A Deed of Release broadly refers to an arrangement between two or more parties whereby one or more parties agree not to take any legal action against the other party in relation to a claim now or in the future.

In employment relationships, employers will sometimes seek to have a former employee sign a Deed of Release to formally acknowledge that no further claims, such as unfair dismissal claims, will be commenced against the business/employer.

So, if you are asked to sign a Deed of Release, what do you need to know?

Courts commonly regard a Deed of Release as a record of the parties reaching some sort of settlement of the former claim against the employer.

In essence, by signing a Deed of Release, you may be agreeing to forsake any entitlements that you may have against your employer and to not pursue such entitlements any further. You also agree to release the business from any future claims which may arise

What is covered in a Deed of Release?

While the primary purpose of an employer entering a Deed of Release is to release the employer from liability and prevent you, as the ex-employee, from taking legal action, the contents of the document can cover other matters as well.

For example, confidentiality and intellectual property are common items which are dealt with in a Deed of Release. The Deed of Release may agree that, in consideration of the amount paid to you by the employer, you agree that you will not disclose any confidential information that you obtained throughout the employment, and you will not use any intellectual property that belongs to the employer to compete in the future. Other concerns may include the return of any business-owned property that is currently in your possession.

It is important that you agree to each of the items covered under the Deed of Release as it is a legally binding document once properly executed.

What cannot be included in a Deed of Release?

While a Deed of Release is a popular and efficient way of resolving a disputed claim, it is not without its limits.

A Deed of Release cannot:

• bind third parties;
• have provisions which preclude the operation of governmental/statutory agencies with duties relating to tax law or workplace, health and safety legislation; or
• be ‘against public policy’ or ‘contrary to law’.

If a Deed of Release has unreasonable provisions a court may hold it to be unenforceable.

Conclusion

Stay tuned for Part 2 on what to do if you are being asked to sign a Deed of Release by your employer. Next week’s article will look at how broadly a Deed of Release can be drafted before it becomes overly onerous. If you require any advice or assistance with a claim, contact LegalVision on 1300 544 755. Our employment lawyers would be happy to assist.

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