Madagascar Employment Guide

Navigating Employment Termination in Madagascar: A Guide for Global Employers

Terminating an employment contract in Madagascar requires strict adherence to a complex legal framework. Employers must navigate these regulations carefully, as unilateral termination without valid justification is not permitted. The process involves coordination with key stakeholders and may incur specific costs and procedural steps.

Permissible Grounds for Termination

To ensure compliance, employers can terminate employment through several legally recognized channels:

• Voluntary resignation initiated by the employee.
• Mutual agreement between the employer and the employee.
• Unilateral termination by the employer, justified by:
  • Unsatisfactory performance during the probationary period.
  • Objective grounds such as economic redundancy.
  • Disciplinary dismissal for misconduct.
  • Persistent underperformance indicating professional inadequacy.
• Natural expiration of a fixed-term contract.

Understanding Notice Period Obligations

The mandatory notice period in Madagascar varies significantly. It starts at a minimum of one day and increases based on the employee's length of service and classification. For example, an employee with five years of service in a managerial role will have a longer notice period than a junior employee with one year of service.

Severance Pay: A Critical Financial Consideration

Employees dismissed for economic reasons are legally entitled to severance pay. The compensation is calculated as ten days' wages for each full year of service, with a statutory cap equivalent to six months' salary. For instance, an employee with a decade of service would receive 100 days' wages as severance, provided it does not exceed the six-month limit.

To mitigate unforeseen financial liabilities, SailGlobal proactively manages severance accruals for all employment agreements in Madagascar. Leveraging deep expertise in global litigation risk management, SailGlobal's calculations are based on prevailing statutory rights and local best practices. Should an employee resign or be ineligible for severance, any unused accrued funds are promptly returned to the client.

Case Study: Implementing a Compliant Restructuring

Consider a multinational company downsizing its Antananarivo office. By partnering with SailGlobal, the company ensured each terminated employee received the correct notice and severance, avoiding costly legal disputes and maintaining its reputation as a responsible employer.