Termination By Agreement Template for the United Arab Emirates

When you need to end an employment relationship by mutual consent in the United Arab Emirates, a Termination By Agreement document provides the legal framework to protect both employer and employee interests. This formal agreement ensures compliance with UAE labor laws while establishing clear terms for the termination process, financial settlements, and post-employment obligations.

When do you need this document?

You should use this agreement when both parties voluntarily decide to end the employment relationship without disputes or misconduct. Common situations include company restructuring where affected employees agree to voluntary separation packages, mutual recognition that the role is no longer suitable for either party, or when an employee wishes to pursue other opportunities and the employer agrees to early release from contract obligations. This document is also essential when negotiating enhanced separation packages beyond standard entitlements, or when establishing specific terms for transition periods and handover responsibilities.

Key legal considerations

The agreement must clearly specify the termination date, calculation of end-of-service gratuity according to UAE Labor Law provisions, and settlement of all outstanding dues including salary, allowances, and accrued leave. Include comprehensive clauses covering the return of company property, confidentiality obligations, non-compete restrictions where applicable, and mutual release provisions to prevent future claims. Pay particular attention to visa cancellation responsibilities and timeline requirements, as delays can result in penalties for both parties. The document should also address any outstanding loan obligations, medical insurance coverage during notice periods, and procedures for obtaining experience certificates and reference letters.

Legal requirements in United Arab Emirates

Under Federal Decree-Law No. 33 of 2021, termination agreements must comply with specific notice period requirements, though these can be waived by mutual consent with appropriate compensation. End-of-service gratuity calculations must follow prescribed formulas based on length of service and final salary, with a minimum of 21 days' salary for each year of service. The agreement must be documented in writing and signed by both parties, with witness signatures recommended for additional legal protection. For companies operating in free zones like DIFC or ADGM, additional regulations may apply requiring specific clause inclusions. Ensure the document addresses UAE visa regulations, as employers must cancel work permits within specified timeframes to avoid penalties, and employees need proper documentation for visa status changes or departures from the country.