Deed of Release for Employment

What is a Deed of Release for Employment?

This Deed of Release for Employment is for use when an Employee is leaving an Employer. It deals with final matters between both Parties. It can also serve to release both the Employer and the Employee from the various obligations that they have towards each other, such as obligations that might exist under the Employment Agreement.

A Deed of Release for Employment is especially useful when an Employee has made, or is considering making, a legal claim against the Employer. For example, the Employee might be considering a claim for unfair dismissal, unlawful termination or unpaid entitlements. By signing a Deed of Release, the Employer and the Employee can finalise an agreement which may involve the Employer paying some kind of severance payment in return for the Employee's confirmation that the matter is at an end.

What is the difference between a Deed of Release for Employment, a Deed of Release (Mutual) and a Deed of Release (General One Way)?

A Deed of Release (General One Way) is a general release document that can be used for a wide range of situations (aside from employment situations). It is for use when one party is releasing another party from certain obligations or liabilities. It may be used to settle a dispute between the parties, for example if one party is alleging that the other party is liable to it for some reason.

Our Deed of Release (Mutual) is also a general release document that can be used for a wide range of situations, but is more suitable when multiple parties are simultaneously releasing each other from various obligations and liabilities.

By contrast, this Deed of Release for Employment is specifically designed for employment situations.

Is it mandatory to have a Deed of Release for Employment?

No, it is not mandatory to have a Deed of Release for Employment. However, it is a good way to rule a line under the matter so that both parties can move forward with confidence that it has been resolved.

If the parties do not use a Deed of Release for Employment, then it remains possible that either party could come forward at a later date to make a claim against the other party.

What does "release" mean?

In this document, the term "release" refers to being released from any further claims. If the Employee releases the Employer, then this means that the Employee agrees they have no further legal claims against the Employer.

Therefore, in respect of a particular obligation, the Party which is "releasing" the other Party, is effectively giving up some of their legal rights. This should not be done without careful consideration. Both Parties should make sure that they understand the consequences of this. If they have any doubt, they should seek independent legal advice.

What is not allowed in a Deed of Release for Employment?

The Employer should not try to avoid any mandatory employment obligations via this Deed of Release for Employment.

For example, in many states and territories, employment laws prevent the release of Employers from various obligations towards their Employees (such as obligations to pay wages, workers compensation or superannuation). It may be necessary to consult the Employment Agreement, any applicable modern award or enterprise agreement, or relevant employment laws such as the National Employment Standards. These may impose various obligations on the Parties, which cannot be avoided. If such a restriction applies in relation to a particular obligation, then even if this Deed confirms that a Party has been released from that obligation, the Deed may be unenforceable, and the Party may still be bound by that obligation.

What has to be done once a Deed of Release for Employment is ready?

Once the Deed has been prepared, both Parties may take a copy (before it is signed) and review it to ensure that they understand the Deed and are happy with the terms of it.

There are certain formal requirements that need to be met in order for a Deed to be validly signed. This Deed will need to be signed in accordance with those formal requirements, or it may not be legally binding. For example, for an individual to validly sign a Deed, the signature clause should read "Signed Sealed and Delivered" and they should sign it before an independent adult witness, who also provides their full name and signature. The rules regarding the signing of Deeds by companies are set out in the Corporations Act 2001, and generally require the Deed to be signed by two directors, or by a director and the secretary or in the event that the company has a sole director, by that person.

Again, if the Parties are unsure about this, they should seek legal advice. If the Parties get this wrong, the Deed may not be legally binding.

Is it necessary to have witnesses for a Deed of Release for Employment?

For individuals or partnerships, it is generally necessary to have witnesses for a Deed to be validly signed. In many states and territories of Australia there is legislation which explicitly requires a witness. In some states and territories of Australia it is not legally mandatory, but it is still best practice to do so. Therefore, this Deed is set up to require witnesses for all individuals who sign it.

For companies that are signing the Deed under section 127 of the Corporations Act 2001 (by having the directors and/or secretary sign it) then witnesses may not be required.

What must a Deed of Release for Employment contain?

The Deed of Release records various details, such as:

• full names of the Parties.
• final payments (including severance payments, if applicable).
• confidentiality.
• return of property.
• a release from further obligations.
• an acknowledgement from the Parties that matters are finalised.
• confirmation from the Parties that they have had the opportunity to obtain legal advice.

Some obligations might continue after the termination of the Employment Agreement (and after the signing of this Deed of Release), such as obligations on the Employee to maintain the confidentiality of certain confidential information. At the same time, the Parties may require confirmation that some other obligations are at an end. For example, if the Employer is making a severance payment to the Employee, then the Employer may want confirmation from the Employee that such a payment will be accepted as full and final settlement of matters (and that the Employee will not therefore claim any other payment or compensation from the Employer).

Which laws are applicable to this Deed of Release for Employment?

The Fair Work Act 2009 (Cth) contains the National Employment Standards (NES), which set minimum employment standards in Australia.

In addition, each state and territory has legislation that deals with various employment matters such as occupational health and safety or discrimination.

If a modern award or enterprise agreement applies, then this will need to be consulted.

Each state and territory has legislation that addresses the formalities that apply to the signing of deeds by individuals. In addition, the Corporations Act 2001 (Cth) deals with the signing of deeds by companies.

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