Agreeing on a settlement after quitting your job.
The term 'release' is normally found in a settlement agreement. It refers to releasing the employer of any future claims or legal action in return for the benefits and consideration that the employee gets.
When the employee signs the release in return for separation payment, a settlement is reached. The employer ensures through the release statement that the employee doesn't take future action that can hurt the company. The employee signs it as an indication of his acceptance of the settlement consideration. Even though the employee hasn't laid any claims against the company, the employer might still request the worker to sign a release statement.
When is the release statement not appropriate?The employee should assess the specific conditions of the case. If you think that the company did something that is illegal that requires prosecution, you can decline the settlement amount, but you should still evaluate the case to see whether a settlement agreement amount wouldn't perhaps suffice.
Unlawful action after the release statement is signedIf the employer does something illegal with regard to the employee after the worker signed the release, the employee still has the right to file claims against the employer for actions after the settlement agreement date.
Legal consultation before the signing of a releaseYou may need to get the opinion of a lawyer before you sign the release if you believe that you have a strong case and should receive a larger settlement amount. The lawyer may advice you on steps to be taken, and whether the severance pay offered is too low or in line with market trends.
Tax implicationsA large settlement amount may place you in a higher tax bracket. You should consult with an auditor to establish how the settlement amount affects your payable taxes. If the amount is small, it most likely will not have a huge effect on your payable income tax. The auditor can advice you on the best way to distribute the amount for tax purposes.
The settlement is not necessary only in the form of a cash amount, but can also include a reinstatement, promotion, an increase in salary, or better employment terms. When the employer offers you a settlement agreement, you are expected to sign the release agreement for surety that you will not file further claims. It is thus necessary to consider whether the agreement is acceptable or whether you should request further mediation or go to court.