Employment law
Ending an open-ended contract: what is the employee entitled to?
One Monday morning, in the Sahel Distribution warehouse in Bamako, the storekeeper learns that his job is being cut. Seven years with the company, a monthly salary, and one question that comes straight away: how much, and when? The manager, for his part, is already dreading the summons to the labour inspectorate. Both are right to worry: when an open-ended contract ends, the most expensive item is almost never the severance payment, it is the botched procedure.
Sahel Distribution and the people named here are fictional. They serve only as an example throughout this article.
1. What exactly are we talking about?
An open-ended contract is a contract with no term set in advance. Either party may end it at any time, provided notice is given to the other.
Three different exits carry three different names. Dismissal comes from the employer. Resignation comes from the worker. Mutually agreed termination comes from both, through a signed protocol (Labour Code, articles L.40 and L.50 bis).
The most common mistake: using words that are not Malian
Many contracts and dismissal letters circulating in Mali refer to “serious misconduct”. That notion does not exist in the Malian Labour Code: the Code knows only gross misconduct, and leaves it to the court to assess. The same goes for “dismissal without real and serious cause”, a French formula. In Mali, the term is wrongful termination.
This is not a vocabulary detail: each notion carries its own regime, and a letter invoking “serious misconduct” invokes a ground that does not exist.
In Mali there is no serious misconduct. There is gross misconduct, and the court is the one that assesses it.
2. Before dismissing: a letter to the inspector, fifteen days of waiting
Any employer intending to dismiss must inform the labour inspector of the district by registered letter. That letter states who the worker is, who the employer is, and what the ground for dismissal is. The inspector then has fifteen days to issue an opinion (Labour Code, article L.40).
A worker who disputes the ground may bring the matter before the labour court, and that appeal suspends the employer’s decision. In other words: a dismissal challenged before the court produces no effect until the court has ruled.
So the Sahel Distribution manager sends his registered letter before calling the storekeeper in, not the other way round. That order is not administrative politeness: it is what makes everything that follows lawful.
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3. Notice: a period for each category, a price when it is not observed
Notice runs from the date the written notification is handed over. Its length depends on how the salary is paid and on the worker’s position in the hierarchy.
| Worker’s situation | Notice period |
|---|---|
| Staff paid by the day or by the week | 8 days |
| Worker whose salary is paid monthly | 1 month |
| Supervisors and equivalent grades | 2 months |
| Managers and executive staff | 3 months |
These periods apply in the absence of a more favourable collective agreement or decree. The contract may be ended without notice for gross misconduct, subject to the court’s assessment (Labour Code, article L.41).
What unobserved notice costs
The party that fails to observe the period owes the other a payment equal to the remuneration and benefits of any kind the worker would have received during the notice period not actually served (Labour Code, article L.42). The rule cuts both ways: a worker who walks out overnight owes it too.
Example. Ousmane, storekeeper, salary paid monthly, average monthly pay of XOF 300,000.
- Notice due: 1 month.
- Notice neither served nor paid: payment in lieu of XOF 300,000.
The most common mistake
Believing that releasing the worker from attending during the notice period allows the salary to be cut. It does not: unless both sides agree, the release entails no reduction in salary, benefits or holiday payments. The worker is also entitled to one paid day off per week to look for a new job and, once half the notice has been served, may leave as soon as a new job is found without owing payment in lieu (Labour Code, article L.44).
4. Severance pay: one year with the company, then a bracketed scale
Severance pay is owed to a dismissed worker with at least one year of continuous service in the company. It is separate from notice: you do not choose between the two, you pay both. It is also owed where the contract ends through force majeure (Labour Code, article L.53).
It is calculated on the average monthly remuneration of the last twelve months preceding the dismissal. That average covers every payment that rewards work, but excludes payments that reimburse expenses.
| Seniority bracket | Rate applied to the monthly average, per year |
|---|---|
| 1st to 5th year | 20 % |
| 6th to 10th year inclusive | 25 % |
| Beyond the 10th year | 30 % |
Example. Ousmane has 7 years of continuous service and a monthly average of XOF 300,000.
- First 5 years: 5 × 20 % = 100 %
- 6th and 7th years: 2 × 25 % = 50 %
- Total: 150 % × 300,000 = XOF 450,000
Fractions of years count. Were he to leave at 7 years and 6 months, half a year at 25 % would be added, i.e. 12.5 %: 162.5 % × 300,000 = XOF 487,500.
It is not seniority that is paid, it is each bracket of seniority, at its own rate.
Two important reservations. Collective agreements and establishment agreements may set more favourable rates, and those rates then apply. Conversely, the payment is not owed where the dismissal is grounded on the worker’s gross misconduct, which only the court assesses.
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5. Economic grounds: one more payment, and a door left open
Dismissal on economic grounds is dismissal based on a ground unrelated to the worker personally: a job cut or transformed, or a substantial change to the contract, following economic difficulties or technological change (Labour Code, article L.46).
Before dismissing, the employer must consult the staff delegates and look with them for solutions that keep jobs: shorter hours, shift working, part-time work, technical lay-off, redeployment, restructuring of bonuses. If they agree, a protocol is signed and sent to the labour inspector. If they disagree, the minutes are sent to him immediately, and he has fifteen days to use his good offices.
What the employer owes on top
A worker dismissed on economic grounds receives, on top of notice and severance pay, a special non-taxable payment equal to one month of gross salary. For two years he also keeps priority for re-hiring in the same category within his former company. In a dispute, it is for the employer to prove the economic ground and compliance with the order of dismissals (Labour Code, article L.48).
Example. Ousmane’s job is cut on economic grounds, with notice not served.
- Severance pay: XOF 450,000
- Payment in lieu of notice: XOF 300,000
- Special non-taxable payment: XOF 300,000
- Total: XOF 1,050,000, plus payment for holiday accrued and not taken.
The most common mistake
Believing the one-month special payment replaces severance pay. The text says the opposite: it is added to notice and to severance pay. A company that pays only one month in full settlement will owe the difference, and will owe it in court.
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6. Resignation, retirement, mutual termination: three exits, three calculations
Not every ending of an open-ended contract is a dismissal, and the reckoning changes each time. One thing is constant: an employer may never presume a resignation. The worker must give it in writing (Labour Code, article L.40).
| Exit | What is owed on top of accrued rights | Condition |
|---|---|---|
| Resignation | Long-service payment, calculated like severance pay | At least ten years of continuous service in the company |
| Retirement | Retirement payment, calculated on the same basis | Definitive cessation of activity in order to draw the pension |
| Mutually agreed termination | Departure payment set in the protocol, never below the statutory severance pay | Protocol freely signed, without pressure; copy sent to the inspectorate |
Three useful points. On resignation, notice is owed by the worker, and it is the worker who pays in lieu if it is not observed. On retirement, severance pay and the long-service payment are not owed: they are replaced by the retirement payment (Labour Code, articles L.54 and L.55). On mutually agreed termination, neither party observes notice, and a defect in consent makes the termination void.
7. Gross misconduct: what it removes, what it never removes
Gross misconduct allows termination without notice and deprives the worker of severance pay. But it is never established by the employer simply asserting it: the competent court assesses it, after the event. An employer who gets the characterisation wrong pays the notice, the severance pay, and damages for wrongful termination.
It removes no right already accrued: pay for days worked remains due, payment for holiday accrued and not taken remains due, and the certificate of employment must be handed over. On conducting a sanction without getting it wrong, see Sanctioning without getting it wrong, and, for fixed-term contracts, ending a fixed-term contract for misconduct.
Gross misconduct removes payments. It removes no right already accrued.
8. Getting the form wrong and getting the substance wrong: two very different bills
The Code draws a clear line between a badly dressed dismissal and a badly founded one. Confusing them means underestimating the risk in one case and overestimating it in the other.
| What went wrong | What the court awards |
|---|---|
| The form: dismissal lawful in substance, but no written notification or no ground stated | A payment that may not exceed one month of the worker’s gross salary |
| The substance: dismissal with no legitimate ground, an inaccurate ground, or a dismissal linked to the worker’s opinions or union activity | Damages assessed by the court, which are separate from both notice and severance pay |
In setting damages, the court takes account of custom, the nature of the services engaged, seniority, the worker’s age and accrued rights. Where the dismissal is disputed, it is for the employer to prove a legitimate ground (Labour Code, articles L.51 and L.52).
9. Final settlement: pay immediately, hand over the papers
Where the contract ends or is terminated, salary and payments must be settled as soon as the service ends (Labour Code, article L.103). There is no grace period: the day of departure is the day of payment.
Depending on the case, the reckoning covers:
- the salary still due and accrued accessories (bonuses, uplifts, overtime);
- payment for holiday accrued and not taken;
- notice served, or the payment that stands in for it;
- severance pay, or the long-service payment, or the retirement payment;
- the one-month special payment where the ground is economic.
The employer must also hand the worker, on final departure, a certificate of employment stating only the date of entry, the date of leaving, the nature and dates of the successive jobs held and the professional grade. Adding an appraisal, or entering tendentious or inaccurate information, exposes the employer to damages (Labour Code, article L.61).
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A closer look: “in full settlement” closes nothing
Many companies have a receipt signed “in full settlement”, believing the file is definitively closed. The Code says the opposite. A worker accepting a payslip without protest or reservation, signing it, and the words “in full settlement” do not amount to waiving payment of all or part of the remuneration.
The worker has three years to claim a salary, an accessory, a bonus or a payment, running from the date the sum fell due. That period is interrupted by only two events: a certificate from the labour inspector stating the date the dispute was referred to him, or a court summons that has not lapsed (Labour Code, articles L.110, L.111 and L.118).
Key takeaways in 6 points
- Inform the labour inspector by registered letter before any dismissal, and allow him his fifteen days to give an opinion.
- Give notice in writing and state the ground in it: with nothing in writing, the proof is missing and the form is already wrong.
- Pay severance from one year of continuous service, on the average of the last twelve months, bracket by bracket.
- Add, on economic grounds, one month of gross salary free of tax, and hold the re-hiring priority open for two years.
- Settle salary and all payments as soon as the service ends, and hand over the certificate of employment on the day of departure.
- Never rely on the words “in full settlement”: the worker keeps three years in which to claim.