HRSINGAPORE Community Discussions
Mutual release clause
Dear HR Community,
I have been asked about a mutual release letter from an employee in my organisation.
I've heard about a mutual release clause which can be included in a letter terminating contracts.
Such clauses usually state that neither party can have claims against each other after the contract is terminated.
Is it common to have such a clause in agreements between employees and employers?
And can we issue a mutual release letter?
If anyone has done so please share the circumstances and contents of such a clause or letter.
We are a financial institution.
Thank you so much.
REPLIES & COMMENTS
I have come across resignation circumstances where both parties mutually agree to waive serving notice period and or the payment-in-lieu of notice. This is usually stipulated in the employment contract.
You will have to state the notice period requirement, however, mutually agree to waive….
Also, state that all employee benefits will cease on (date).
However, do take into consideration if the employee has balance leave.
Then he or she has to utilise such leaves and mutually agree to waive any notice period…
I noted that you are in the financial industry and a few points that come to my mind are as follows which I just thought of sharing:
1) why would an employee make such request to the company? Is it a win-win process, that the company should consider, at least the employer is not disadvantaged after issuing such clause on employee's termination notice?
2) Is there any other existing employment clause in your company and industry that contravenes with this requested clause?
I am sorry to say that I have not heard of mutually release clause, but from what I briefly read online, it can be a legally binding clause, so probably you can consider checking with your legal department or someone who is proficient with employment laws.
Having said so, you may understand that in Singapore, an employer cannot claim liability from employees or has less success rate in logging a case even if there is a mutually agreed clause signed by employer and employee on company’s document, as the Singapore labour court supports employees more than employer e.g. Non-Compete Clause.
A mutual release agreement is usually given on the last day of work.
This is to ensure that both parties have fulfilled their obligations under the employment contract.
However certain clauses can survive even after the end of an employment contract, i.e. confidentiality clause and conflict of interest clause.
Hence in order to protect the interests of your company, you might want to consult a lawyer on the drafting of a mutual release agreement.