FAQ series: Question 3 – I recently had reason to terminate the employment of an employee who was not performing. To buy certainty, we offered him a small additional sum of money in return for the signing of a Deed of Release. However, as he was leaving he told me he had outsmarted us as he was now going to make a claim for workers’ compensation. Can he do that given we paid him extra?
The simple answer to the above question is yes, he may still make a claim for workers’ compensation. However, that does not mean that his claim for compensation will be accepted. We will save explaining the process for assessing a workers’ compensation application for another day. What is important to know is that a Deed of Release is a document which is often used to settle matters between employers and employees. For a Deed to be genuinely useful it needs to include a provision which states that the Deed can be used “as a bar” to the employee taking any action against the employer relating to the matters included in the Deed. However, the workers’ compensation legislation generally prevents an employee from contracting out of their entitlement to workers’ compensation. Therefore, the Deed can not be used as a “bar” in such circumstances. There are also other circumstances where such a Deed may not be effective in preventing an employee from taking action against an employer. Therefore, although Deeds are recommended where possible, employers need to be aware of their limitations.
Keep an eye out for the next FAQ in the series. If you would like to know more about how Deeds can be used to the benefit of employers, please contact us on email@example.com or 3218 3919.