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In a recent Federal Circuit Court decision, a college teacher who claimed she was suffering from a psychological disability attempted to render her Deed of Release – signed in 2007 – invalid. However, due to a lack of medical evidence her claim was unsuccessful.

The Facts

In essence:

  • The employer said it no longer trusted the college teacher to exercise her duties after various performance issues and a work-related incident.
  • The employer invited the college teacher to resign and sign a deed of release describing it as a ‘retirement’, or alternatively dispute the school’s decision.
  • The college teacher signed the deed in 2007.
  • The college teacher commenced a disability discrimination claim against the employer in March 2017. The employer disputed the claim and relied upon the Deed of Release.
  • The college teacher claimed that she had been suffering from an ‘incoherent state of mind’ at the time of signing the Deed, and submitted that it should not be enforceable
  • The college teacher failed to produce medical evidence in support of this submission, and her discrimination claim was dismissed.

What is a Deed of Release?

In essence:

  • Employers can effectively prevent or settle employee claims with a Deed of Release.
  • Deeds of Release are commonly used to settle unfair dismissal and other employment disputes, and/or to prevent such claims from being commenced.
  • The ‘release’ is typically offered in exchange for a monetary settlement, but can include non-financial consideration such as a statement of service.
  • Deeds of Release cannot waive the employee’s statutory rights. For example, rights to superannuation contributions or a claim under workers’ compensation legislation.
  • Deeds of Release usually also imposes obligations of confidentiality and non-disparagement on the parties, which can be valuable where professional or personal reputations are at risk.
  • A Deed of Release can be set aside on the following grounds:
    • illegality
    • Misrepresentation
    • non-disclosure of a material fact when disclosure was required
    • duress
    • mistake
    • undue influence
    • abuse of confidence
  • A Deed of Release should be used whenever settling an employment dispute, or when negotiating an employment separation exit with an employee.
  • An employee will typically not voluntarily enter into a Deed of Release without receiving some additional benefit (referred to as ‘consideration’), so employers should be prepared to offer an additional ‘ex-gratia’ payment as consideration for the Deed of Release.
  • Employees cannot be forced into signing a Deed of Release, and any Deed entered into under duress is unenforceable.

Tips for Employers

The Matthews Folbigg Workplace Solutions employment law team recommends employers seek our assistance whenever negotiating:

  • a separation with an employee, or
  • a settlement to an employment dispute;

in case the separation can be supported by a Deed of Release.