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Final Settlement Letter To Employee for Saudi Arabia

Final Settlement Letter To Employee Template for Saudi Arabia

A Final Settlement Letter to Employee is a formal document issued under Saudi Arabian labor law that officially documents the conclusion of employment and details all financial settlements between an employer and departing employee. The document comprehensively covers end of service benefits, final salary, leave encashment, and any other financial entitlements or obligations as prescribed by Saudi Labor Law (Royal Decree No. M/51). It serves as a legally binding record of the full and final settlement of all employment-related claims and obligations, ensuring compliance with local labor regulations while protecting both employer and employee interests.

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What is a Final Settlement Letter To Employee?

The Final Settlement Letter To Employee is a mandatory document required under Saudi Arabian employment law when concluding an employment relationship. It is used when an employee's service with the company ends, whether through resignation, termination, retirement, or contract completion. The document must comply with Saudi Labor Law (Royal Decree No. M/51) and related ministerial decisions, ensuring accurate calculation of end of service benefits, final salary, leave balances, and other entitlements. It serves multiple purposes: documenting the final financial settlement, providing clarity on all payments and deductions, obtaining mutual agreement on the settlement terms, and establishing a legal record of the employment conclusion. The letter typically requires input from HR, Finance, and department heads, and must be signed by an authorized company representative.

What sections should be included in a Final Settlement Letter To Employee?

1. Letter Header: Company letterhead, date, reference number, and employee details including employee ID and position

2. Subject Line: Clear indication that this is a Final Settlement Letter

3. Service Details: Employment duration, last working day, and termination type

4. Basic Settlement Components: List of standard settlement items including final salary, end of service benefits, and leave balance

5. Payment Details: Total settlement amount and payment method/banking details

6. Clearance Confirmation: Statement confirming return of company properties and clearance from all departments

7. Full and Final Settlement Declaration: Legal statement confirming this as full and final settlement of all claims

8. Signature Block: Space for company authorized signatory and employee acknowledgment

What sections are optional to include in a Final Settlement Letter To Employee?

1. Outstanding Loans/Advances: Include when employee has pending loans or salary advances to be adjusted

2. Performance Bonus Settlement: Include when there are pro-rated or pending bonus payments

3. Notice Period Adjustment: Include when there are notice period payments or deductions to be calculated

4. Medical Insurance Extension: Include details about post-employment medical coverage if applicable

5. Non-Compete Reminder: Include when employee was subject to non-compete clauses

6. Repatriation Benefits: Include for expatriate employees entitled to repatriation benefits

What schedules should be included in a Final Settlement Letter To Employee?

1. Schedule A - Salary and Benefits Calculation: Detailed breakdown of final salary, allowances, and deductions

2. Schedule B - End of Service Benefits Calculation: Detailed calculation of end of service gratuity as per Saudi Labor Law

3. Schedule C - Leave Balance Calculation: Breakdown of unused leave days and their monetary value

4. Appendix 1 - Clearance Checklist: Department-wise clearance checklist with signatures

5. Appendix 2 - Company Property Return Form: List of company properties returned with verification signatures

Authors

Alex Denne

Head of Growth (Open Source Law) @ Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

Saudi Arabia

Publisher

Ƶ

Document Type

Employment Form

Cost

Free to use
Relevant legal definitions




















Clauses




















Relevant Industries

Banking & Financial Services

Manufacturing

Retail

Technology

Healthcare

Construction

Education

Energy & Utilities

Professional Services

Hospitality

Telecommunications

Real Estate

Mining

Transportation & Logistics

Government & Public Sector

Relevant Teams

Human Resources

Finance

Legal

Payroll

Compensation & Benefits

Employee Relations

Corporate Governance

Internal Audit

Administration

Relevant Roles

HR Director

HR Manager

Payroll Manager

Finance Manager

Legal Counsel

Compensation & Benefits Manager

HR Operations Manager

HR Business Partner

Finance Director

Chief Financial Officer

HR Administrator

Payroll Specialist

HR Specialist

Company Secretary

Legal Manager

Industries







Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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