Escharotomy is indicated when the circulation is compromised due to increased pressure in a burned limb or when a circumferential burn of the chest wall results in
respiratory compromise by restricting normal chest wall movement.

The following guidelines describe the technique:

Clinical Practice Guidelines Escharotomy for Burn Patients NSW Statewide Burn Injury Service

These guidelines from New Zealand provide a concise reference:

http://www.nationalburnservice.co.nz/pdf/escharotomy-guidelines.pdf

Review the procedure with this blog post:

http://lifeinthefastlane.com/trauma-tribulation-005/

This video demonstrates the procedure: