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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.


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