The dismissal indemnity was replaced by the seniority payment after the amendment to Article 89 of the Labor Law by Royal Decree dated June 26, 2018. The dismissal indemnity was paid to worker when the employer terminated the employment contract at initiative of the employer, except in the case of a serious offense. In addition, the indemnity was also paid to the worker if the employer ceased the contract due to the worker’s sickness. Employer was not obliged to pay for any dismissal of worker who resigned at his own will. The indemnity had to be paid to worker, even though the termination of the contract was not made by the employer, but the employer had been urged by his evil deeds to cause the worker terminate his own contract. If the employer treated the worker unfairly or repeatedly violated the terms of the contract, he also had to pay indemnities and damages to the worker.
The seniority payment, however, applies to the same system of dismissal indemnity, but it is different at the time of payment. The seniority payment must be paid to the incumbent worker, while the dismissal indemnity has to be paid at the time the contract is terminated. In principle, the seniority payment is equal to the average wage of 15 days per year. Every six months, the employer must pay the worker half of the seniority payment. If the employer terminates an employment contract in accordance with the provisions of the Labor Law, the employer must pay the amount of seniority remaining from 1 month to 6 months of the payment equal to the wage and the fringe benefits for 7 days. Payment of seniority is explained in detail by the Prakas dated September 21, 2018 of the Ministry of Labor and Vocational Training.