work;
- other acquired components of pay, bonuses included;
- compensation for leave accrued and not taken.
The employer must also issue a certificate of employment, stating the start date, the leaving date, the nature and dates of the successive positions held and the occupational classification. It is exempt from all stamp and registration duties.
Practical tip: set out each sum on a separate line of the final settlement. An itemised settlement can be checked; a lump-sum one gets challenged. Labour Code, Article L.61 (French).
2. Severance pay
It is due after at least one year of continuous service, subject in particular to exclusion for gross misconduct. It is distinct from notice and does not replace it.
The calculation is based on the average monthly remuneration over the last twelve months, excluding expense reimbursements, to which a progressive scale by seniority band applies:
| Seniority band | Rate applied to each year in the band |
|---|---|
| 1st to 5th year | 20% |
| 6th to 10th year inclusive | 25% |
| Beyond the 10th year | 30% |
Fractions of a year are taken into account, and more favourable contractual provisions may apply.
Example: seven complete years of service, with average monthly remuneration of CFA 300,000.
| Band | Calculation | Result |
|---|---|---|
| First 5 years | 300,000 × 5 × 20% | CFA 300,000 |
| 6th and 7th years | 300,000 × 2 × 25% | CFA 150,000 |
| Total | CFA 450,000 |
This amount covers severance pay only: notice and leave are calculated separately. Law No. 2017-021, Article L.53 as amended (French).
3. Compensation in lieu of notice
Where the notice period is not observed, the party responsible must pay compensation equal to the remuneration and benefits the employee would have received during the unobserved period.
The settlement must therefore state three elements: the notice period applicable to the occupational category, the period actually worked, and the terms of any waiver. A waiver at the employer's initiative does not reduce the sum due. Labour Code, Article L.42 (French).
4. Dismissal on economic grounds
It gives rise to a special, non-taxable payment equal to one month's gross salary, paid by the employer. It is in addition to notice and to severance pay, where the latter is due.
An employee dismissed on economic grounds also retains priority for rehiring for two years in their category. That priority is not a symbolic formality: it must be honoured if activity resumes.
In a dispute, the burden of proving the economic ground and compliance with the order of dismissals lies with the employer. Law No. 2017-021, Article L.48 as amended (French); Labour Code, Article L.48 (French).
5. Procedural defects and unfair dismissal
Two situations must be distinguished, and the distinction is frequently missed in settlements:
| Situation | What is at issue | Consequence |
|---|---|---|
| Procedural defect | The dismissal is substantively justified, but written notification or the statement of grounds is missing | Compensation that may not exceed one month's gross salary |
| Unfair dismissal | The ground itself is not legitimate | Damages, assessed by the competent court |
One month's salary should therefore not be entered automatically for any irregularity: that cap concerns a purely formal defect, on a dismissal that is otherwise well founded.
And in every contested case, it is for the employer to prove that a legitimate ground for dismissal existed. Labour Code, Articles L.51 and L.52 (French).
6. Resignation and gross misconduct
Two particular situations are worth knowing.
Resignation after a long career. An employee who resigns after at least ten years of continuous service is entitled to a long-service payment, calculated on the same basis and under the same conditions as severance pay. A resignation is therefore not always a departure without compensation.
Gross misconduct. It may exclude severance pay and compensation in lieu of notice, subject to assessment by the competent court. It never removes already acquired rights: salary, earned bonuses and untaken leave remain due. Labour Code, Articles L.41, L.53 and L.54 (French).
7. Summary by reason for leaving
| Reason for leaving | Severance pay | Notice | Specific payment |
|---|---|---|---|
| Dismissal on legitimate personal grounds | Due after 1 year | Due | - |
| Dismissal on economic grounds | Due after 1 year | Due | Special one-month, non-taxable payment |
| Dismissal for gross misconduct | May be excluded | May be excluded | - |
| Resignation | No | Owed by the employee | Long service after 10 years |
| Termination by agreement | - | No notice | Payment at least equal to statutory severance |
| Dismissal irregular in form | Depends on the merits | Depends on the merits | Compensation capped at one month |
In every case, acquired rights and the certificate of employment are due.
Key takeaways
| The rule | What it implies |
|---|---|
| Each entitlement is calculated separately | Payments do not automatically add up |
| The scale is progressive: 20%, 25%, 30% | On the average of the last twelve months |
| One year of service opens severance pay | Below that, it is not due |
| Economic grounds add a non-taxable month | Plus two years' rehiring priority |
| The one-month cap covers formal defects only | Unfair dismissal is a matter of damages |
| The burden of proving the ground lies with the employer | The file is built before the decision |