Severance Release Agreement Template for the United Arab Emirates

A Severance Release Agreement is an essential legal document that protects both employers and employees when terminating an employment relationship in the United Arab Emirates. This comprehensive settlement agreement ensures compliance with UAE Labor Law while providing a clear framework for resolving all outstanding obligations and preventing future disputes.

When do you need this document?

You need a Severance Release Agreement when formally ending an employment relationship, whether through mutual consent, redundancy, or dismissal. This document is particularly crucial when there are complex entitlements to calculate, such as end-of-service gratuity, unused vacation days, or bonus payments. It's also essential when the termination involves sensitive circumstances, such as performance issues or restructuring, where both parties want to ensure a clean break with no future claims. Companies operating in free zones like DIFC or ADGM may have additional requirements that necessitate specific provisions in the agreement.

Key legal considerations

Your Severance Release Agreement must include precise calculations of all statutory entitlements under UAE Labor Law, including end-of-service gratuity based on the employee's length of service and final salary. The agreement should clearly define what claims are being released, ensuring that the scope is reasonable and enforceable under UAE law. You must include proper consideration for the release, typically the settlement payment itself, and ensure that any restrictive covenants like non-compete clauses comply with UAE legal requirements. The document should address confidentiality obligations, return of company property, and specify the governing law and dispute resolution mechanism. It's crucial that both parties understand the finality of the agreement and that the employee has adequate time to review the terms before signing.

Legal requirements in United Arab Emirates

Under UAE Labor Law (Federal Decree-Law No. 33 of 2021), your Severance Release Agreement must be drafted in both Arabic and English, with the Arabic version taking precedence in case of disputes. The agreement must comply with Ministerial Resolution No. 47 of 2022 regarding end-of-service benefit calculations and settlement procedures. You must ensure that the settlement amount meets minimum statutory requirements and that the agreement doesn't waive rights that cannot be legally waived under UAE law, such as certain safety or discrimination protections. The document should be properly witnessed and notarized where required, and both parties should retain signed copies. For employees in certain free zones, additional compliance requirements may apply under specific free zone employment laws. The agreement should also address visa cancellation procedures and any requirements for obtaining a no-objection certificate for future employment.