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If you are an employer, protecting your business and taking care of your employees is a priority. If you want to settle a dispute with an employee or formalise the end of an agreement that has not yet come to an end, you might start thinking about taking legal action. However, legal proceedings can be quite expensive and time consuming. You might first consider settling disagreements or disputes with a commercial solution. If you do so, you will want to document the decision using a deed of release.

This article will:

  • explore situations where you would need a deed of release; and
  • cover some of the key considerations to think about before using this deed.

What Is a Deed of Release?

A deed of release is a legally binding document used to formalise the end of an agreement or settlement between different parties. When you sign a deed of release, you are agreeing to bring a dispute or agreement to an end. A deed of release is commonly used in the employment setting but it can be applied in other commercial arrangements.

It is very important that both you and your employees understand:

  • what you are signing; and 
  • the obligations you will face. 

When Will I Need a Deed of Release?

Employment Contract

You may find yourself in a position where you have to make the tough decision of ending the employment of a staff member. In this situation, you can provide your employee with a deed of release which notes the specific terms that end the relationship. This can prevent any further claims from arising from your employment relationship and “releases” you both from further obligations. Remember, you cannot force your employees to sign this deed or to get out of any obligations that you legally owe to an employee (e.g. redundancy payment). 

A deed of release will be especially important where your employee:

  • is claiming they have been unfairly dismissed; or
  • has made allegations about you in the workplace following their termination.

In these situations, you could consider providing your employee with a deed to prevent your employee from filing claims with the Fair Work Commission or commencing other legal proceedings. The deed should be carefully drafted to state that your employee “releases” you from any future claims in relation to their employment or the termination. 

By signing the deed, the employee can: 

  • agree to release your company from any claims they have made; and 
  • indemnify you in respect of any damage that resulted from these claims. 

You can also agree with the employee not to make any new claims. The deed will also set out the value of any payments you owe your employee (and additional benefits that you want to include) in exchange for signing the deed. 

For example, you could offer your employee an additional ex-gratia payment on top of their outstanding entitlements as incentive for them agreeing to sign the deed.

Dispute Between Employer and Employee

You may find yourself in a position where your employee has commenced court proceedings following:

  • a disagreement or allegation that occured in the workplace; or 
  • termination of their employment.

In this case, a deed will be useful where the employee agrees to discontinue any court proceedings that they have commenced against you. You can enter into a deed with the employee, agreeing to stop any current or new proceedings in exchange for a commercial settlement.

How Do I Get a Deed of Release?

It can be tempting to download a template deed of release off the internet, but a deed of Release is a legally binding document. As such, it is best to have a lawyer carefully draft and review the deed before you sign it. Your lawyer will draft it to include the provisions that you and your employee have discussed. Your lawyer will also draft the deed in such a way to protect you and your business from any ongoing issues concerning the employee involved.

Franchise Agreement

You can also use a deed of release outside this context. A deed can also be used where parties to a commercial agreement wish to finalise a contract that has ongoing obligations on those parties. A good example is when the term of a franchise comes to an end. As a franchisor, you could enter into a deed of release with the franchisee to release you both from any obligations and claims you may have against each other. You should enter into this deed before you enter into a new Franchise term.

What if My Ex-Employee Breaches the Deed of Release?

There are several ways your ex-employee can breach the deed. These include:

  • breaching a confidentiality clause within the deed; and 
  • commencing new proceedings after agreeing that they will not file any more proceedings against you.

If your ex-employee breaches a confidentiality clause, you may get court orders to stop the person from disclosing any further confidential information. You may be entitled to compensation for any loss or damage resulting from the disclosure of confidential information. If the employee has kept any confidential information, you may also get a court order to return this information.

After the employee has signed the deed, it will be difficult for them to try to commence proceedings. You can use the deed to stop the employee commencing any new proceedings.

Key Takeaways

You may think that a deed of release is an unnecessary document, and that a simple written agreement between you and your employee is sufficient. However, a deed of release is a legally binding document. Therefore, using one provides you and your business with significant protection and certainty that your employee will not renege on their promises. If you have any questions regarding Deeds of Release, contact LegalVision’s employment lawyers on 1300 544 755 or fill out the form on this page.

Frequently Asked Questions

What is a deed of release?

A deed of release is a legally binding document used to formalise the end of an agreement or settlement between different parties. When you sign a deed of release, you are agreeing to bring a dispute or agreement to an end.

Where do I get a deed of release?

As a deed of release is a legally binding document, it is best to have a lawyer carefully draft and review the deed before you sign it. Your lawyer will draft it to include the provisions that you and your employee have discussed.

Do I need a deed of release?

You may need a deed of release if your employee is claiming that you have unfairly dismissed them, or if they have made allegations about you in the workplace following their termination. You can also use a deed where parties to a commercial agreement wish to finalise a contract that has ongoing obligations on those parties.

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