As an employer, protecting your business is very important to you. Knowing when and where to take legal action, or use particular legal documents, can sometimes be confusing. In this article, we will discuss:

  • when you should use a deed of release;
  • the key considerations when using a deed of release; and
  • what to do when the employee does not comply with the terms.

What is a Deed of Release?

A deed of release is a formal document used for:

  • preventing or settling disputes;
  • ending employment relationships; or
  • preventing claims from occurring as a result of issues within the employment relationship.

What Are the Right Times to Use a Deed of Release?

As an employer, you can use a deed of release in a variety of situations. The primary times that you can use a deed of release are when:

  • an employee’s position is made redundant;
  • you terminate the employment of an employee; or
  • an unfair dismissal proceeding has recently settled.

In any of these situations, you will want to present the employee with a deed of release that states the agreed upon terms that “release” each party of further obligations. The deed of release will also set out the value of any payments you owe the employee.

What Should I Include in a Deed of Release?

Drafting a deed of release can be tricky, especially if there are sensitive issues that need addressing. Having the deed of release prepared by an experienced employment lawyer is prudent. It will ensure that both you and your employee have your interests clearly outlined and protected.

Some terms that may be in a deed of release are:

  1. a description of the circumstances surrounding the employee’s termination; and
  2. the terms of the agreement, such as:
    1. any payments owed to the employee (settlement pay or redundancy pay);
    2. the release: terms that state that neither the employer or the employee can bring further action against the other after signing the deed of release, such as an unfair dismissal claim by the employee;
    3. a statement of service is given to the employee;
    4. the agreement needs to remain confidential; and
    5. neither party can disparage the other after the agreement is signed.

What Are the Benefits of Using a Deed of Release?

Broadly, the main benefit of a deed of release is that it will clarify the post-employment obligations. By asking your employee to sign one, you are ensuring that the terms of the redundancy or settlement are clear to both you and the employee.

It is in the employee’s interest to sign the deed of release as it will likely outline all entitlements owed to them, such as:

  • annual leave;
  • long service leave; and
  • any other bonus payments.

Additionally, the deed can include a non-disparagement clause. This clause is usually mutual, and protects both the employer and the employee’s reputation by restricting what either party can say about the other.

How Do I Use a Deed of Release to Terminate an Employee’s Employment?

Employment comes to an end when the employee:

Giving your employee a deed of release to sign doesn’t automatically validate the termination, but it’s a key step in the termination process.

When using a deed of release in the termination process, be sure to consider:

What if an Employee Breaches the Deed?

The deed of release should contain terms stating that the employee will not:

  • disclose any confidential information they discovered during employment;
  • disparage their employer following termination;
  • breach any restraint of trade or non-compete clauses; and
  • make an unfair dismissal claim.

If the employee breaches these terms, you will be able to use the deed of release as a tool to stop the behaviour continuing. For example, if the employee makes an unfair dismissal claim despite signing the deed, you may ask the Fair Work Commission to dismiss the proceedings.

The relevant state or territory laws will govern the process of enforcing the terms if the deed is breached.

How Do I Use a Deed of Release at the End of Unfair Dismissal Proceedings?

You may want to use a deed of release to document the agreed upon terms at the end of an unfair dismissal proceeding. If used in this capacity, the deed should outline:

  • the terms of the settlement;
  • the fact that the employee is bringing an end to the proceedings; and
  • any amounts owed to the employee.

Key Takeaways

As an employer, knowing when to use particular legal documents to protect your business can be confusing. Having a deed of release in place will clearly outline each party’s post-employment obligations, and will prevent employees commencing any legal proceedings once they leave the business. If you have any questions, contact LegalVision’s employment lawyers on 1300 544 755 or fill out the form on this page.

Jessica Anderson
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