What is a Deed of Release?

A Deed of Release is a legal document that formalises an agreement, commonly between an employer and an employee. A Deed is legally binding and is used to resolve disputes, avoiding the Fair Work Commission, claims or legal proceedings.

Using a Deed of Release saves time and money that would be required to undergo court proceedings. It also allows both parties to express their views and negotiate the terms until they reach an agreement they are both satisfied with.

Deeds are most commonly used between an employer and ex-employee, to avoid an unfair dismissal claim or legal proceedings. It allows for the employer and the ex-employee to be released from future dealings with one another and can assist ex-employees to secure employment more easily.

When to use a Deed of Release?

A Deed of Release can be used when an employer has a dispute with an ex-employee. This could be because the employee believes their dismissal was unfair, they disagree with the circumstances in which they were terminated, or they were made redundant.

The provisions included in the Deed of Release can depend on the dispute. Common provisions include payment to the employee in the agreement they will not sue the employer or take them to the Fair Work Commission, employees can also be paid out their annual leave or unpaid wages. The Deed must specify the exact payment amount the employee will receive.  Agreement not to lodge an unfair dismissal claim is another common provision that involves the employee giving up their legal rights in exchange for payment. A statement of service outlining the ex-employee’s details of employment with the company can also be given to help them find employment elsewhere.

An employee must understand the terms of the Deed and agree to them by signing. A Deed of Release cannot be signed under duress or coercion, this could lead to the agreement being appealed and the matter dragging out further. If an employee alleges they were coerced into signing a Deed and there is reason to suggest they were (e.g. facts in dispute) the matter may be taken to court, costing time and money. If an employer or ex-employee breaches the terms of the agreement in the Deed, the other party can instigate legal proceedings to recover damages sustained from the breach or reopen unfair dismissal applications.

At ProcessWorx our HR consultants are experienced in managing and support businesses through the process of releasing employees. Contact us for more information on (08) 9316 9896, or email enquiries@processworx.com.au.

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Written by Danielle McNamee

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