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Severance Pay Contract Template for United Arab Emirates

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Key Requirements PROMPT example:

Severance Pay Contract

I need a Severance Pay Contract for a senior executive in our Dubai tech company who is being made redundant effective March 15, 2025, including specific provisions for stock options and annual bonus pro-rating.

Document background
The Severance Pay Contract serves as a crucial document in UAE employment relationships, particularly during employment termination. It is designed to comply with UAE Labor Law (Federal Decree-Law No. 33 of 2021) and relevant ministerial decisions, providing a clear framework for calculating and disbursing end-of-service benefits. This document is essential when employment relationships are terminated, whether through resignation, termination, or mutual agreement. It encompasses detailed calculations of gratuity payments based on years of service, provisions for outstanding benefits, and specific requirements for both mainland UAE and free zone jurisdictions. The contract ensures transparency in severance arrangements while protecting both employer and employee interests under UAE law.
Suggested Sections

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

2. Background: Context of the severance agreement, including reference to the original employment contract and reason for termination

3. Definitions: Key terms used in the agreement including 'Basic Salary', 'Gross Salary', 'Service Period', and other relevant terminology

4. Calculation of Severance Pay: Detailed explanation of how the severance pay is calculated according to UAE Labor Law, including basic salary, length of service, and applicable multipliers

5. Payment Terms: Timing and method of severance payment, including any installment arrangements if applicable

6. Tax and Deductions: Statement regarding any applicable taxes or deductions from the severance amount

7. Full and Final Settlement: Confirmation that the payment represents full and final settlement of all claims

8. Confidentiality: Obligations regarding confidentiality of the severance terms and company information

9. Return of Company Property: Requirements for returning company assets and documents

10. Governing Law: Confirmation of UAE law application and jurisdiction

11. Execution: Signature blocks and execution requirements

Optional Sections

1. Non-Competition and Non-Solicitation: Required when the employer wishes to enforce post-employment restrictions

2. Free Zone Specific Provisions: Required when employment is within DIFC or ADGM, incorporating specific free zone regulations

3. Voluntary Resignation Provisions: Included when the severance is due to voluntary resignation rather than termination

4. Medical Insurance Extension: Optional provision for continuing medical coverage post-employment

5. Reference and Recommendations: Terms regarding the provision of employment references

6. Outplacement Services: When the employer is providing career transition support

7. Dispute Re红杏直播: Specific dispute re红杏直播 procedures beyond standard court jurisdiction

Suggested Schedules

1. Schedule 1 - Severance Calculation Breakdown: Detailed mathematical calculation of the severance amount including basic salary, service years, and any additional benefits

2. Schedule 2 - Outstanding Benefits Statement: List of any additional payments such as accrued leave, pro-rated bonuses, or other benefits

3. Schedule 3 - Company Property Checklist: Itemized list of company property to be returned

4. Appendix A - Original Employment Contract: Copy of the original employment contract referenced in the severance agreement

5. Appendix B - Resignation/Termination Letter: Copy of the formal termination or resignation documentation

6. Appendix C - Employee Clearance Form: Standard company clearance form confirming return of assets and settlement of dues

Authors

Alex Denne

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

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Find the exact document you need

Severance Pay Contract

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UAE-compliant agreement documenting mutually agreed employment termination terms and conditions between employer and employee.

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