Employee Dismissal & Release Forms: What’s in it for You?

If you’ve recently been dismissed, you may have found that an additional financial proposal or a “release” accompanied your dismissal letter.  Release forms vary; some are short one-paged documents and others are several pages long and can include numerous clauses.   It may be called a “release and settlement agreement” or something similar; and almost all of them are formally structured contracts containing limited-time-only offers. You must sign before the deal expires to receive the proposed financial compensation.

This has been a common trend for over a decade as many companies include release forms as part of their dismissal protocol.  You might wonder: what’s in it for me?  Or, what exactly am I releasing? By signing a dismissal-based release, you could be signing away the termination benefits your employer legally owes you. 

Employee Dismissal and Release Forms: What’s in it for the Employer?

At the time of dismissal, it’s the employer’s legal obligation to provide the employee reasonable notice of the dismissal.  However, the employer doesn’t have to provide reasonable notice if there’s a specific contractual agreement stating otherwise. This is exactly what a release is for.

Working notice is the most traditional way of providing reasonable notice. Once an employee has been informed of their dismissal, they must continue working (with pay) during the notice period, and once that period ends, the employment is completely terminated. An employer, who doesn’t want to give working notice, may offer a “salary continuance” where the employee doesn’t work, but receives regular wages for a set period of time.  This time period is determined by the employer.  Or, the employer may offer a lump sum payment in lieu of notice.  The amount is, once again, determined by the employer. The employer may also make an offer that is not working notice and is less than the face value of what the law would consider reasonable notice.

Employee Dismissal - A Release Form Can Release the Employer from Liability

Employers usually want to get a dismissal over and done with as quickly as possible.  However, by serving a dismissal letter and ending employment simultaneously, the employer can’t provide working notice in the form of reasonable notice and this exposes them to a damages claim for wrongful dismissal.  A release settlement signed by an employee can protect the employer from these kinds of claims and may release them from numerous legal obligations.  It’s also a way to cut costs as the limited time financial offer (if accepted) will replace the reasonable notice that the employer owes the employee. 

Even after employment ends, an employer may have terms in a release form that clearly outline an employee’s obligation to the company after dismissal. Confidentiality clauses, non-solicitation, fiduciary duty and non-competition clauses are some examples. These clauses may not be part of the original employment contract, but can be used in a release to protect the employer’s interests for a set period of time after the employee has been terminated.  These terms can place restrictions on an employee for months or even years after their dismissal.

Employee Dismissal - Can You Get a Better Deal?

Providing reasonable notice may be very expensive and release settlements can provide a better deal and significant savings for the employer. It also protects them from wrongful dismissal damages and more. Once an employee signs a release settlement, new dismissal terms come into effect and the legal obligations between employer and employee are re-written. Too many employees sign away their rights and full notice without being aware of their bargaining position.

Release forms are generally created by the employer to benefit the employer. How does your release form compare to the amount of reasonable notice your employer owes you? It all depends on your individual circumstances, your employment contract and your employer’s motivation for putting the offer on the table in the first place. Before you settle for a settlement, get the answers you need and find out how to negotiate a better deal by contacting Employment Lawyer, Bob Yeager.