Employee Termination Agreement for Pakistan

Employee Termination Agreement Template for Pakistan

This document serves as a formal agreement between an employer and employee in Pakistan, outlining the terms and conditions of employment termination in accordance with the Industrial and Commercial Employment (Standing Orders) Ordinance, 1968, and other relevant Pakistani labor laws. It comprehensively covers termination terms, final settlements, benefits, statutory payments, and mutual obligations post-termination. The agreement ensures compliance with local regulations while protecting both parties' interests through clear documentation of separation terms, including notice periods, final settlements, and any continuing obligations.

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What is a Employee Termination Agreement?

The Employee Termination Agreement is a crucial legal document used in Pakistan when formally ending an employment relationship. It is designed to comply with Pakistani labor laws, particularly the Industrial and Commercial Employment (Standing Orders) Ordinance, 1968, and various provincial labor regulations. This agreement should be used whenever an employment relationship is being terminated, whether through mutual consent, retirement, resignation, or dismissal. It includes essential information about final settlements, statutory benefits, notice periods, and post-employment obligations. The document serves multiple purposes: it provides legal protection for both parties, ensures compliance with local labor laws, documents the full and final settlement, and helps prevent future disputes by clearly stating all termination terms and conditions.

What sections should be included in a Employee Termination Agreement?

1. Parties: Identification of the employer and employee, including full legal names, addresses, and designation

2. Background: Brief overview of the employment relationship, including start date, position, and context of termination

3. Definitions: Key terms used throughout the agreement defined for clarity and legal certainty

4. Termination Date: Clear specification of the last day of employment and effective date of termination

5. Reason for Termination: Statement of the grounds for termination in accordance with Pakistani labor laws

6. Final Settlement: Details of final salary, benefits, and other compensations to be paid

7. Notice Period/Payment: Specification of notice period served or payment in lieu of notice

8. Company Property: Requirements for return of company property and documentation

9. Full and Final Settlement: Confirmation that the settlement represents complete discharge of all obligations

10. Confidentiality: Ongoing obligations regarding confidential information

11. Governing Law: Specification that the agreement is governed by Pakistani law

12. Execution: Signature blocks and execution formalities

What sections are optional to include in a Employee Termination Agreement?

1. Non-Compete Clause: Restrictions on future employment with competitors (if applicable and reasonable under Pakistani law)

2. Non-Solicitation: Restrictions on soliciting company employees or clients

3. Outplacement Support: Details of any career transition assistance offered

4. Medical Benefits Extension: Continuation of medical benefits if offered beyond termination

5. Reference Letter: Terms regarding the provision of employment references

6. Dispute Resolution: Specific procedures for resolving disputes, including arbitration if agreed

7. Severance Package: Details of any additional severance pay beyond statutory requirements

8. Mutual Non-Disparagement: Agreement by both parties not to make negative statements about each other

9. Legal Consultation: Acknowledgment of right to seek legal counsel

10. Release of Claims: Mutual release of claims, subject to Pakistani law limitations

What schedules should be included in a Employee Termination Agreement?

1. Schedule A - Settlement Calculation: Detailed breakdown of all financial settlements including salary, benefits, and deductions

2. Schedule B - Company Property List: Itemized list of company property to be returned

3. Schedule C - Benefits Summary: Details of any continuing benefits or benefit settlements

4. Schedule D - Statutory Payments: Calculation of statutory payments such as gratuity and social security

5. Appendix 1 - Clearance Certificate: Departmental clearance form confirming return of all company property

6. Appendix 2 - Release Form: Standard release form as per company policy and Pakistani law

7. Appendix 3 - Reference Letter Format: Template or actual reference letter if agreed upon

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

Pakistan

Publisher

Genie AI

Document Type

Cancellation Letter

Sector

Sales

Cost

Free to use
Clauses
Relevant Industries

Banking & Finance

Information Technology

Manufacturing

Retail

Healthcare

Education

Telecommunications

Construction

Professional Services

Energy

Hospitality

Transportation & Logistics

Media & Entertainment

Real Estate

Pharmaceutical

Relevant Teams

Human Resources

Legal

Compliance

Employee Relations

Corporate Secretarial

Operations

Administration

Senior Management

Finance

Relevant Roles

HR Manager

Legal Counsel

HR Director

HR Business Partner

Compliance Officer

Employee Relations Manager

HR Administrator

Department Manager

Managing Director

Chief Human Resources Officer

HR Operations Manager

Legal Manager

Company Secretary

Line Manager

Senior HR Executive

Industries
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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