Creating A Deed Of Release For Redundancy: Australian Employer’s Guide

Making roles redundant is never easy. You want to treat your team with respect, follow the law, and reduce the risk of disputes after someone leaves.

One document many employers consider at this point is a deed of release. Used well, it can bring certainty for everyone. Used poorly, it can create more risk than it removes.

In this guide, we’ll explain what a deed of release for redundancy is, when to use one, the limits you need to respect under Australian employment law, and how to put together a fair, enforceable document. We’ll also share a practical step-by-step process and common pitfalls to avoid.

What Is A Deed Of Release For Redundancy?

A deed of release for redundancy is a formal settlement document that records the end of employment due to genuine redundancy and sets out the agreed terms of separation.

In most cases, the employee receives their statutory entitlements (like redundancy pay and accrued leave) and, in some cases, an additional ex gratia amount or other benefits. In return, the employee provides a release of claims relating to their employment and its ending, to the extent permitted by law.

It’s important to be precise about what a deed can and cannot do. A deed of release can settle existing or potential claims that have arisen up to the signing date. However, it cannot be used to contract out of statutory minimums, prevent lawful reports to regulators, or waive rights that the law says cannot be released. We’ll spell out those carve-outs below.

When Should You Use A Deed Of Release?

You don’t need a deed of release for every redundancy. If the process is straightforward, you’ve consulted properly, and you’re simply paying the correct legal entitlements on time, you may decide a deed isn’t necessary.

That said, many employers choose to use a deed when:

• There’s an elevated risk of dispute (for example, sensitive circumstances or a breakdown in the relationship).
• You’re offering terms beyond the minimum legal entitlements (e.g. an additional lump sum or outplacement support) and want commercial certainty in return.
• You want confidentiality around the terms, a clear release of claims to the extent the law allows, and practical obligations like return of property.
• Selection criteria or process issues could be questioned and you want to reduce the risk of litigation.

If you are offering anything over and above the minimum entitlements, a deed is a sensible way to document the settlement. Where you propose an extra amount, you might see it described as an ex gratia payment (a discretionary payment that isn’t legally required).

How Deeds Of Release Interact With Fair Work Laws

Australian employment law sets a floor of minimum standards. A deed can clarify and settle issues, but it cannot go below that floor. Keep these rules front of mind when drafting and negotiating.

1) You Can’t Contract Out Of Minimum Entitlements

You must pay all minimum entitlements, including redundancy pay under the National Employment Standards (NES), accrued annual leave and any other applicable amounts under an award or enterprise agreement.

Those statutory entitlements cannot be withheld or made conditional on signing a deed. If you want a release, make the additional ex gratia amount conditional on signing, not the minimum entitlements. For clarity, state in the deed that statutory amounts will be paid regardless of execution.

2) Carve-Outs You Should Include

To remain enforceable and fair, most deeds include explicit carve-outs confirming the employee is not giving up:

• Minimum entitlements under the NES, modern awards or enterprise agreements.
• Workers’ compensation claims (these are subject to separate legislation and processes).
• Superannuation guarantee entitlements.
• Rights to make a protected disclosure or complaint to a regulator (e.g. Fair Work Ombudsman, WHS regulator, the ATO) or to cooperate with an investigation.
• Claims that arise after the deed is signed.

Deeds typically release “to the fullest extent permitted by law” all other employment-related claims up to the date of signing. This can include general law claims and (subject to the facts) claims under the Fair Work Act that have already arisen. Ensure the release is carefully drafted and not excessively broad.

3) Genuine Redundancy Still Matters

A deed is not a substitute for a compliant process. To rely on a “genuine redundancy” defence to an unfair dismissal claim, you need to meet the criteria in the Fair Work Act, including consultation and redeployment steps. It’s worth revisiting what a genuine redundancy means under section 389 of the Fair Work Act before you start.

4) Give Time And Opportunity For Advice

For a release to hold up, the employee must have a genuine opportunity to consider the deed and seek independent advice. Avoid pressure. Provide a reasonable review period and recommend they obtain legal advice. Poor process can undermine enforceability.

What To Include In A Redundancy Deed Of Release

Every redundancy is different, so avoid a “copy‑paste” approach. A tailored deed should be clear, balanced and specific to the role, award/enterprise agreement (if any), and the circumstances.

• Parties and Background: Identify the employer and employee, and set out a short background confirming employment details and redundancy as the reason for ending employment.
• Termination Date: The last day of employment, including how notice is handled (worked or payment in lieu of notice).
• Payments: List statutory amounts (redundancy pay, outstanding wages, accrued leave, any award or agreement entitlements) and, separately, any additional ex gratia sum. Specify timing, method, and tax treatment. If you’re unsure of figures, use a tool or guidance and cross-check against your obligations using a redundancy calculator or seek advice.
• Release Of Claims (with carve-outs): A carefully drafted release of employment-related claims up to the date of signing, subject to the carve‑outs listed earlier (minimum entitlements, workers’ comp, super, regulator communications, and post-deed claims).
• Confidentiality: Mutually keep the deed’s terms and business information confidential, with standard exceptions (law, tax, financial and legal advisers, immediate family).
• Non-Disparagement: Balanced obligations not to make statements that could harm the other party’s reputation, again with reasonable exceptions. For context on scope, see our guide to non‑disparagement agreements.
• Post-Employment Obligations: Return of property, access and data, continuing confidentiality, and any reasonable cooperation required (if applicable).
• References/Statements: Optional agreed wording for references or an internal/external announcement to reduce uncertainty.
• Independent Advice And Consideration Period: Acknowledge the opportunity to seek independent advice and the period allowed to consider the deed.
• Tax, Super And Insurance: Clarify how payments will be taxed, superannuation treatment, and what happens with insurances on termination.
• Execution: Signed as a deed by the employee and by the employer. If you’re signing as a company, follow section 127 of the Corporations Act to ensure valid execution.

Make sure the deed is internally consistent and aligns with the Employment Contract, any applicable award or enterprise agreement, and your policies. If you want help drafting a clear, balanced release, our team can assist with contract drafting or a tailored review.

Step-By-Step: How To Create And Use A Redundancy Deed Of Release

1) Confirm It’s A Genuine Redundancy

Before you go near a deed, confirm the role is no longer required and that you’ve met your consultation duties under any applicable award or enterprise agreement. Double-check redeployment options. The “genuine redundancy” criteria in section 389 are your starting point.

2) Calculate Entitlements Accurately

Work out redundancy pay, notice, outstanding wages, annual leave and long service leave (if applicable). Cross-check the figures carefully. If you’re unsure, our employment team can assist, and you can also refer to our guide on calculating redundancy payments and related entitlements.

3) Decide Whether To Offer An Ex Gratia Amount

If you want a comprehensive release and additional protections, you’ll usually offer something beyond the minimum legal entitlements (for example, a lump sum, outplacement, or extended EAP access). This additional value is what makes the bargain in the deed fair on both sides.

4) Prepare A Tailored Deed (With Carve-Outs)

Draft a deed that is specific to the person and circumstances, includes clear carve-outs and doesn’t make statutory entitlements conditional on signing. If needed, we can provide a focused contract review before you issue it.

5) Provide Time And Access To Advice

Give the employee a reasonable period to consider the deed and recommend they seek independent legal advice. Avoid pressure or artificial deadlines. A balanced process supports enforceability and professionalism.

6) Execute Correctly And Exchange Copies

Have both parties sign as a deed. For companies, use the Corporations Act execution method. Exchange signed copies and keep records. Only once the deed is properly executed should you pay any additional amounts that were made conditional on signing.

7) Complete All Post-Employment Steps

Make all payments on time, retrieve devices and access cards, revoke systems access, and arrange any agreed references or announcements. Keep a clean paper trail. If you need a pack to manage the formalities, our Employee Termination Documents Suite can help with the essentials.

Common Pitfalls To Avoid

Deeds are powerful, but they’re not a magic wand. Here are frequent mistakes and how to steer clear of them.

• Making statutory entitlements conditional: You cannot make NES entitlements (redundancy pay, accrued leave, minimum notice) contingent on signing. Keep those separate. Make only the extra ex gratia benefits conditional on execution.
• Overly broad releases: Avoid blanket wording that attempts to release everything, including future claims, workers’ compensation and regulator communications. That approach can backfire. Use clear carve‑outs and limit releases to matters up to the signing date.
• Rushed or pressured signing: Not allowing time for legal advice (or creating artificial deadlines) risks enforceability and looks unfair. Give a reasonable consideration period.
• Template misuse: Lifting a deed from another business or the internet can introduce errors or conflicting terms. Tailor it to your award/enterprise agreement context, the role and your policies.
• Process problems masked by a deed: A deed won’t fix a non‑genuine redundancy, failure to consult or discriminatory selection criteria. Get the process right first.

As a final sense‑check, consider whether your settlement is balanced and clearly drafted. If you’re unsure, a quick review by a lawyer can save a lot of pain later.

What Other Documents Do Employers Usually Prepare?

Alongside a deed of release, it’s common to prepare or update:

• Redundancy/Termination Letter: Sets out notice, termination date, and entitlements payable, consistent with the deed.
• Employment Contract: Check the Employment Contract for notice and redundancy terms so the deed aligns with it.
• Employee Termination Documents: Final payslip, statement of service and handover checklist. If you need a ready‑to‑go bundle, see our Employee Termination Documents Suite.
• Confidentiality/Non-Disparagement Provisions: These are usually built into the deed rather than separate documents. Our overview of non‑disparagement agreements explains typical scope and limits.
• Deed Of Release And Settlement: For general settlement principles and drafting tips beyond redundancy, see our guide to deeds of release and settlement.

Make sure all documents are consistent and compliant with any applicable award or enterprise agreement and your internal policies.

FAQs: Practical Questions We Hear From Employers

Can I include payment in lieu of notice in the deed?

Yes. You can either have the employee work out the notice period or make a payment in lieu of notice. Spell out which approach you’re taking and how it will be calculated.

What if the employee refuses to sign?

You must still pay accrued and statutory entitlements on time. You can’t withhold those amounts to pressure a signature. You can decide whether to keep any ex gratia offer on the table, revise the proposal, or proceed without a deed.

How long should I give them to consider the deed?

There’s no fixed rule, but several business days is common, and longer for more complex situations. The key is that the opportunity to get advice is real and the timing is not coercive.

Is a deed better than a simple agreement?

A deed doesn’t require consideration in the same way a contract does and is generally seen as a more formal settlement instrument. For redundancy releases, deeds are standard practice and help avoid technical enforceability issues.

Do I need to consult before finalising the deed?

Yes, if an award or enterprise agreement applies, you’ll likely have a consultation obligation about the redundancy. This process sits alongside the deed. The deed records the settlement; it doesn’t replace proper consultation.

Key Takeaways

• A deed of release can bring certainty to a redundancy, but it must respect legal limits and can’t contract out of minimum entitlements.
• Never make NES entitlements (redundancy pay, accrued leave, minimum notice) conditional on signing; make only extra, discretionary benefits conditional.
• Use clear carve‑outs for workers’ compensation, super, regulator communications, minimum entitlements and post‑deed claims to keep the release enforceable.
• Confirm a genuine redundancy and calculate entitlements accurately before you draft the deed; consider using a redundancy calculator and cross‑checking notice with notice period rules.
• Give employees time to consider the deed and to seek independent legal advice; avoid pressure or artificial deadlines.
• Execute correctly (including company execution under section 127 if relevant) and follow through on payments and post‑employment steps promptly.

If you’d like a consultation on managing a redundancy and preparing a deed of release, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no‑obligations chat.