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A Separation Agreement is a legally binding contract between an employer and employee in Saudi Arabia that formally ends their working relationship. It spells out the terms of departure, including final salary payments, end-of-service benefits, and any additional compensation as required under Saudi Labor Law.

This agreement protects both parties by clearly documenting mutual obligations and preventing future disputes. It typically covers important details like confidentiality requirements, non-compete clauses, and the return of company property - all aligned with Sharia principles and local labor regulations. Many Saudi companies use these agreements during restructuring or when senior executives leave to ensure smooth transitions.

Use a Separation Agreement when ending employment relationships amicably in Saudi Arabia, especially for senior positions or complex departures. This document becomes essential during company restructuring, voluntary resignations, or mutual termination scenarios where both parties need clear documentation of the terms.

It's particularly valuable when dealing with employees who had access to sensitive information, when offering enhanced severance packages beyond standard end-of-service benefits, or during mass layoffs. The agreement helps prevent future disputes by clearly outlining post-employment obligations, confidentiality requirements, and final settlements in accordance with Saudi Labor Law and Sharia principles.

• Employment Separation Agreement: Standard template for professional departures, covering basic terms and benefits under Saudi Labor Law
• Mutual Separation Agreement Employment: Used when both parties jointly agree to end employment, often including enhanced benefits
• Exit Agreement For Employees: Comprehensive version for senior positions, with detailed confidentiality and non-compete provisions
• Simple Separation Agreement: Streamlined version for straightforward departures with minimal complications
• Marriage Separation Agreement: Specialized version addressing personal status law requirements for marital separation

• HR Directors and Managers: Lead the drafting process and ensure compliance with Saudi Labor Law when preparing Separation Agreements
• Legal Counsel: Review and modify agreement terms, ensuring Sharia compliance and protection of company interests
• Departing Employees: Review, negotiate, and sign the agreement, often with personal legal advice
• Company Executives: Approve final terms and authorize special provisions or enhanced packages
• Labor Ministry Officials: May review agreements during disputes or compliance checks
• External Legal Advisors: Often consulted for complex cases or when dealing with senior executive departures

• Employee Details: Gather complete employment history, position, salary, and benefits information
• End Date Planning: Set clear termination dates and final working day arrangements
• Financial Calculations: Calculate end-of-service benefits according to Saudi Labor Law formulas
• Company Property: List all items for return, including devices, documents, and access credentials
• Post-Employment Terms: Define confidentiality requirements and any non-compete restrictions
• Documentation: Collect relevant employment contracts and policy documents
• Template Selection: Use our platform to generate a legally-compliant agreement tailored to your specific situation

• Party Information: Full legal names, addresses, and identification details of employer and employee
• Employment Details: Position, hire date, and separation date aligned with Saudi Labor Law
• Financial Terms: Final salary, end-of-service benefits calculation, and any additional compensation
• Release Clauses: Mutual release of claims and obligations under Sharia principles
• Confidentiality Terms: Protection of company secrets and intellectual property
• Non-Compete Provisions: Geographic and time-bound restrictions as per local regulations
• Governing Law: Clear reference to Saudi Labor Law and dispute resolution mechanisms
• Signature Block: Space for both parties' signatures, dates, and official company stamp

A Separation Agreement differs significantly from an Asset Purchase Agreement in Saudi Arabia, though both are sometimes encountered during business transitions. While Separation Agreements focus on ending employment relationships and settling related obligations, Asset Purchase Agreements deal with the transfer of business assets and associated rights.

• Purpose and Scope: Separation Agreements handle employment termination and benefits, while Asset Purchase Agreements cover business asset transfers and valuations
• Legal Framework: Separation Agreements primarily follow Saudi Labor Law and employment regulations, whereas Asset Purchase Agreements align with commercial and corporate laws
• Key Provisions: Separation Agreements focus on confidentiality, final settlements, and post-employment obligations; Asset Purchase Agreements detail asset listings, warranties, and transfer conditions
• Timing: Separation Agreements take effect at employment termination, while Asset Purchase Agreements activate upon asset transfer completion