A quitclaim (or waiver and release) is a document by which an employee, usually upon separation, releases the employer from further liability in exchange for a sum of money. Quitclaims are not per se invalid, and a validly executed quitclaim can bar the employee from later pursuing claims, but the law and jurisprudence view them with caution because of the unequal footing between employer and employee. For a quitclaim to be valid and binding, the requisites are: first, there was no fraud or deceit on the part of any of the parties; second, the consideration for the quitclaim is credible and reasonable, that is, not unconscionably low compared to what the employee is legally entitled to; third, the employee executed the waiver voluntarily, with a full understanding of its terms and consequences; and fourth, the contract is not contrary to law, public order, public policy, morals, or good customs, or prejudicial to a third person with a right recognized by law. Courts will set aside a quitclaim that fails these requisites, for example, one obtained through coercion, misrepresentation, or undue pressure, or one where the amount is grossly inadequate (a 'dole-out' far below what is due), or one signed by an unwitting employee who did not understand what they were giving up. When a quitclaim is invalid, it does not bar the employee's claims, and at most the amount already received is deducted from the total award. So a quitclaim is enforceable only when it is voluntary, for reasonable consideration, freely and knowingly executed, and not contrary to law; otherwise, the employee may still pursue their claims.
Quitclaims Are Viewed With Caution
A quitclaim releases the employer from liability for a sum. It is not per se invalid, but courts scrutinize it due to the unequal footing of employer and employee.
The Requisites for Validity
- No fraud or deceit;
- Credible and reasonable consideration (not unconscionably low);
- Executed voluntarily with full understanding; and
- Not contrary to law, morals, or public policy.
When It Is Set Aside
Courts set aside a quitclaim obtained by coercion, misrepresentation, or undue pressure, or where the amount is grossly inadequate, or signed by an unwitting employee. An invalid quitclaim does not bar the claims — the amount received is merely deducted.
Practical Takeaways
- A quitclaim binds only if voluntary, reasonable, and knowingly signed;
- A grossly low or coerced quitclaim is void;
- An invalid quitclaim just leads to deducting what was received.
Frequently Asked Questions
Is a quitclaim always binding? No. Quitclaims are not per se invalid but are viewed with caution. A quitclaim binds only if it was voluntary, for credible and reasonable consideration, executed with full understanding, and not contrary to law or public policy.
When will a court set aside a quitclaim? When it was obtained through fraud, coercion, misrepresentation, or undue pressure, when the consideration is unconscionably low compared to what is due, or when the employee did not understand what they were waiving.
What happens if a quitclaim is invalid? It does not bar the employee's claims. At most, the amount already received under the quitclaim is deducted from the total monetary award the employee is found entitled to.
What makes the consideration for a quitclaim reasonable? It must be credible and reasonable, not unconscionably low compared to the employee's legal entitlements. A grossly inadequate amount is a badge of invalidity.
This commentary is for general informational purposes only and does not constitute legal advice. For guidance specific to your situation, please consult a licensed attorney.
If you have questions about your rights or options under Philippine law, our firm is available to assist. You may reach us via Viber or WhatsApp, call us at 0995 433 5550, or send an email to vivasnobles@gmail.com. We look forward to hearing from you.