This page of the guide to Disgaea RPG answers the question what to do when the character reaches lvl 100. Here, you will learn what reincarnation is and where to do it.
When a character reaches level 100, the ability to level up will be blocked. You need to go to Facilities - Mao's Lab and click Reincarnate, the option that increases the maximum level.
Select the character you want to raise the level cap for (always 100 levels more) and click Reincarnation.
Of course, this is not free. You'll pay for it with a few reincarnation gems and HL coins.
NOTE! After reincarnation, your character will again be at level 1. Their statistics will again be very low, so be careful with the upcoming fights. At this point, it's best to use the quick leveling option in Dark Gates - Gate of EXP and use a few coupons to skip the battle.