Termination Settlement Agreement Template for Saudi Arabia

The Termination Settlement Agreement is a crucial document used in Saudi Arabia when formally ending an employment relationship by mutual consent. It is particularly important in the Saudi Arabian context due to the specific requirements of Saudi Labor Law and Shari'ah principles that must be observed in employment terminations. This document is typically used when both parties wish to document a clean break and mutual understanding of the termination terms, including financial settlements, end of service benefits, and ongoing obligations. The agreement helps prevent future disputes by clearly documenting all aspects of the termination, from final payments to the return of company property. It's especially valuable in situations involving senior employees, sensitive positions, or complex benefit arrangements, as it provides legal certainty and protection for both parties under Saudi law.

1. Parties: Identification of the employer and employee, including full legal names, addresses, and relevant registration/ID numbers

2. Background: Brief history of employment relationship, including start date, position, and reason for termination

3. Definitions: Key terms used throughout the agreement, including defined terms for payments, effective date, and employment period

4. Termination Date: Clear statement of when employment relationship ends and final working day

5. Financial Settlement: Detailed breakdown of all payments including salary, end of service benefits, and other entitlements under Saudi Labor Law

6. Tax and Social Insurance: Provisions regarding tax treatment of payments and settlement of social insurance obligations

7. Mutual Release and Waiver: Parties' agreement to release each other from all claims relating to employment relationship

8. Company Property: Requirements for return of company property, documents, and confidential information

9. Confidentiality: Ongoing obligations regarding confidential information and trade secrets

10. Governing Law and Jurisdiction: Confirmation of Saudi law application and relevant court jurisdiction

11. Language: Specification that Arabic version prevails in case of conflict with English translation

12. Execution: Signature blocks and execution requirements