This Severance Pay Agreement is designed for use in the United Arab Emirates when formalizing an employee's departure from an organization. It serves as a legally binding document that details the complete termination package and ensures compliance with UAE Federal Decree-Law No. 33 of 2021 and other applicable employment regulations. The agreement encompasses essential elements including end-of-service gratuity calculations, outstanding leave entitlements, notice period arrangements, and any additional benefits agreed upon between the parties. It's particularly crucial in scenarios involving senior executives, long-term employees, or complex termination arrangements where clear documentation of agreed terms is necessary to prevent future disputes. The document can be customized for use in mainland UAE, DIFC, or ADGM jurisdictions, with appropriate modifications to reflect the specific applicable laws and regulations.
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1. Parties: Identification of the employer and employee, including full legal names, addresses, and relevant identification numbers
2. Background: Brief context of the employment relationship, reason for termination, and basis for the severance agreement
3. Definitions: Key terms used throughout the agreement, including 'Effective Date', 'Termination Date', 'Severance Payment', and other relevant terms
4. Severance Payment: Details of the total severance amount, calculation method in accordance with UAE Labor Law, and payment schedule
5. End of Service Benefits: Calculation and payment of gratuity and other end of service entitlements under UAE Labor Law
6. Outstanding Entitlements: Treatment of accrued but unused leave, unpaid salary, and other employment benefits
7. Tax and Statutory Deductions: Statement regarding any applicable deductions and tax implications
8. Release and Waiver: Mutual release of claims and waiver of rights following payment
9. Confidentiality: Obligations regarding confidentiality of the agreement terms and company information
10. Governing Law and Jurisdiction: Specification of UAE law as governing law and relevant courts' jurisdiction
1. Non-Compete and Non-Solicitation: Restrictions on future employment and client/employee solicitation, if applicable to the employee's role
2. Additional Benefits: Any extra benefits beyond statutory requirements, such as medical insurance extension or repatriation assistance
3. Reference and Announcement: Terms regarding employment references and internal/external communication about the departure
4. Company Property: Details about return of company property, if not already completed
5. Continuation of Certain Benefits: Any benefits that will continue post-employment
6. Post-Termination Assistance: Terms for any transitional support or knowledge transfer required from the employee
7. Stock Options/Share Rights: Treatment of any outstanding equity compensation
8. Visa and Immigration: Provisions regarding visa cancellation and immigration status, particularly relevant for expatriate employees
1. Schedule 1 - Severance Calculation: Detailed breakdown of severance payment calculation including basic salary, allowances, and statutory entitlements
2. Schedule 2 - Payment Timeline: Detailed schedule of payment installments if the severance is to be paid in multiple tranches
3. Schedule 3 - Outstanding Benefits: Itemized list of all outstanding benefits and entitlements
4. Appendix A - Employee Information: Detailed employee information including employment history, position, and salary details
5. Appendix B - Handover Checklist: List of items, tasks, and responsibilities to be handed over before departure
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