Termination And Settlement Agreement Template for the United Arab Emirates

A Termination And Settlement Agreement is your essential legal document for ending an employment relationship by mutual consent in the United Arab Emirates. This comprehensive agreement protects both parties while ensuring full compliance with UAE employment law, particularly Federal Decree-Law No. 33 of 2021. When properly executed, it provides clear documentation of all termination terms and prevents future disputes.

When do you need this document?

You need this agreement whenever you want to terminate an employment relationship by mutual consent rather than through dismissal or resignation. It's particularly valuable when negotiating voluntary redundancies, early retirement packages, or resolving workplace disputes through settlement. The document becomes essential if you're restructuring your business, closing operations, or when an employee agrees to leave in exchange for enhanced compensation. You'll also require this agreement if you're settling potential legal claims or ensuring compliance with UAE visa cancellation requirements. For employees under 21, involvement of a legal guardian makes this formal documentation even more critical.

Key legal considerations

Your agreement must clearly specify all financial settlements, including end-of-service gratuity calculations under UAE law, any enhanced compensation, and payment timelines. Include comprehensive mutual release clauses to prevent future claims from either party. Address post-termination obligations such as confidentiality, non-compete restrictions, and return of company property. Ensure proper witness arrangements, particularly when dealing with employees under 21 who require legal guardian involvement. Consider any ongoing benefits, visa sponsorship transfer requirements, and compliance with Central Bank regulations for settlement payments. The agreement should specify which party handles visa cancellation procedures and associated costs.

Legal requirements in United Arab Emirates

Under UAE Federal Decree-Law No. 33 of 2021, you must calculate end-of-service gratuity based on the employee's final basic salary and length of service. For employees with unlimited contracts, provide 21 days' basic salary for each of the first five years, and 30 days for each subsequent year. Limited contract employees receive different calculations based on their remaining contract period. Ensure compliance with notice period requirements, which vary from 30 to 90 days depending on service length and position level. Your agreement must address any outstanding leave balances, ticket allowances, and accommodation arrangements. Include proper Arabic translation if required, and ensure all parties have legal capacity to enter the agreement. The document should comply with UAE Civil Code principles governing contractual obligations and settlement arrangements.