The Employee Separation Agreement is a crucial document used when terminating employment relationships in Saudi Arabia, whether through mutual agreement, resignation, or termination. It must comply with the Saudi Labor Law (Royal Decree No. M/51) and related regulations, including specific requirements for end-of-service benefits, notice periods, and final settlements. The agreement serves multiple purposes: it documents the formal end of employment, outlines all financial settlements, addresses the return of company property, maintains confidentiality obligations, and includes any post-employment restrictions. For expatriate employees, it may also address visa-related matters and final exit procedures. The document protects both employer and employee interests by clearly stating all separation terms and obtaining mutual acknowledgment, thereby reducing the risk of future disputes and ensuring regulatory compliance.
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1. Parties: Identification of the employer and employee, including full legal names, addresses, and relevant registration/ID numbers
2. Background: Brief context of the employment relationship, including start date and reason for separation
3. Definitions: Key terms used throughout the agreement, including defined terms from Saudi Labor Law
4. Effective Date of Separation: Clear statement of the termination date and last working day
5. Final Settlement: Details of all financial entitlements including salary, allowances, and commissions up to the last working day
6. End of Service Benefits: Calculation and payment terms of end-of-service benefits as per Saudi Labor Law
7. Company Property: Requirements for returning company assets, documents, and intellectual property
8. Confidentiality Obligations: Ongoing obligations regarding confidential information and trade secrets
9. Full and Final Settlement: Confirmation that the agreement represents a complete settlement of all claims
10. Governing Law: Confirmation of Saudi Law application and jurisdiction
11. Execution: Signature blocks and execution requirements
1. Non-Compete Obligations: Post-employment restrictions on working with competitors, used when employee had access to sensitive information
2. Non-Solicitation: Restrictions on approaching company employees or clients, included for senior positions
3. Additional Benefits: Any discretionary benefits beyond statutory requirements, used for amicable separations or senior executives
4. Medical Insurance Extension: Terms for continuing medical coverage, if applicable
5. Reference Letter: Terms regarding the provision of employment references, included upon employee request
6. Relocation Assistance: Support for expatriate employees returning to their home country, if applicable
7. Dispute Resolution: Specific procedures for handling disputes, included for complex separations
8. Training Cost Recovery: Terms for recovering training costs if applicable under employment contract
1. Schedule 1 - Final Settlement Calculation: Detailed breakdown of all financial entitlements and deductions
2. Schedule 2 - End of Service Benefit Calculation: Detailed calculation of end-of-service benefits as per Saudi Labor Law
3. Schedule 3 - Company Property List: Itemized list of company assets to be returned
4. Schedule 4 - Handover Checklist: List of tasks, documents, and responsibilities to be transferred
5. Appendix A - Release Form: Standard release of claims form in Arabic and English
6. Appendix B - Non-Compete Terms: Detailed terms of non-compete obligations if applicable
7. Appendix C - Benefits Summary: Summary of any continuing or special benefits
8. Appendix D - Exit Interview Form: Standard exit interview documentation as required by Saudi authorities
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