A Deed of Release is a document used when an employee is leaving a business, in which the employee agrees to release the business from any employee claims in return for a sum of money.
These are serious documents that need to be considered very carefully. You need to make sure that the Deed of Release covers your specific situation and has clauses that are relevant for your needs. While we do provide Deed of Release Documents and have worked with many clients on the correct way to issues these documents, should our clients need more specific advice or documents, we call in our legal partners who can assist.
A Deed of Release may also include a variety of other items for settlement such as Statements of Service, resignation agreements, non-disparagement clauses and agreements around confidentiality, for both parties.
Two items that cannot be contracted out of payment with a Deed of Release is Workers Compensation Benefits and Superannuation.
While the Deed can be used for employees in the process of leaving as well as an employee who has already left the organisation, these formal documents need to be used very carefully.
Any offer of a Deed of Release to an employee should be made on a ‘Without Prejudice’ basis. This means that if the employee does not accept the terms of the Deed, your business does not need to be bound by the offer, and just because you have made this offer, it is in no way, an admission of guilt or liability. This relates to not only any documents given, but also any conversations around the Deed. For example we give another letter to the employee that fully explains this criteria.
Employers need to think clearly about initiating a Deed of Release. In some circumstances, bringing this course of action to your employee, can be like a red flag to a bull. Your employee may assume that you have something to hide, and may think this tactic demonstrates that fact, therefore they should not sign, but progress with actions against you.
As the Deed will stipulate that the employee will receive an amount of money (as well as perhaps other entitlements) in exchange for providing release from further claims, the employee may consider the odds that further monetary amounts might result if they do not sign, but continue litigious action.
As such it is imperative that organisations seek further advice before considering the use of a Deed of Release.
Employees must be able to enter willingly into the terms of a Deed of Release. They must be given time to take the document away and seek legal or financial advice before they accept the terms. You cannot issue a Deed of Release and expect your employee to sign on the spot. At least three days should be allowed for your worker to gain advice and make a decision about whether to sign or not. If signing the Deed on the business premises, the worker should bring their own support person as witness to their signature. This witness should not be associated with the business in any way.
A Deed of Release may be an excellent tool to utilise in certain circumstances, however you need to get the right advice and understand all the implications and possible unintended consequences of using this strategy.
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