Termination of an employee is neither easy nor ideal, but sometimes it is necessary. When the employee you’re letting go of isn’t meeting workplace expectations, they could become a liability to the company and the team. Industry standards necessitate providing them with a deed of release, which every terminated employee must agree to sign upon reviewing.
What Is a Deed of Release?
A deed of release is a legally binding document issued by an employer to a terminated employee. It includes all the terms and conditions of the settlement. This document is for the employer’s benefit and protects the company from being sued by former employees for various reasons.
This document differs from an Agreement, which is another document issued to terminated employees. The difference between the two is that the agreement requires the employee to pay the ex-employee for their exit from the company. These are usually more suitable for employees terminated due to cost-cutting in the company or your prerogative as an employer.
The rule of thumb is that if an employee is terminated due to extenuating circumstances not based on their performance, it is better to issue an Agreement. But if the employee is being terminated based on their bad performance or inability to do the work, you can issue them a deed of release.
Parts of a Deed of Release
Non-negotiable Terms
The deed should be detailed enough to include that the employee is released from all responsibility for their role. The company will also not be held responsible for the employee’s actions in the past, present, and future. It has to state that the employee acknowledges the reason for their termination as correct, so they would have no legal grounds to sue the company.
Every deed should have an underlying resolution to it. You can add that the employee will still receive bonuses or commissions that they are entitled to when they were employed if there were any.
Confidentiality and Non-Disparagement
The most important part of the deed is confidentiality from both parties. As employees are not allowed to give out the company’s sensitive information, the deed can also state that you as the employer should not disclose the reason for termination to their colleagues or future employers. These terms can be settled between the parties and their lawyers.
It is illegal to coerce employees into signing the deed through physical or financial intimidation. If the employee acknowledges that the termination is fair, then they would have no reason to sue the company and sign it. However, they do have the right to seek legal counsel.
Conclusion
A deed of release is necessary to protect you from any troubles that may arise later on. As a company owner, you need to make sure that your employees, no matter their performance, leave the business with no ill will and acknowledge the reason for their dismissal as their responsibility.
They, too, are entitled to reading and reviewing the deed and can dispute it in court if they do not find it justifiable. If it cannot be settled between both parties, you will need proper legal representation.
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