Deed of Release - What is it and why is it important?

Posted by Luke Mitchell on 01 May 2019
Deed of Release - What is it and why is it important?

A company entered into a Deed of Release with a former employee. The company subsequently discovered that the former employee had misappropriated $320,000 of its money. When the employer took action to recover those funds,  the former employee claimed the existence of the Deed of Release which meant that the employer was barred from recovering the funds from her.

However, in its decision in Wichmann v Dormway Pty Ltd [2019] QCA 31 (26 February 2019) the Queensland Court of Appeal rejected the former employee’s argument and upheld the finding of the Court  that the former employee was required to repay the misappropriated funds. In reaching it's decision the Court of Appeal found that once the company became aware of the former employee’s conduct  "The [employer] would have been entitled to avoid the whole deed and, not only deny the [employee] reliance upon the release, but also to recover the money paid under the deed."

So what is a Deed of Release and what are the benefits of entering into one when there is (or has been) a termination of employment?

A Deed of Release will vary from matter to matter in terms and scope.  It is a document commonly used by employers to finalise all matters related to the employment of a departing employee and typically contains an agreement between both parties to resolve all current or future claims on certain terms.

Generally speaking, the Deed will most likely contain some or all of the following areas depending on the reason the Deed is being drawn up:

  • The names of the parties executing the Deed;
  • Background to the matter;
  • Terms of Settlement;
  • An outline of the termination payment and what the payment relates to;
  • Timeframe for the Deed to be executed;
  • The payment of  legal costs;
  • The provision of a Statement of Service;
  • Confidentiality and Non Disparagement provisions;

Should you need assistance with drawing up a Deed of Release or reviewing a Deed prior to signing, our experienced Employment Law team can help.