Resignation Settlement Agreement Template for Saudi Arabia

A resignation settlement agreement is a formal legal document that records the terms and conditions of your voluntary departure from employment in Saudi Arabia. This comprehensive agreement ensures both you and your employer fulfill your obligations under Saudi Labor Law while providing clarity on financial settlements, end-of-service benefits, and other separation terms.

When do you need this document?

You need a resignation settlement agreement whenever you voluntarily terminate your employment in Saudi Arabia and want to formalize the separation terms. This document becomes particularly important when negotiating severance packages beyond statutory requirements, when there are outstanding disputes to resolve, or when your employer requires documentation of settlement terms for compliance purposes. The agreement is also essential if you're in a senior position, have access to confidential information, or when there are complex benefit calculations involved. Many employers in Saudi Arabia prefer using these agreements to ensure clear documentation of the employment termination and to protect against future legal claims.

Key legal considerations

Your resignation settlement agreement must address several critical legal elements under Saudi Arabian law. The document should clearly calculate your end-of-service benefits (gratuity) based on your length of service and final salary, as mandated by Saudi Labor Law. You need to ensure proper handling of your notice period, whether worked or paid in lieu, and verification that all outstanding wages and benefits are included in the settlement. The agreement should address the return of company property, continuation or termination of benefits like health insurance, and any non-compete or confidentiality obligations. Consider including clauses about reference letters, visa cancellation procedures, and clearance from the General Organization for Social Insurance (GOSI). Both parties should understand their release of claims obligations and ensure the settlement complies with Wage Protection System requirements.

Legal requirements in Saudi Arabia

Saudi Labor Law establishes specific requirements that your resignation settlement agreement must meet to be legally valid. The agreement must comply with end-of-service benefit calculations as outlined in the Labor Law, typically equivalent to half a month's salary for each of the first five years and one month's salary for each subsequent year. You must provide proper notice as specified in your employment contract or as required by law, generally 30 days for monthly-paid employees. The settlement must account for any unused annual leave entitlements and ensure compliance with GOSI settlement procedures. The agreement should be executed in Arabic or include certified Arabic translations for official purposes. Both parties must have legal capacity to enter the agreement, and if required by company policy or the nature of the settlement, the document may need notarization. The agreement must not violate any provisions of Saudi Labor Law or other applicable regulations governing employment relationships in the Kingdom.