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Termination Of Contract By Mutual Consent Letter for Saudi Arabia

Termination Of Contract By Mutual Consent Letter Template for Saudi Arabia

A Termination of Contract by Mutual Consent Letter is a formal document used in Saudi Arabia to record the voluntary agreement between an employer and employee to end their employment relationship. The document must comply with Saudi Labor Law and Sharia principles, detailing the terms of separation including the effective date, financial settlements, and mutual releases. It serves as a legal record of the amicable termination, protecting both parties' interests and ensuring all statutory requirements are met, including the calculation of end-of-service benefits and final settlements as per Saudi labor regulations.

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What is a Termination Of Contract By Mutual Consent Letter?

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.

What sections should be included in a Termination Of Contract By Mutual Consent Letter?

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

What sections are optional to include in a Termination Of Contract By Mutual Consent Letter?

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

What schedules should be included in a Termination Of Contract By Mutual Consent Letter?

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

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

Cancellation Letter

Sector

Sales

Cost

Free to use
Relevant legal definitions















Clauses















Relevant Industries

Banking and Financial Services

Construction

Manufacturing

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Government and Public Sector

Relevant Teams

Human Resources

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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

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Compensation and Benefits Manager

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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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