Termination Settlement Agreement Template for the United Arab Emirates

When ending an employment relationship in the United Arab Emirates, a Termination Settlement Agreement provides essential legal protection for both employers and employees. This comprehensive document formalizes the terms of employment termination while ensuring compliance with UAE Labor Law (Federal Decree-Law No. 33 of 2021) and related regulations. You need this agreement to document final settlements, end-of-service benefits, and create binding mutual releases from future claims.

When do you need this document?

You require a Termination Settlement Agreement when concluding any employment relationship in the UAE, whether through mutual agreement, resignation, or dismissal. This includes situations where an employee resigns with proper notice, cases of termination for cause under Article 120 of UAE Labor Law, redundancy situations requiring end-of-service payments, or mutual separation agreements. The document is particularly crucial when negotiating enhanced severance packages, resolving workplace disputes through settlement, or ensuring compliance with notice period requirements. International companies operating in free zones like DIFC or ADGM may need specialized versions that comply with both UAE federal law and zone-specific regulations.

Key legal considerations

Your agreement must address several critical elements to ensure legal validity and enforceability. The settlement payment calculation should comply with UAE Labor Law requirements, including gratuity payments based on basic salary for each year of service, outstanding salary and benefits, and accrued annual leave compensation. Include comprehensive release clauses that protect both parties from future claims while ensuring they don't violate UAE public policy. Address confidentiality obligations, non-compete restrictions within legal limits, and return of company property. Consider visa cancellation procedures and labour card surrender requirements, as these affect the employee's legal status in the UAE. Ensure the agreement doesn't contain provisions that contradict mandatory UAE employment protections.

Legal requirements in United Arab Emirates

Under UAE Labor Law (Federal Decree-Law No. 33 of 2021), your Termination Settlement Agreement must comply with specific statutory requirements. Calculate end-of-service gratuity according to Article 142, providing 21 days' basic salary for each year of service for the first five years, and 30 days for each subsequent year. Ensure proper notice periods are met or compensated according to Article 115. The agreement must be written in Arabic or include certified Arabic translation for enforceability in UAE courts. Address labour card cancellation within 30 days of termination and coordinate with immigration authorities regarding residence visa status. Consider DIFC Employment Law (Law No. 2 of 2019) if the employment falls within Dubai International Financial Centre jurisdiction, which may have different termination and settlement requirements. Ensure compliance with UAE Central Bank regulations for international payment transfers if applicable.