Negotiated outcomes are a common feature in people management.  Whether you’re offering an employee an additional payment as part of a redundancy, or you’re wanting to document the terms of a ‘mutual’ separation, or you’re wrapping up an unfair dismissal, a Deed of Release tends to be the ‘go to’ tool. 

The reality is that when they’re signed and the payments made, a Deed of Release tends to be practically effective.  That is, the Deed also served as a psychological line in the sand, and everyone moved on.  But that’s not always the case and it’s important you keep in mind a few of the more important things. 

1. Have you captured what’s important? 

Most template Deeds have been drafted by lawyers in a broad and general way.  That’s because we want to maximise the number of claims that might be caught, and we’re not always aware of when or how the template will be used in the future.  This is typically OK and practically effective in most instances, but if there’s something that’s important to be released, or there’s specific disputes being resolved, they should be expressly called out. 

We also can’t always rely on the Deed being effective against legislative rights.  As a general statement, a Deed of Release may not be effective against a legislative based claim that was not known or the subject of the dispute, when the release is in general terms. 

2. A Deed can’t re-write history

As a matter of public policy, Courts will typically accept a genuinely agreed position about a factual matter that was in dispute between the parties, but that’s less likely to be accepted where it’s one party trying to re-write history.  For example, recording that the employment terminated at an earlier point in time may not be effective for all purposes.  Put simply, if the employee worked for another two weeks beyond the date defined to be the termination date in the Deed, the Deed is unlikely to be effective at changing that “fact” for purposes outside the Deed. 

3. A Deed is unlikely to be effective against future events that weren’t contemplated.

Sometimes we use Deeds to record the terms of a future, mutual separation (i.e. where the employment will end at a future point in time).  Within the Deed we will include a release, the terms of which should also make clear that it’s intended to also cover the remaining period of employment.  While this will typically be practically effective, it won’t typically be legally effective against future events that weren’t contemplated.  For example, the Deed doesn’t create a space for the employee to be bullied, or to be treated adversely (in a way that was not agreed) due to a workplace right.  To create certainty in these situations, we usually recommend including an obligation for the employee to sign a second, short Deed Poll on termination.  This can sometimes be resisted (because it adds technicality and confusion to the process), but it can be important. 

4. Who’s going to sign it? 

Deeds have a special place in the law.  Unlike contracts, a Deed can impose legally binding obligations on a person, or remove their rights, in circumstances where the person gets absolutely nothing in return.  But as popularised by Uncle Ben when talking to Peter Parker, ‘with great power comes great responsibility’.  Because of the power of a Deed, their enforceability also depends on them being executed properly.  In the case of the employer, this typically requires them to be signed in accordance with the requirements for signing a Deed under the company’s constitution.  This may not aways be convenient.