What Employees Must Know Before Agreeing to a Deed of Release?

Going through the termination process of employment may be confusing, and more so with significant legal documents involved. Within the first steps, signing a deed of release becomes a key consideration that can influence your rights and future opportunities. Understanding what this agreement covers, including payments, restrictions, and protections, is essential before you commit. With careful review, you can ensure the terms support your best interests and provide a clear, confident path forward.

Everything you need to know before signing deed of release

1. Payment

In the majority of cases, a deed of release vs settlement agreement provides some lump sum payment to a leaving employee. A bonus payment is one of the entitlements that often gets overlooked. In case there is a clause in your contract that tells you that you may be entitled to a payment of a bonus, then the lump sum payment in the deed of release must be high enough to compensate you for the fact that you lost a chance to earn that bonus.

One must also bear in mind that in the majority of cases, some part of the lump sum payments will be subtracted and sent to the ATO to be taxed, hence making it paramount to make sure that any payments are taxed appropriately and in the most efficient way.

2. Release from Liability

In a deed of release for employees, there will be a clause that prevents you from making a claim against your employer in the future. It is important to know just how broad that ban on future claims extends so that you know just what you are giving up. Some deeds will be an outright prohibition of all claims against your employer, and some will be limited to a particular dispute.

At times, you can negotiate a release with your employer in which you are released from all possible claims that he has against you. However, an employer may agree to “partially release” an employee from claims, for example, by providing relief from a restraint of trade (“competition”) provision in your employment contract or from certain allegations made against you.

3. Statement of Service

You should always consider the deed of release in order to attempt to determine how the termination of your employment will be categorised and whether a statement of service or a reference shall be provided to you. The majority of employers will be pleased to provide you with a positive or neutral reference and indicate that you have resigned due to personal reasons as a means of resolving a disagreement.

This may matter in case you wish to remain in the same industry. If you have experienced unfortunate redundancy, it is worth ensuring that your redundancy status is stated on a statement of service for taxation purposes.

4. Confidential Information

In the vast majority of cases, deeds of release will prevent you from revealing or utilizing any of the confidential information of the employer. In case you are not confident about which information is considered confidential, then it is wise to ask your employer about what they believe is considered confidential so as to ensure that you do not inadvertently violate the clause. But if there is a clause that contains the term know-how, then it might be better to seek the legal advice of a deed of release lawyers Perth.

5. Restraints of Trade and Post-Employment Obligations

There will be certain deeds of release which will establish restraints of trade. These restraints include:

• Non-compete clauses that do not allow you to establish a business or serve an existing rival in a specified geographical location during a specific time frame.
• ‘Non-solicitation’ clauses prohibit you from actively seeking out or contacting any of your employer’s clients in an attempt to do business with them. They can also prohibit you from enticing any of your co-workers or former co-workers to leave their current employment to work for a different company.

These provisions may prevent you from moving on in your career easily. Legal advice should be sought as to what the clause means and how it will impact and be enforced or not. In case your commercial lawyer Perth believes the clause is not enforceable, they will be in a position to write to the employer and insist that it should be narrowed or eliminated. This will also assist in making you relax a little in order to proceed with your next endeavour.

6. Non-disparagement

The non-disparagement laws put a limit on what you can say about your employer. In most cases, they will prevent any statements that would be harmful to the reputation of the employer in its trade and the society at large.

It is worth considering making the non-disparagement clause mutual. This implies that you should also have an agreement with your employer not to disparage you. This can be important to protect your own reputation.

Conclusion

To accept or reject the terms of your deed of release, you need to know the main aspects of this document because it might severely influence your financial rights, future working opportunities, and your professional reputation. Through the examination of such clauses regarding payments, restrictions, confidentiality, and post-employment, you can make informed decisions and prevent unintentional consequences.

Legal consultation will make sure that the contract is reasonable, enforceable and specific to your situation so that you can securely proceed and defend your interests in the long run.