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Deed of Release and Indemnity

Version 1.1 Updated 17 Oct 2017
Contract Exit

Who can use this Deed of Release and Indemnity?

This Deed of Release and Indemnity (Deed) can be used by all Employers.

Commentary
 
This Deed is general in nature. It contains some standard clauses which are usually included in a Deed, but due to the diverse range of workplaces, does not contain a comprehensive array of provisions to deal with every eventuality.

Prior to providing the Deed to the employee, read over the document carefully to ensure it contains all the matters which are appropriate to the particular circumstances. You should be aware that Deeds of Release are very formal documents that need to be carefully prepared if they are to successfully protect an employer for a law suit in future.

Accordingly, it is recommended that you obtain legal advice on the drafting of your Deed notwithstanding the availability of this template.
 
What can the Deed be used for?

The Deed can be used for an existing employee who is in the process of leaving the organisation, or an employee whose employment has already been terminated.

It can also be used in circumstances where the employee has commenced legal proceedings against the business.

In the Deed, the employee will agree to release your business from any Claims (this term is defined in the Deed) the employee may have against the business, in exchange for the payment of a sum of money. The Deed is drafted to attempt to extend these protections to any 'related bodies corporate' of any employers who are companies.

While including such a provision may dissuade an employee from commencing proceedings against a related body corporate, generally the terms of a Deed will only bind a person or entity who is a party to the Deed. As such, if it is important that the terms of the Deed are able to be enforced by a related company or organisation. This entity will need to be included as a party and other terms of the Deed (including the execution provisions), will need to be amended to reflect this.

You should ask your legal advisor to make these necessary amendments or have the amendments you make checked by your lawyer, to ensure the Deed meets your requirements and is able to be enforced.

Money in exchange for release

The Deed sets out that the employee will receive a sum of money in exchange for providing the releases set out in the Deed. However, other non-monetary benefits may be provided (in addition to or in lieu of the sum of money) to an employee, in exchange for their promise to provide the releases to the business.

For example, the business may agree to forgive a debt or provide a release to the employee in respect of any actions the business may be able to commence against the employee. If you wish to amend the Deed in this way, it is advisable to have your legal advisor check the amendments to ensure they are appropriate and maintain the enforceability of the Deed.

It may not always be necessary for money to be provided in exchange for a Deed. However, you should seek legal advice if no consideration is to be provided.

Workers compensation legislation and superannuation legislation expressly prohibits an employer contracting out of the requirement to pay workers compensation benefits or superannuation to an employee, by, for example, including a provision to this effect in a Deed. As such, the Deed we have drafted indicates that the releases provided by the employee exclude any claim under workers compensation legislation and superannuation legislation. If you wish to use the Deed in workers compensation or superannuation matters, you should obtain specific advice before amending it.
 
Releases and indemnities

The Deed contains an option for mutual releases, indemnities and non-disparagement clauses - that is, the business also agrees to release and indemnify the employee from any claims the business may have against the business. Often, in the resolution of legal proceedings, mutual releases, indemnities and non-disparagement clauses will be a term of the settlement.

If you are unsure whether to include the optional clauses for release, indemnity and non-disparagement by the business you should seek legal advice.
 
Reasons for termination

The Deed does not include the reasons for the termination of the employment relationship. It simply indicates the date that the employee’s employment was terminated. If you wish to include the reasons for the termination of the employment relationship, the Deed will need to be amended. Often, employees are more willing to sign a Deed of Release which does not include a reason for the termination of their employment which may reflect badly on them. If there is other documentation which records the reasons for the termination of the employee’s employment, it is not vital that the reasons be repeated in the Deed.

If the parties have agreed on the termination being characterised in a particular way (e.g. a resignation), wording to this effect should be included.

Agreeing to the Deed

The employee must willingly enter into the terms of the Deed. The employee should be given time to read the Deed, ask any questions and obtain advice (legal, financial or otherwise) about the terms of the Deed, prior to signing it. Certainly, no employee should be handed the Deed and required to sign it on the spot. We recommend that the employee be required to consider the Deed for at least 3 days prior to signing it (and more time if requested).

No one associated with the business in any way (for example, another employee, director etc), should witness the employee’s signature on the Deed.

If an employee does not willingly agree to the Deed, the employer cannot withhold their statutory termination entitlements and must pay these out on termination. It is only any addition terms (e.g. waive of a debt, payment of an ex-gratia amount, etc) which the employee would not have the benefit of receiving

Additional terms

While the Deed endeavours to provide your business with a release in relation to claims (actual and potential) an employee may make against your business, there is a wide range of other matters that can potentially form the content of a Deed. For instance, a Deed may deal with confidentiality of information, use or return of employer property, references, and various post-employment obligations which may extend beyond existing contractual restraints.

If you wish to include an additional term in the Deed to cover a specific issue which relates to the particular employee, it is advisable to have your legal advisor check the relevant amendment(s) to ensure they are appropriate for what you wish to achieve and are also enforceable.

Post-employment obligations

The Deed ensures that any post-employment obligations the employee has under an existing contract of employment or workplace agreement will continue. We have also included a general confidential information provision.

If the employee does not have any express post-employment obligations written in their contract (for example, a post-employment restraint which prohibits them soliciting certain customers or employees from your business, for a limited period of time, within a specified geographical area; or a confidential information or intellectual property clause etc) and you wish to include such provisions, the Deed will need to be amended to
insert a suitably drafted clause.

It is advisable to have a legal advisor who is skilled in workplace law issues draft an appropriate clause to suit your specific circumstances. If the clause is not drafted appropriately, then it may be ineffective.

If legal proceedings have already commenced…

If the employee has already commenced proceedings against your business, you should have your legal advisor review the Deed prior to providing it to the employee, in order to ensure the Deed, if executed by the employee, will finalise all proceedings (save perhaps in relation to a workers’ compensation or superannuation claim), between your business and the employee.

The offer

Prior to making an offer to resolve a matter with the employee, consider what claims and matters are sought to be covered by the Deed. In particular, consider any special conditions and the extent of the releases required. If you are unsure whether or not the width of the releases provided in the Deed are appropriate (including the definition of 'claims') for your circumstances, seek legal advice.

Without prejudice

It is important when making the offer outlined in the Deed to the employee, that it is done on a ‘without prejudice’ basis. This makes it clear that your business does not necessarily wish to be bound by the offer if it is rejected, and that your communications are for the purpose of negotiations and are not an admission of liability. As such, you should make clear, in any conversations or correspondence you have with the employee about the Deed (and settlement negotiations generally) that these are undertaken on a ‘without prejudice’ basis.

Important: signatory clauses

Finally, the Deed contains a number of execution (ie signatory) clauses which are intended to apply to most employers. However, unless you are certain that the signatory clauses in the Deed are appropriate to the employing legal entity, it is strongly recommended that you seek specific advice. Before printing this Deed, you should ensure that you update all cross referenced clauses by following the instructions contained in the document.

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