Herrera certainly presents a difficult dilemma for the Phillies. If he truly has remorse for the incident and has been a model of deportment since, then it seems he does deserve a second chance, both by the basic agreement and by any sense of what is the right thing. Of course, the Phillies know much more about his remorse and behavior than we do. While Herrera's play last season before the suspension was not good and could support a "baseball reason" to release him, it certainly could be challenged based on his first three seasons with the Phillies. The Phillies also have a cost (over $20 million) to release Herrera, although it is the same amount they will pay him anyway if he is not released.
Putting Herrera on waivers at this time gives the other teams a chance to take him (and his contract) off the Phillies books. This seems very unlikely to happen. If he clears waivers, it would seem to me a no brainer to outright Herrera to the minors rather than release him. This gives the Phillies the open spot on the 40 man roster and allows them to send Herrera to the less visible minor league camp.
If Herrera is remorseful and has shown appropriate off field behavior, the story could be used to overcome the initial opposition to bringing Herrera back to the majors (by the Phillies or another team) if his baseball skills and performance in spring camp and in some months of minor league play. Perhaps some team would at some point be willing to take him in a trade. The Phillies might have to pay part of the salary, but perhaps could recover a portion of the twenty plus million.
I know many say just release Herrera now. I would like to see the Phillies recover some value from the contract they are bound by at this point. I also want to see the Phillies treat Herrera fairly. I certainly do not know his character or his remorse or lack thereof since the incident last year. I do believe that his actions in that incident are unacceptable and deserve punishment, but the judicial system did not pursue the case and MLB did punish Herrera in accordance with the basic agreement. If there is nothing else we don't know, Herrera deserves a fair second chance.
Of course, his fall off in performance in 2018 and in the early part of 2019 suggest that his career was on a significant downturn and he may well have played himself into a release had he played a full 2019 season, The domestic violence incident makes it more difficult to be clear that a release was solely a "baseball decision".
For now, outrighting him off the 40 man roster seems to be a logical move.