The Termination of Contract by Mutual Consent Letter is a crucial document in Saudi Arabian employment law, used when both employer and employee agree to end their employment relationship amicably. This document type is particularly relevant when parties wish to document their mutual agreement to terminate employment outside of standard unilateral termination procedures. It must comply with Saudi Labor Law and Sharia principles, ensuring all statutory requirements are met. The letter typically includes essential elements such as the termination date, financial settlements, end-of-service benefits calculations, and mutual releases. It serves as protection for both parties by clearly documenting the agreed terms of separation and preventing future disputes. This document is commonly used during company restructuring, when employees pursue new opportunities, or in situations where both parties agree that ending the employment relationship is in their best interests.
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1. Letter Header: Complete contact information of both parties, date, and reference number
2. Subject Line: Clear indication that this is a mutual termination of contract
3. Contract Reference: Details of the original contract including date and reference number
4. Statement of Mutual Consent: Clear declaration that both parties agree to terminate the contract
5. Effective Date: Specific date when the termination becomes effective
6. Financial Settlement: Details of final payments, including salary, end of service benefits, and any other dues
7. Mutual Release: Statement releasing both parties from further obligations under the contract
8. Acknowledgment: Confirmation that both parties understand and agree to the terms
9. Signature Block: Space for signatures of both parties and dates
1. Ongoing Obligations: Used when certain obligations survive termination, such as confidentiality or non-compete clauses
2. Return of Property: Include when there are company assets, documents, or materials to be returned
3. Reference Provision: Include when parties agree on the nature of employment references to be provided
4. Outstanding Projects: Used when there are specific projects or tasks that need to be addressed or transferred
5. Non-Disparagement: Include when parties wish to agree not to make negative statements about each other
6. Legal Review Statement: Include when parties wish to acknowledge they had the opportunity for legal review
1. Schedule A - Final Settlement Calculation: Detailed breakdown of all financial settlements including salary, benefits, and deductions
2. Schedule B - Original Contract: Copy of the original employment contract being terminated
3. Schedule C - Handover Checklist: List of items, documents, and responsibilities to be handed over
4. Schedule D - Clearance Form: Company clearance form showing all departments' approval of the termination
5. Schedule E - Benefits Statement: Statement of any continuing benefits or insurance coverage post-termination
Authors
Relevant legal definitions
Clauses
Relevant Industries
Banking and Financial Services
Construction
Manufacturing
Technology and IT
Oil and Gas
Healthcare
Retail
Education
Professional Services
Telecommunications
Real Estate
Hospitality
Transportation and Logistics
Government and Public Sector
Relevant Teams
Human Resources
Legal
Compliance
Corporate Secretariat
Employee Relations
Compensation and Benefits
HR Operations
Management
Administration
Relevant Roles
Human Resources Manager
Legal Counsel
HR Director
Compliance Officer
Department Manager
HR Business Partner
Chief Human Resources Officer
Employee Relations Manager
Legal Director
HR Administrator
Compensation and Benefits Manager
HR Operations Manager
Chief Legal Officer
Recruitment Manager
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