What is a deed of release?

In an employment law context, a deed of release, which is also sometimes referred to as a “separation deed”, “deed of settlement” or “release agreement”, is usually an agreement between an employer and employee to settle all claims arising out of the employment.

When is a deed of release used?

A deed of release can be used in a variety of situations however it is most commonly used when there has been a breakdown in the employment relationship and the parties wish to record an agreement to end the employment. In this situation, the release agreement will usually provide, among other things, that the employee will resign from their employment on some agreed terms.

They are also commonly used to settle a claim made by the employee in a court or tribunal. For example, if an employee makes an unfair dismissal claim in the Fair Work Commission, and the parties ultimately reach an agreement to settle that claim, they will usually sign a deed of release recording the terms of settlement.

What terms are usually contained in a deed of release?

A deed of release will usually provide for the following:

• an agreed method by which any existing employment relationship will come to an end;
• the payment of accrued entitlements;
• the payment of additional compensation (e.g. an “ex gratia” sum or a settlement payment)
• a release from all claims;
• the discontinuance of any proceedings;
• confidentiality; and
• non-disparagement

Should I sign a deed of release?

Most well-drafted deeds of release will contain an acknowledgement by the employee that they have had an opportunity to obtain independent legal advice. This is always recommended.

A deed of release contains lasting obligations that can sometimes impact the rest of your professional career. When drafted by an employer, they can also contain terms that are deliberately more favourable to the employer. If a particular provision is overlooked or is poorly drafted, it can cause significant reputational damage and can potentially restrain your conduct for many years to come.

An experienced employment lawyer will be able to assist you in advising on the terms, negotiating amendments and potentially negotiating an increase in the amount of compensation offered. A lawyer will also be able to provide you with advice about the other options available to you if you do not wish to sign the release agreement.

Can I get out of a deed of release?

It is incredibly difficult to set aside a deed of release once it has been signed. Unless you can establish that there was some form of duress, unconscionable conduct, misrepresentation or mistake, you will likely be bound by the terms of the agreement, even if they are unfavourable to you. For this reason, it is always important to obtain legal advice before you sign the agreement.

Disclaimer: This article should not be construed as legal advice and is not intended as such. If readers wish to obtain advice about anything contained in this article, they should speak with a lawyer and discuss their individual circumstances.