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Incentive Agreement Template for United Arab Emirates

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Key Requirements PROMPT example:

Incentive Agreement

"I need an Incentive Agreement for our Dubai-based sales team of 15 people, with quarterly commission payments based on individual sales targets and a team performance multiplier, to be implemented from January 2025."

Document background
An Incentive Agreement is a crucial document used to formalize performance-based compensation arrangements in the UAE business environment. This agreement type is particularly relevant when companies wish to implement structured bonus schemes, commission programs, or other performance-linked compensation systems while ensuring compliance with UAE labor laws and regulations. The document is designed to protect both employer and employee interests by clearly defining performance metrics, calculation methodologies, and payment terms. It becomes especially important in sectors where variable compensation forms a significant part of the total remuneration package. The agreement must be carefully drafted to align with UAE Federal Labor Law requirements, particularly regarding wage protection systems and employee rights. Incentive Agreements are commonly used for sales roles, executive positions, and other performance-driven functions, providing a clear legal framework for variable compensation structures.
Suggested Sections

1. Parties: Identification of the parties entering into the agreement - the company and the beneficiary of the incentive scheme

2. Background: Context of the agreement, including the purpose of the incentive scheme and its relation to employment terms

3. Definitions: Detailed definitions of key terms used throughout the agreement, including performance metrics, calculation periods, and payment terms

4. Term and Duration: Period for which the incentive agreement is valid, including any renewal provisions

5. Incentive Structure: Detailed explanation of the incentive program, including types of incentives (e.g., cash bonuses, commission, stock options)

6. Performance Metrics: Clear definition of the performance criteria and targets that trigger incentive payments

7. Calculation Methodology: Detailed explanation of how incentives will be calculated, including formulas and measurement periods

8. Payment Terms: Timing and method of incentive payments, including any deferral mechanisms

9. Conditions Precedent: Any conditions that must be met before incentives become payable

10. Termination Provisions: Circumstances under which the agreement can be terminated and the impact on unpaid incentives

11. Governing Law and Jurisdiction: Specification of UAE law as governing law and relevant courts for dispute resolution

Optional Sections

1. Clawback Provisions: Optional section for circumstances where the company may reclaim paid incentives, used in high-value or regulated environments

2. International Payments: Required when incentive payments are made across borders, addressing currency and compliance requirements

3. Group Company Provisions: Needed when the incentive scheme operates across multiple group companies

4. Non-Competition and Confidentiality: Additional restrictive covenants tied to the incentive scheme, used for senior employees or sensitive roles

5. Tax Provisions: Detailed tax treatment of incentives, required when tax implications are complex or for international employees

6. Change of Control: Provisions dealing with the impact of company ownership changes on the incentive scheme

Suggested Schedules

1. Schedule 1 - Performance Targets: Detailed breakdown of specific performance targets and metrics

2. Schedule 2 - Calculation Examples: Worked examples showing how incentives are calculated in different scenarios

3. Schedule 3 - Payment Schedule: Timing and structure of incentive payments

4. Schedule 4 - Eligible Positions/Roles: List of positions or roles eligible for the incentive scheme

5. Appendix A - Incentive Acceptance Form: Form for employee acknowledgment and acceptance of incentive terms

6. Appendix B - Performance Review Form: Template for documenting performance against incentive criteria

Authors

Alex Denne

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

Relevant legal definitions








































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Relevant Industries

Financial Services

Professional Services

Real Estate

Technology

Retail

Healthcare

Education

Hospitality

Construction

Energy

Telecommunications

Manufacturing

Consulting

Insurance

Banking

Relevant Teams

Human Resources

Legal

Sales

Business Development

Executive Management

Finance

Operations

Retail Operations

Investment Banking

Asset Management

Commercial

Marketing

Customer Service

Business Strategy

Relevant Roles

Sales Manager

Business Development Executive

Chief Executive Officer

Managing Director

Sales Representative

Account Manager

Regional Director

Financial Advisor

Investment Banker

Real Estate Agent

Insurance Broker

Department Head

Vice President

General Manager

Chief Financial Officer

Country Manager

Commission-based Consultant

Performance Manager

Senior Executive

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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