The original Celestial Empire manuscript had rules for Morale, based on a simplified version of the ones found on pages 90-91 of Crusaders of the Amber Coast, also by Alephtar Games. The Morale rules were left out of the published version of the game; however the Morale ratings for the various creatures did remain in the published version of the rule book (see page 108).
Basically the Morale rules function as follows:
1. Creatures with a 'Leader' Morale rating may keep their ground irrespective of losses amongst their fellows, and even fight to the death if cornered, or if defending their lair. One-fifth of the Status score of the 'Leader' creature is applied as a bonus to its Command rolls, and to the morale tests of its underlings (see below).
2. Creatures with an 'Average' Morale rating function as if they were Leaders as long as they are commanded by a Leader. If the Leader goes down, or if more than half of their party fall or flee, an 'Average' creature must roll under Stamina. If the roll is failed, the creature becomes demoralised (as per p53 of BRP), and flees/surrenders/remains frozen in panic.
3. Creatures with a 'Mook' Morale rating must constantly be kept under the command of the Leader through a successful Command skill roll. If the Leader goes down, or if more than half of their party fall or flee, a 'Mook' creature automatically becomes demoralised, and flees/surrenders/remains frozen in panic.