The Layoff Agreement is a critical document used in Saudi Arabia when an employer needs to formally terminate an employment relationship due to various business reasons such as restructuring, downsizing, or organizational changes. This document is specifically designed to comply with Saudi Labor Law (Royal Decree No. M/51) and related regulations, ensuring that all mandatory requirements for employment termination are met. The agreement typically includes detailed provisions for end-of-service benefits, notice periods, final settlements, and ongoing obligations such as confidentiality. It serves as a protective measure for both employers and employees by clearly documenting the terms of separation and helping prevent future disputes. The document must be carefully drafted to ensure it meets all local legal requirements while addressing specific circumstances of the termination.
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1. Parties: Identification of the employer and employee, including full legal names and addresses
2. Background: Context of the employment relationship and reason for layoff in general terms
3. Definitions: Key terms used throughout the agreement
4. Termination Date: Specific date when employment will terminate and last working day details
5. Final Settlement: Breakdown of final payment including salary, end-of-service benefits, and other entitlements
6. Notice Period: Details of notice period or payment in lieu of notice
7. Company Property: Requirements for return of company property and documentation
8. Confidentiality Obligations: Ongoing obligations regarding confidential information
9. Full and Final Settlement: Confirmation that the agreement represents full and final settlement of all claims
10. Governing Law: Confirmation of Saudi Law application and jurisdiction
11. Acknowledgment: Employee acknowledgment of understanding and voluntary acceptance
1. Non-Compete Clause: Restrictions on future employment - include if employee had access to sensitive information or key clients
2. Reference Provision: Terms regarding future employment references - include if agreed to provide references
3. Outplacement Support: Details of any career transition services offered - include if providing such support
4. Medical Insurance Extension: Terms of continued medical coverage if applicable - include if offering extended benefits
5. Rehire Eligibility: Status regarding future employment with company - include if allowing future rehire possibility
6. Garden Leave: Terms of any garden leave period - include if employee will not work during notice period
7. Severance Package: Additional compensation beyond statutory requirements - include if offering extra benefits
1. Schedule 1 - Payment Calculation: Detailed breakdown of all payments including basic salary, benefits, and statutory entitlements
2. Schedule 2 - Company Property List: Itemized list of company property to be returned
3. Schedule 3 - Confidential Information: Specific details of confidential information and intellectual property
4. Appendix A - End of Service Benefit Calculation: Detailed calculation of end-of-service benefits as per Saudi Labor Law
5. Appendix B - Outstanding Leaves and Allowances: Calculation of any outstanding leave, allowances, or other benefits
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