Dismissals and Termination of Employment in Algeria

Legal information about notice periods, severance pay, summary dismissals, grounds for termination and more.

1. Dismissal of employees

1.1 Reasons for dismissal

Termination of the work relationship is strictly regulated in Algerian law. Article 66 of the Law 90-11 dated 21 April 1990 on employment relations, as amended, and supplemented, hereafter referred to as “Law 90-11”, has stipulated the cases/legal reasons for ending the employment relationship.

The main reasons provided by the law to terminate an employment contract are: 

  • The nullity or the legal abrogation of the employment contract. 
  • The arrival at the end of short-term contract. 
  • Resignation.
  • Dismissal.
  • The total incapacity to work.
  • Dismissal in order to reduce the workforce (downsizing). 
  • The employer ceasing legal activities.
  • Retirement. 
  • Death.

According to the above, dismissal as a unilateral way of terminating the employment relationship is limited in labour law to disciplinary dismissal and dismissal for economic reasons, excluding dismissal for personal reasons, lack of skills or performance. 

A disciplinary dismissal takes place after an employee commits a serious fault.

The Labour Code defines serious faults as serious penal faults that occur during work and are sanctioned by penal legislation. The following are also considered examples of serious fault (Art. 73 of Law 90-11):

  • A worker who refuses without any valid reason to execute instructions linked to his/her professional obligations or he causes the company distress because he fails to execute his/her obligations.
  • A worker who divulges professional information related to techniques, technology, production process, organisational mode or internal documents, unless he/she is authorised by the employer or by law to do so.
  • A worker who participates in a collective and concerted work stoppage in violation of the legislative provisions in force.
  • A worker who commits any act of violence.
  • A worker who deliberately causes material damage to buildings, structures, machines, instruments, raw materials, or any object connected to work.
  • A worker who refuses to execute a notified requisition order in accordance with the regulation in force.
  • A worker who takes drugs or drinks alcohol inside the company or the workplace.

In practice, unless dismissal proceedings are provided for in the internal rules, only the above-mentioned faults are considered serious and are subject to dismissal.

Note that as per Art. 73-1 of Law 90-11, in determining and qualifying serious fault committed by a worker, the employer must consider the circumstances in which the fault occurred, its extent and
 
degree of seriousness, the damage caused, as well as the conduct of the worker, up to the date of this fault, towards the patrimony of his/her employing organisation.

Dismissal for economic reasons is analysed below under section 1.7.

Thus, Algerian legislation does not define the procedure and conditions to be followed for other cases of termination of the employment relationship (except for disciplinary dismissal and dismissal due to economic reason).

Therefore, due to potential negative consequences, dismissal should only be considered in cases of extreme necessity. Indeed, a Court may qualify a dismissal as abusive if the dismissal does not respect the legal provisions. Indeed, the risk is that the Court may either ask for the reinstatement of the worker (when possible) or grant the employee compensation for abusive dismissal amounting to six months’ salary. In addition to this amount, the Court may grant the employee the salaries that he would have been paid between the dates of dismissal and the decision. In addition to this amount, the Court may also grant the employee compensation for any damage caused by the loss of his/her job. 

Note that Law 90-11 was amended by Law 22-16 of 20 July 2022. Indeed, the latter law added provisions concerning cases that lead to the suspension of the work relationship and worker leave for the creation of a business. Specifically, workers are entitled to non-remunerated leave for business creation once during their professional career.

A worker is also entitled to participate in part-time work for business creation. 

The duration of leave or part-time work for business creation is set at a maximum of one year. This can be extended in exceptional circumstances for a period not exceeding six months if the concerned worker provides appropriate justification.

A worker receiving leave for the creation of a business will face the suspension of his/her remuneration and the termination of his/her rights relating to seniority and promotion.

However, the worker preserves all acquired rights related to his/her job position as of the date of the leave for business creation.

During leave, a worker will continue to benefit from social security coverage according to the terms set by the regulation.

In case of non-completion of the project within the set deadlines, the worker may request reinstatement in his/her job, or to be reemployed in full-time work within a minimum of one month before the expiration of the leave or the period of part-time work for business creation.

1.2 Form

Article 73-2 of Law 90-11 provides that disciplinary dismissal is carried out in accordance with the provisions and procedures set out in the internal rules. These procedures must include the written notification of the dismissal decision and a hearing by the employer of the concerned worker who may be assisted by a worker of his/her choice belonging to the employing body.

Regarding the implementation of measures concerning dismissal for economic reasons, Article 16 of Decree 94-09 dated 26 May 1994 related to employment safeguarding and the protection of employees who are likely to lose their job involuntarily (“Decree 94-09”) provides that downsizing must be accompanied by:

  • The establishment of individual decisions to end the employment relationship; 
  • The payment of dismissal allowances;
  • Communication with the relevant work inspection and unemployment insurance and early retirement funds; and 
  • The names of the employees affected by the downsizing.

Note that Decree 94-09 was modified by the Complementary Finance Act for 2022 (articles 1 and 3 of the said decree). Modified Article 1 now provides that – in addition to the rules and procedures governing the use of readjustment of employment levels for economic reasons and the nature, levels, forms of assistance that the public authorities could grant in favour of the preservation and promotion of employment – the Decree fixes any similar measure taken by public authorities relating to payments by the State to workers and employees of economic companies in particular cases set down by the regulation.

Regarding Article 3 of this decree, the Complementary Finance Act for 2022 adds that the national employee protection system against the risk of involuntary job loss for economic reasons consists of legal instruments establishing, in particular, any similar measures taken by public authorities relating to the payment by the State to workers and employees of economic companies subject to final court decisions confiscating their assets in connection with corruption cases. This is done in order to allow these workers access to certain specific benefits, including unemployment insurance and early retirement.

1.3 Notice period

Article 73-5 of Law 90-11 provides that the dismissal of workers who have not committed serious misconduct entitles them to a leave period, the minimum duration of which is fixed in collective agreements or conventions.

Art. 73-6 of the same law provides that, during the leave period, the dismissed worker is entitled to two hours per day, cumulative and paid, to allow him/her to look for another job.

The employer organisation can fulfill the obligation to give leave by paying the dismissed worker with a sum equal to the total remuneration the employee would have received during the same period.

1.4 Involvement of employee representatives

Redundancy for economic reasons should be decided after collective bargaining, as outlined in Article 69 of Law 90-11. This process relies on a number of social partners. 1 Workers’ representatives, unions, participation committees. Dismissal can be due to economic reasons, but would require the employer to follow a series of restrictive steps and proceedings.

Decree 94-09 has established the abovementioned rules. It provides and confirms that negotiations must be entered into with a social partner (i.e. trade unions) or employee representatives.

1.5 Involvement of a union

Refer to section 1.4 above.

1.6 Approval of state authorities necessary

Having been the subject of an agreement, the social plan we refer to below under section 1.7 (regarding downsizing) is filled by the employer with the Clerk of the Court and the relevant Labour Inspectorate. It is implemented according to the agreed-upon deadlines and modalities and in strict compliance with the provisions of Decree 94-09 (Art. 15 of Decree 94-09).

If the employee is a foreigner, Article 21 of Law 81-10 dated 11 July 1981 on the conditions of employment of foreign employees, as amended, hereafter the “Law 81-10”, stipulates that the employer is required to notify the relevant employment services of any termination of an employment contract within forty-eight hours. The foreign worker concerned is required to return the work permit or temporary work authorisation to his/her employer organisation, which must send the authorisation to the relevant employment services no later than 15 days after the termination date the work relationship.

1.7 Collective redundancies

Article 69, paragraph 1 of Law 90-11 provides that when there is justified for economic reasons, the employer may downsize.

Under the same Article 69, downsizing is a reduction of the workforce that consists of a collective dismissal that carries out individual and simultaneous dismissal for economic reasons and is decided after collective negotiation. The same article forbids an employer that has started a downsizing procedure from hiring new employees at the same place of work in the same professional categories as the employees dismissed due to the downsizing.   

If the concept of "economic reason" is not defined by legislation or case-law in Algeria, it is accepted that it must be sufficiently serious to justify downsizing and therefore represents an uncontrollable constraint suffered by the employer that requires downsizing to ensure the company’s continued survival. Thus, to justify a dismissal for economic reasons, the job cull must result from economic difficulties.

The Algerian labour regulation is extremely protective of employees who could involuntarily lose their jobs and obliges an employer who has decided to resort to this type of dismissal to follow strict procedures.

Before proceeding with downsizing, the employer is required to use all means to reduce the number of redundancies (Cf. Art. 70 of Law 90-11), including:

  • Reducing working hours.
  • Moving employees to part-time work.
  • Following the procedure for retirement under existing legislation.
  • Reviewing the possibility of transferring staff to other activities that the employer may have developed or to other companies. In case the employee refuses, he/she receives a dismissal allowance for downsizing.

The measures promoting the safeguarding of employment are covered by Decree 94-09. In this regard, the employer is required to set up a social plan comprised of two steps (refer to Articles 7,8 and 9 of Decree 94-09).

Article 5 of Decree 94-09 provides that any employer with more than nine employees that decides to readjust levels of employment and wages must register them within the framework of the protection mechanism provided for by this legislative decree resulting in a social component.

Note that these measures cannot be performed without the participation of employee representatives. The latter must be consulted, and minutes of the negotiations must be taken.

The collection of the opinions of the participation committee, the organisation and supervision of the negotiations with the union representatives of the workers concerning the content of the social component and its implementation are carried out in accordance with the legal provisions in force, most notably Law 90- 02 of 6 February 1990, as amended and supplemented, on the prevention and settlement of collective labour disputes and to the exercise of the right to strike, as well as Law 90-11.

If the employer does not find a favourable solution to safeguard employment or if the employee rejects any proposal made by the employer, dismissal should be announced and the employee notified.

It should be noted that the employer can downsize only if social security contribution payments are up to date, including those for the unemployment insurance schemes and early retirement (Cf. Art. 20 of Decree 94-09).

1.8 Summary dismissals

Non-Applicable exactly with these terms. 

Refer to section 1.1 regarding the disciplinary dismissals and section 1.7 regarding downsizing.

1.9 Consequences if requirements are not met

Article 73-4 (paragraph 1) of Law 90-11 provides that if a worker is dismissed in violation of mandatory legal and/or contractual procedures, a Court of first and last resort can annul the dismissal decision for non-compliance with the procedures, instruct the employer to carry out the procedure
 
provided for, and grant the worker financial compensation at the employer's expense, which may not be lower than the salary the employee would have received had the individual continued work.

Also note that anyone who downsizes in violation of the provisions of Law 90-11 is, without prejudice to the rights of workers to reinstatement, eligible for punishment with a fine of between DZD100,000 and DZD 200,000 multiplied by the number of workers involved (Art. 146 of Law 90-11).

In addition, note that Decree 94-09 provides in Article 34 that failure to declare staff reduction and payment of contributions as stipulated in Article 20, as referred to above (section 1.7), constitutes an offence within the meaning of this legislative decree, and can result in a fine of between DZD 2,000 and DZD 5,000 multiplied by the number of workers concerned.

Article 23 of Law 81-10 provides that non-transmission of the notice of termination of the employment contract by the employing organisation, within the time limits prescribed in Article 21 of Law 81-10 (as referred to under section 1.6), can be punished with a fine of between DZD 5,000 and DZD 10,000, which will be doubled if repeated.

1.10 Severance pay

Regarding redundancy allowances, the employer must pay any employee subject to downsizing and who benefits from the unemployment insurance regime an amount of compensation equal to three months’ salary (Cf. Art. 22 of Decree 94-09).

As per Article 23 of Decree 94-09, this allowance is calculated based on the average gross monthly wage received during the 12 months preceding the termination of the employment relationship.

In addition, Article 21 of the same Decree provides that employees earmarked to be terminated in the framework of a reduction in the workforce and who are compensated by means of a job, or admission to retirement or early retirement are not entitled to any compensation other than that due to them for paid leave.

In specific cases of serious fault, the dismissal allowance can be null.

Article 73-4 (paragraph 2) of Law 90-11 provides that if a worker dismissal occurs in violation of the provisions of Article 73, as referred to above, it is presumed to be unfair. A Court ruling in the first and last resort could decide either to reinstate the employee in the company and maintain the individual's advantages or – in the event that one or other of the parties refuse – the Court could also grant the worker financial compensation of no less than six months salary without prejudice to any damages.

1.11 Non-competition clauses

A non-competition clause is only valid if provided in the employment contract or collective agreements.

1.12 Miscellaneous

To avoid resorting to forced termination of the employment relationship, which might qualify as an unfair dismissal, the transaction “Accord transactionnel” is a kind of employment relationship termination, which,
 
although not provided for by Algerian labour law, has a legal basis (the transaction is contained in Article 459 of the Civil Code) and allows for a defence in case of contestation.

This transaction allows the employer to solve the payment consequences of the employee’s departure and includes the abandonment of any pursuit in exchange for immediate payment by the employer of an amount that the parties consider fair. The minimum amount of this compensation may not be less than the amount allowed by law to an employee, which is three months salary in an economic dismissal.

2. Dismissal of managing directors

Decree 90-290 of 29 September1990 (“Decree 90-290”) fixes the specific regime of labour relations concerning company directors.

In accordance with Article 2 of Decree 90-290, the following individuals are considered to be company managers:

  • The main salaried manager (general director, manager, or other main salaried manager) of any capital company whose working relationship is established with the administrative body (board of directors, supervisory board, or other administrative body) of the said company; and
  • Management executives who assist the main salaried manager of the said company.

The principal salaried manager is linked to the administrative body of the capital company by a contract that determines his/her rights and obligations as well as the powers conferred by the said administrative body (Art. 3 of Decree 90-290).

The powers conferred on the principal salaried manager by the administrative body of the capital company are the subject of a legal publication (Art 4. of Decree 90-290).

2.1 Reasons for dismissal

As per Article 10 of Decree 90-290 and without prejudice to the legislative provisions in force, the employment contract of company directors may be terminated by either party in the event of a breach of the terms of the contract by one of the parties, particularly those relating to objectives and performance obligations.

2.2 Form

Article 15 of Decree 90-290 provides that terminating the employment contract of the principal salaried manager is announced or declared by the authorised bodies of the capital company in accordance with the provisions of ordinance n ° 75-59 of 26 September 1975 of the Commercial Code.

When the termination of the employment contract occurs according to the will of the capital company’s authorised body, the latter must inform the concerned company director in writing. The termination of the employment contract gives the right, in this case, for the company director who has not committed serious misconduct, to take a contractually determined leave period (Art. 12 of Decree 90-290).

In accordance with Article 13 of Decree 90-290, the company manager is entitled, during the leave period, to half a paid day per day. The capital company can fulfil its obligation to offer a leave period by paying the company manager a sum equal to the total remuneration that he/she would have received over the same period.

2.3 Notice period

As per Article 11 of Decree 90-290, when the employment contract is terminated according to the will of the company manager, the latter is required to observe a notice period, determined contractually, except in the event of a serious breach of the terms of the contract by the other contracting party.

2.4 Involvement of employee representatives

Not applicable.

2.5 Involvement of a union

Not applicable.

Article 9 of Decree 90-290 provides that the rights and obligations of company directors, including their remuneration, are not subject to collective bargaining.

2.6 Approval of state authorities necessary

No.

2.7 Collective redundancies

Not applicable.

2.8 Summary dismissals

Not applicable.

2.9 Consequences if requirements are not met

The abusive termination of the employment contract by one or the other of the parties may, in addition to the periods of notice or leave referred to in Articles 11 and 12 as mentioned above, give rise to civil damages, in accordance with the legislation in force (Art. 14 of Decree 90-290).

2.10 Severance pay

There is no mandatory severance pay for the capacity as director, unless stated otherwise in the by-laws of the company or in the resolution of appointment of the managing director.

2.11 Non-competition clauses

The non-competition clause must be agreed-upon between the parties.

2.12 Miscellaneous

As per Article 6 of Decree 90-290, the company director has the same rights and obligations as salaried workers by the legislation in force, except for specific provisions related to the regime of the director's employment relationship.

Article 16 of the same Decree provides that company directors are not subject to the internal rules of the capital company.

However, company directors who do not comply with the obligations arising from their employment relationship may be subject to a written warning or call to order from the bodies with which he/she concluded the employment contract.

This transaction allows the employer to solve the payment consequences of the employee’s departure and must include the abandonment of any pursuit in exchange for immediate payment by the employer of an amount considered to be fair by the parties. The minimum amount of this compensation cannot be less than the amount allowed by law to an employee, which is three months salary in an economic dismissal.