Being handed a deed of release by your employer is one of those moments where a deadline suddenly matters more than a decision. You are told you have until Friday, you have not yet looked properly at the numbers, and whoever handed it to you has implied it is a good deal. Whether it is a good deal for you depends on what the deed says, what you would be giving up, and what your alternatives look like if you do not sign. In this article, we’ll walk through what a deed of release is, whether you can refuse to sign one, and what to check before you do.
A deed of release usually reads like paperwork. It is not paperwork. Once you sign, it takes claims off the table that you may not yet have thought to make, and it can sit alongside restraints and non-disparagement obligations that shape your career for years after you leave.
What is a deed of release, and can you refuse to sign one?
A deed of release is a formal legal document that ends any legal claims you have against your employer in exchange for something in return, usually a payment. Once you sign it, you generally cannot sue your employer over anything the release covers, and your employer generally cannot come after you either. Deeds of release turn up in three situations: at the end of your employment, after a workplace dispute, or when you have flagged a potential claim and both sides want it resolved before it reaches a tribunal.
The document is legally binding. If you sign it and later change your mind, your options are limited. Our team has also answered the common questions about deeds of release on video, if you would rather watch than read.
Can you refuse to sign? Yes. You are almost never legally required to sign a deed of release. The real question is not whether you can refuse, but whether refusing leaves you better off. The rest of this article works through that.
Why has your employer offered you one?
Employers offer deeds of release for one reason: certainty. They want to close the door on any future claim you might make. From their side, that is a legitimate commercial goal. From your side, the question is whether closing that door is being paid for at the right price.
Sometimes a deed of release is offered as part of a genuine redundancy or a mutually agreed departure. Sometimes it follows a dispute where you have said something that makes your employer nervous. And sometimes it is presented as a matter of course when you leave, without any real reason for you to sign. The offer itself tells you very little. What matters is what is in the deed, and what your circumstances actually are.
What happens if you refuse to sign?
If you do not sign, your employment ends on the terms already set by your contract and the Fair Work Act 2009 (Cth). You would still receive any unpaid wages, accrued annual leave, long service leave if you are entitled to it, and any redundancy pay owed under the National Employment Standards or your award¹. Refusing does not forfeit what you are already owed.
What you would be weighing up is the ex-gratia amount, meaning any payment above what you are legally entitled to. That is the part being offered in exchange for the release. Against it, weigh any claim you could otherwise bring. Most commonly that is an unfair dismissal application to the Fair Work Commission, which must be lodged within 21 days of the dismissal taking effect.
It helps to know the scale of what you would be pursuing. Where an unfair dismissal claim succeeds, compensation is capped at the lower of six months’ pay or half the high income threshold, which is $95,050 for dismissals on or after 1 July 2026. That is a ceiling rather than a going rate, and most matters settle well below it. If you have a strong claim, negotiating the deed or refusing it may leave you better off. If your claim is weak, or the ex-gratia amount is reasonable, signing may be the more sensible option.
You may also feel pressure to sign to preserve something you want, such as a positive reference or an agreed statement of service. Even then, you can usually negotiate those separately, or ask for them regardless of whether you sign. The pressure to sign by Friday is not your imagination, but it is usually not a legal deadline either.
What should you check before signing?
If you are considering signing, six things are worth checking carefully. Our clause-by-clause guide to what is in a deed of release goes through each one in more depth.
1. The settlement amount
Deeds of release usually include a lump sum called a settlement amount, made up of entitlements you are already owed and, sometimes, an additional ex-gratia component. Before deciding whether the total is fair, you need to know what you are already entitled to. That includes wages, leave, notice pay, and redundancy pay under the National Employment Standards. Only what sits on top of those entitlements is genuinely being paid in exchange for the release.
2. The scope of the release
The release from liability clause is the deed’s operative core. It sets out what claims you are giving up. Some releases are narrow, covering only claims arising from your dismissal. Others are broad enough to cover any claim of any kind you might ever have against your employer, its directors, its related entities, and its officers. If the release is broad, understand it before you sign. It may cover claims you did not know you had.
It’s important to note that employers cannot legally contract out of workers compensation or superannuation claims. Even if the Deed does not explicitly ‘carve out’ these claims, they will still be legally available for you to pursue.
3. Restraint clauses
Some deeds contain restraint of trade clauses, such as non-compete or non-solicitation restrictions. These can limit where you work next, who you can approach, and for how long. They are not always enforceable. Whether a particular restraint is upheld depends on how reasonable it is, the industry you work in, and the state you are in. Often, you will already have a restraint in your employment agreement, so it is always worth checking to make sure the terms of the Deed don’t go further than what you have previously agreed to, or that you are being compensated appropriately if they do.
Where you are matters more than most people expect. In New South Wales, section 4 of the Restraints of Trade Act 1976 (NSW) lets a court read an overly wide restraint down to a valid scope rather than striking it out. In most other states a court is more likely to strike it out altogether. In practice, a NSW restraint is more likely to bite.
You may also have seen reporting that non-compete clauses are being banned. The federal government has announced a ban for workers earning below the high income threshold, intended to take effect in 2027. As at September 2026 it has not been legislated, and the announced model would apply to new contracts once it is in force. It does not help you with a deed you are being asked to sign today.
4. Non-disparagement clauses
Non-disparagement clauses limit what you can say about your employer after you leave. On paper they can look harmless. In practice they are enforceable, and the consequences of breaching one can be significant. If you are likely to be asked about your former employer, in interviews, on LinkedIn, or across your industry, this clause matters. Ask for it to be mutual, so your former employer is also bound not to disparage you.
5. Classification of your termination
How your departure is classified affects both your reputation and your tax position. A statement of service noting resignation, mutual separation, or genuine redundancy is much more useful than a document that leaves the reason ambiguous. If your departure is a genuine redundancy, the deed should say so. The tax treatment turns on it.
6. Tax treatment of the payment
If part of the payment is described as a genuine redundancy payment, some of it is tax free. For the 2026-27 income year that is $13,598 plus $6,801 for each completed year of service. The word completed matters: nine years and eleven months counts as nine years. Anything above that limit is taxed as an employment termination payment at concessional rates. If your departure is not a genuine redundancy, the same money may be taxed as an ordinary employment termination payment, which usually leaves you with less. Work this out before you sign, not after.
If any of this sounds like what you are facing, and you are working against a short deadline, this is the moment to get a preliminary view before you sign. Call us on 1300 882 386, email us at wehelp@jfmlaw.com.au or make a booking with us.
A recent case: what a signed release can cost you
Dr Peter van Onselen, former co-host of Network Ten’s The Project, signed a deed of release when his contract with the network ended. It included a non-disparagement clause. Some months later he made comments about the network publicly. Network Ten sued for breach of contract. The Supreme Court of NSW agreed the clause had been breached. Justice Hammerschlag noted that the claim was not for defamation but for breach of contract, so there was no defence of fair comment. Without a carve-out permitting derogatory statements in his journalistic capacity, van Onselen had breached the deed: Network Ten Pty Limited v van Onselen [2023] NSWSC 829.
The takeaway is not that non-disparagement clauses are unfair. It is that once you sign one, the clause means exactly what it says. If your future includes public commentary about your industry, or your career depends on being able to speak candidly about your work history, think that through before you sign.
Practical steps if you have just been handed a deed
- Ask your employer, in writing, when the deadline is and why. If there is no legal deadline, and there usually is not, you have more time than you are being told. However, employers don’t have any obligation to keep the offer on the table past any provided deadline. If the deadline is tight, ask for an extension. Most deeds contain a clause stating that you have had the opportunity to seek legal advice, so it is rare for these extensions to be refused.
- Get a copy of your employment contract and any workplace policies incorporated into it. Restraint and confidentiality obligations often already exist there.
- List what you are already legally entitled to: wages, leave, notice pay, and redundancy pay under the National Employment Standards.
- Compare that to what the deed is offering. The difference is what you would be paid in exchange for the release.
- Identify any claim you might have, most commonly unfair dismissal, general protections, or unpaid entitlements, and check whether the deed would close it.
- Speak to an employment lawyer before signing. Once the deed is signed, unwinding it is difficult.
When to seek legal advice
The moment worth calling us is before you sign, not after. If you would rather resolve things and move on, we can help you negotiate. If you would rather push back, we can tell you honestly what your prospects look like.
Understanding where the line sits, between what you are being offered and what you may be giving up, is the key to protecting your reputation and your next opportunity.
Call us on 1300 882 386, email us at wehelp@jfmlaw.com.au or make a booking with us.
