Document background
The Mutual Termination of Contract is a crucial document used in Saudi Arabia when both employer and employee agree to end their employment relationship amicably. It is particularly relevant when parties wish to document their mutual agreement to terminate employment before the natural expiry of a fixed-term contract or as an alternative to unilateral termination in an unlimited contract. The document must comply with Saudi Labor Law, Ministry of Human Resources and Social Development (MHRSD) requirements, and Sharia principles. It typically includes comprehensive details about final settlements, end-of-service benefits, clearance procedures, and ongoing obligations. This type of agreement is commonly used during corporate restructuring, voluntary separation programs, or when both parties agree that ending the employment relationship serves their respective interests. The document provides legal certainty and protection for both parties by clearly documenting the terms of separation and preventing future disputes.
