Deed of Release & Settlement | s.595 Fair Work Act

A deed differs from an ordinary contract in one way that matters here: it binds the parties without consideration. A properly executed deed of release resists the later argument that the payment only covered entitlements already owed and, in most jurisdictions, carries a longer limitation period than a simple contract (twelve years for an action on a deed under s.16 of the Limitation Act 1969 (NSW)). Neither side concedes it was wrong, and a no admission of liability clause says so.

People often confuse the deed with the terms of settlement the Commission hands out at the end of a conference. Terms of settlement are short, signed on the day and usually adequate for a modest unfair dismissal matter. A deed of release goes further. It defines the released claims across every forum, deals with tax withholding and superannuation, carves out what the law does not allow the parties to release, and gives the employer a complete defence if the employee starts fresh proceedings. Where a general protections claim is on foot, civil penalty exposure and claims against individual managers make the fuller document the sensible choice.

The Fair Work Act 2009 (Cth) sets the procedure. Under s.595, the Commission may deal with a dispute by mediation, conciliation, recommendation or opinion, and may arbitrate only where the Act expressly authorises it. A dismissed employee alleging adverse action must apply within 21 days under s.366, and the Commission holds a conference under s.368. If the matter does not settle, the Commission issues a certificate and the employee has 14 days to go to court under s.371, unless both parties agree to consent arbitration under s.369(1)(b).

What a deed can release is limited. An employee cannot contract out of the National Employment Standards or a modern award for the future, so the release operates on accrued claims in genuine dispute. Whistleblower protections under Part 9.4AAA of the Corporations Act 2001 (Cth) survive any confidentiality clause. Every state workers compensation scheme excludes contracting out, and s.234 of the Workplace Injury Management and Workers Compensation Act 1998 (NSW) has been applied directly to settlement deeds. Because managers face accessorial liability under s.550, the release extends to the employer's officers.

A settlement paid because employment ended is usually an employment termination payment under s.82-130 of the Income Tax Assessment Act 1997, and it must be paid within 12 months of termination to keep its concessional tax treatment. The Fair Work Commission guidance on discontinuing an application after settlement confirms that Rule 10 of the Fair Work Commission Rules 2024 deals with settled matters, although many deeds still require a Form F50 for certainty. Our other Australian employment templates built on the Fair Work Act share this statutory base.

The most common trigger is a conciliation conference that ends in agreement. The conciliator confirms the headline terms, the parties sign short terms on the day, and the employer prepares the full deed of release within the week. The second scenario arises before anything is filed. An employee raises a bullying or discrimination complaint, or disputes the reasons in a termination letter drafted to the s.117 notice rules, and the employer offers a payment for a release rather than waiting for a Form F8 to arrive. Negotiated senior exits belong here too, often with an agreed resignation replacing a dismissal.

A deed also resolves disputes where employment continues. An employee who alleges adverse action after a flexible work request, and stays in the role, can settle with a release limited to past conduct. Constructive dismissal claims after a restructure are another common source.

Two edge cases deserve care. Workers engaged under an independent contractor agreement that turns on s.15AA sometimes claim they were really employees, and their release must cover sham contracting allegations and unpaid superannuation. Claims involving workplace sexual harassment follow their own rules, particularly in Victoria, where a standard confidentiality clause may be unenforceable against the complainant.

• The recitals identify the employment, the termination date (or confirm that employment continues), the Commission matter number and the claims in dispute. Courts read a release in light of its recitals, so vague background narrows its reach.
• The settlement sum clause states the gross amount, the portion treated as an employment termination payment, PAYG withholding and a payment date fixed by reference to receipt of the signed deed. It also says whether the amount includes superannuation, the point most often argued about afterwards.
• The release and discharge covers claims under the Fair Work Act 2009, federal and state anti-discrimination laws, contract and tort, with express carve-outs for workers compensation, accrued superannuation and rights under the deed itself. A release that purports to waive future NES entitlements is void to that extent, and a severance clause keeps the rest alive.
• The withdrawal and bar clause obliges the employee to discontinue the application within a set period and prevents fresh proceedings on the same facts.
• The confidentiality and non-disparagement clauses protect the settlement terms while preserving disclosures to lawyers, accountants, immediate family and regulators. A mutual non-disparagement obligation names the managers it binds.
• The agreed reference fixes the wording both parties will use with future employers. If the settlement also changes continuing employment, record those changes in an employment contract variation letter so the release and the new terms stay in separate instruments. Restraints stop at confidentiality and non-solicitation, given the federal reform targeting non-compete clauses below the high income threshold.

New South Wales keeps a formal witnessing rule. Section 38 of the Conveyancing Act 1919 (NSW) requires an individual's deed to be attested by a witness who is not a party, although electronic execution and remote witnessing are permitted. Section 151A of the Workers Compensation Act 1987 (NSW) cuts off further compensation where a worker recovers damages from the employer for the same injury. In Gardiner v Laing O'Rourke Australia Construction Pty Ltd [2020] NSWCA 151, the Court of Appeal gave weight to the parties' intention, expressed in a recital preserving workers compensation rights. Our NSW version includes that recital by default.

Victoria has the most significant recent change. The Restricting Non-disclosure Agreements (Sexual Harassment at Work) Act 2025 (Vic) applies to NDAs entered into on or after 1 July 2026 and makes confidentiality about workplace sexual harassment enforceable against the complainant only where the complainant requests it. The complainant must receive a mandatory information statement and a 21-day review period, which they may shorten or waive. Disclosures to regulators, police and lawyers stay permitted, and the complainant can end the NDA after 12 months on seven days' notice.

Queensland modernised its deed rules when the Property Law Act 2023 (Qld) commenced on 1 August 2025. Under s.51, an individual may sign a deed with or without a witness, and s.50 confirms that deeds may be electronic. Actions on deeds made since then have a six-year limitation period. State and local government employees fall under the Industrial Relations Act 2016 (Qld), so their deeds refer to the Queensland Industrial Relations Commission.

Western Australia is where national templates most often misfire. Sole traders, partnerships and trusts that are not trading corporations sit in the state system under the Industrial Relations Act 1979 (WA), and unfair dismissal claims go to the Western Australian Industrial Relations Commission within 28 days. The Property Law Act 1969 (WA) still expects an individual's deed to be witnessed. Wet ink with an independent witness remains the safe course.

You start by selecting the forum: an unfair dismissal application, a general protections dismissal or non-dismissal dispute, a claim not yet filed, or a Western Australian state system matter. The questionnaire then asks where the employee usually works, which adjusts the execution blocks, the workers compensation carve-out and the confidentiality wording. Next come the parties, related entities and managers to be released, and any Commission matter number.

The settlement section asks for the gross amount, the split between the employment termination payment and other components, the superannuation treatment and the payment deadline. You then choose optional clauses such as mutual non-disparagement, an agreed reference and a resignation in place of dismissal. If the matter involves alleged sexual harassment and the employee works in Victoria, the form switches to the complainant request pathway and generates the information statement acknowledgement.

The finished deed downloads in Word and PDF. Send it with a written invitation to obtain independent legal advice and a reasonable period to consider it, then collect both executed counterparts before the payment clock starts.

The most expensive error is paying first. Never transfer the settlement sum until you hold a deed signed by the employee, because a payment made on a handshake is hard to recover. The next is a release drafted too wide. Wording that sweeps workers compensation into "all claims of any kind" invites a court to strike it down under s.234 in NSW or its equivalent elsewhere. The opposite mistake, releasing only the employer entity, leaves managers exposed to accessorial liability under s.550.

Tax and confidentiality produce most of the remaining problems. Employers label the payment "ex gratia", skip PAYG withholding and hear from the ATO months later, or pay outside the 12-month window and lose the concessional rate. Clauses that forbid contact with the Fair Work Ombudsman are unenforceable to that extent. Pressure is the final trap: presenting a deed of release at 5pm with a next-morning deadline hands the employee an argument based on duress or unconscionable conduct. And where the dispute began with a rushed written warning and performance improvement plan, resist rewriting that history in the recitals.