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 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?
- 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:
- non-disclosure of a material fact when disclosure was required
- 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.