Overview

The purpose of a Employee Final Release is simple. It is an explicit acknowledgement by the settling
Plaintiff that it has agreed to resolve its claims as against one or more Defendants, and as a result of that
settlement, it is releasing those Defendants from the claims at issue. A full and final release acts as a
complete defence in the event that a subsequent action is brought by the same party, for the same cause
of action.
Full and final releases are implied in all settlement agreements. However, the comprehensive releases
that are typically exchanged are not strictly required if the release is implied. A party is required to
include a reference to any clauses required in a release, or a specific form of release in order to demand
more complicated terms.1 In essence, the terms of the full and final release must do no more than reflect
the terms of the settlement reached between the parties.

In practice, settlement agreements will often make reference to specific clauses (eg. "claims over" and
"confidentiality"), or will refer to specific forms of release (eg. LawPro form). In most cases, however, the
only reference to a full and final release in a settlement agreement is to indicate that is must be in a form
agreed upon by counsel.

Common clauses

Two of the most important clauses which can be included in a release are the claims over, and
confidentiality clauses. A "claims over" clause is a usual clause to be included in a full and final release,
whereas a confidentiality clause is considered unusual.

A typical "claims over" clause states that the settling party cannot commence or continue an action
against persons who are not parties to the release, where those individuals would be able to seek
contribution and indemnity from the settling defendants. The purpose of such a clause is to protect the
settling defendant from the claims of the plaintiff, whether those claims are direct or indirect. If the plaintiff
commences such a claim, and a party in that action seeks contribution and indemnity from the settling
defendant, the settling defendant is entitled to use the release as a defence to the action seeking
contribution and indemnity, and may be able to strike out the plaintiff's claim altogether, and obtain full
indemnity for any costs incurred in defending that action.

In most cases, there is very little risk to utilizing a "claims over" clause, as the intent is not to pursue any
further actions in respect of a particular loss. However, where there are multiple actions brought or
anticipated, there is a risk that a non-settling defendant will seek contribution and indemnity from a
settling defendant, which would trigger the claims over clause, and expose the plaintiff to the risk of costs,
and the risk of its non-settling action being dismissed.

In order to avoid this, one could draft a release to specifically permit certain actions to be pursued. For
example, a line could be added to a release which states "It is specifically acknowledged and agreed that
the plaintiff may commence or continue an action as against" an additional party. Alternatively, when
settling with one party it may be wise to specifically limit the claim against remaining parties to their
respective liabilities, rather than pursuing joint and several liability.

Confidentiality clauses are typically requested by self-insured Defendants, as any actions settled are paid
directly by them, and they perceive the settlements to affect their reputation to a greater degree than
when settled by their Insurer. The confidentiality clause is intended to prevent any dissemination of the
settlement terms, in order to further protect the reputation of the settling Defendants. These clauses
typically require the fact of settlement, and the details of the settlement to be disclosed to no one except
A) where necessary to seek legal or financial advice, and B) as may be required by law.

Confidentiality clauses may be accompanied by "non-disparagement" clauses. These clauses require the
settling Plaintiff not to publicly speak poorly of the settling Defendant, or otherwise make public any
criticisms of them. This type of clause is also intended to protect the reputation of the settling Defendant,
and will be strictly enforced by the courts.

When negotiating these clauses, it may be wise to seek to remove the confidentiality in regard to the fact
of the settlement, as it is almost inevitable that the fact of a settlement will either be specifically disclosed,
or could be easily inferred from the fact that the litigation has come to an end.

The primary risk of a confidentiality clause is that if the terms of the settlement are disclosed other than as
permitted, it will typically allow the settling Defendant to recover their payment. As subrogating Insurers
typically close their file after settlements, and seldom think of them again, the risk of the Insurer violating a
confidentiality clause is low. However, the Insured may inadvertently disclose the terms of settlement in
casual conversation. As such, on the rare occasion that such a clause is permitted into a release, the
Insured should be expressly warned about the confidentiality clause, and that any disclosure of the
settlement terms will entitle the Defendant to recover the settlement funds. The insured should also be
warned that such a disclosure might be considered a violation of the terms of their insurance policy, as it
amounts to frustrating the Insurer's ability to subrogate.

Subrogated Release vs. Direct Release

A subrogated release is specifically drafted such that it is the Insurer, as subrogee for the Insured, that is
releasing the claim. This type of release can only be used where the Insurer has sole power to settle the
action. This means that there are either no uninsured losses (other than perhaps a deductible), or that
only the subrogated portion of a claim is being settled. A subrogated release does not bind the Insured in
respect of their direct losses.

Opposing Insurers typically prefer to be given a release signed by the Insured, as it will specifically bind
the Insured in respect of their own losses, and will also bind the Insurer. However, where the limitation
period has expired, many Insurers are more comfortable with accepting a subrogated release, as they
have the additional protection of a limitation period in the event that the Insured does bring their own
claim at a later date.

When a third party has been put on notice of a subrogated interest, and proceeds to obtain a full and final
release from the Insured, this release does not bind the Insurer. It only binds the Insured. The logic
behind this is simple: it would be unjust to allow the third party to negotiate a release directly with the
Insured when it is fully aware that the Insurer has a subrogated loss that it is seeking to pursue.
 Employee Final Release
IN CONSIDERATION of the payment to me of the sum of $ ____________________ receipt of
which is hereby acknowledged, I, __________________, on behalf of myself, my heirs,
administrators and assigns (hereinafter collectively referred to as the "Releasor") hereby release
and forever discharge, its parent, subsidiaries and affiliates and each of its and their respective
officers, directors, employees, servants and agents, and their successors and assigns
(hereinafter collectively referred to as the "Releasee") jointly and severally from any and all
actions, causes of action, contracts and covenants, whether express or implied, claims and
demands for damages, costs, interest, loss or injury of every nature and kind whatsoever
arising, which I may heretofore have had, may now have or may hereinafter have and without
limiting the generality of the foregoing, all claims in any way relating to the hiring of, the
employment by or the termination of employment of the Releasor by the Releasee and I hereby
specifically covenant, represent and warrant to the Releasee that I have no further claim against
the Releasee for or arising out of my employment, or separation from the Company, or terms of
such employment or employment separation by the Releasee; employee benefit plans whether
or not arising under the Employee Retirement Income Security Act of 1974, as amended
("ERISA"); any discrimination claim whether or not arising under any local, state or federal law
or regulation, public policy or common law (including, with limitation, the Age Discrimination in
Employment Act, Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act,
and the Older Workers Benefit Protection Act); or any state, federal or local statute, regulation,
public policy, contract or tort principle in any way governing or regulating my employment, or
termination, or terms of employment or termination by the Releasee.

It is expressly agreed and understood that this Agreement is a general release. Nothing
contained in this Agreement is a waiver of any rights or claims (including any which may arise
under the Age Discrimination in Employment Act) that may arise after the date of execution by
me or which, as a matter of law, cannot be released or waived.

It is understood that the giving of the aforementioned consideration is deemed to be no

admission of liability on the part of the said Releasee, said liability in fact being denied.

Therefore, I have executed this Release by signing this Agreement on ______________, in the
presence of the witness whose signature is shown below.

____________________
Employee

____________________
Witness
 Employee Final Release
Review List

This review list is provided to inform you about this document in question and assist you in its
preparation. The focus of any job termination interview should be to gain the individual’s
signature to this document. The purpose is self-evident: avoid later claims, lawsuits,
contentious behavior, and the like.

Companies have no affirmative obligations to provide severance or other benefits after

termination. The reason for the benefits being granter are humanitarian and to protect the
Company on the other. It only makes sense that if the Company is granting a benefit, the
consideration is to receive relief from future problems from that individual. This document
accomplishes that purpose.

Your best chance of getting this signed, and picking up the attendant leverage to avoid a future
lawsuit, is on the spot early in the termination meeting. Present the Release as required to
discuss severance and related matters; get two copies signed; give one to the Employee.
When signed, excuse yourself from the meeting; get a copy or copies made and have those put
away securely by another employee or yourself in a previously decided upon location (the
Accounting Office is an appropriate place). The purpose of this is to prevent “buyer’s remorse”
or second thoughts by the Employee about signature. Now it is done.

If you do not get signature, we suggest you then offer no termination or severance benefits until
that is done. In most cases, that alters the framework of the discussion and you will get the
signature. In those cases in which I have not gotten the signature at that point, I stopped the
meeting, removed the employee (now former employee) from the premises, and suggested the
individual contact me by phone if they changed their minds. Once off the premises, I got a
couple of calls but never resolved termination terms and, accordingly, never had to pay for
severance. No lawsuits resulted from this failure to get the signature. Accordingly, from a
business point of view, we recommend you stand firm on requiring the Release.

Once you do get the signature, which you will in the vast majority of cases, your mission
becomes to help the Employee heal themselves from the bad news. To do this, emphasize that
termination related to overall issues not the employee themselves, unless this approach is
dictated against by obvious facts in the case.

The worst time for termination is Friday afternoon when the employee has the weekend to fret
over it. The best time is early in the week at the end of the day so both the terminator and
terminated can go home afterwards and get ready for the next business day. The question
about Company property is always a tricky one. Many companies have resorted to escorting
people out and packing up their goods. There is good reason for this. You have to make this
decision for yourself.

1. Get two originals signed; give one to the employee and keep one for your files. Remove
yours immediately, as stated above, upon receipt.

2. Although this is a tough thing to do, it is management’s job to do. Nothing can sugar coat
the pain inflicted by termination, though it is more common these days and there is less
shame from the event for the individual as a result. Do your best to preserve the
individual’s dignity so they can heal quickly and move on with their life. Whatever you
do, don’t blame the employee.