Deed of Settlement (Employment) (Australia)
DEED OF SETTLEMENT
(Employment)
This Deed of Settlement is executed as a deed on [Deed Date].
PARTIES
(1) [Employer Name] ([Employer ABN/ACN]), of [Employer Street Address], [Employer Suburb] [Employer State] [Employer Postcode] ("Employer"); and
(2) [Employee Name], of [Employee Street Address], [Employee Suburb] [Employee State] [Employee Postcode] ("Employee").
The Employer and the Employee are collectively referred to as the "Parties" and individually as a "Party".
BACKGROUND
A. The Employee commenced employment with the Employer on [Employment Start Date] in the position of [Job Title].
B. The Employee's employment with the Employer was terminated on [Termination Date].
C. The Employee has made or may make a claim or application in connection with the termination of employment, including: [Claim Type] (the "Claim").
D. The Parties have agreed to resolve the Claim and all related matters on a full and final basis on the terms set out in this Deed.
E. Each Party enters into this Deed freely and voluntarily and has had the opportunity to obtain independent legal advice from a lawyer of their choice before executing this Deed.
THE PARTIES AGREE AS FOLLOWS:
1. NATIONAL EMPLOYMENT STANDARDS ENTITLEMENTS
1.1 The Employer will pay to the Employee the following amounts in satisfaction of the Employee's entitlements under the National Employment Standards (Part 2-2 of the Fair Work Act 2009 (Cth)) and the employment contract:
(a) notice pay of AUD $[Notice Pay] (gross), subject to applicable income tax and superannuation withholding, representing the Employee's entitlement under section 117 of the Fair Work Act 2009 or the employment contract (whichever is greater);
(b) accrued but untaken annual leave of AUD $[Accrued Leave] (gross), subject to applicable income tax and superannuation withholding, pursuant to section 90 of the Fair Work Act 2009;
(c) long service leave of AUD $[Long Service Leave] (gross), subject to applicable tax, pursuant to applicable state or territory legislation; and
(d) redundancy pay of AUD $[Redundancy Pay] (gross), subject to applicable tax, pursuant to section 119 of the Fair Work Act 2009 (if applicable).
1.2 The Parties acknowledge and agree that the entitlements in clause 1.1 cannot be waived or reduced by agreement and represent the Employee's minimum statutory entitlements on termination. Nothing in this Deed reduces or extinguishes any entitlement that cannot lawfully be contracted out of under the Fair Work Act 2009 (Cth).
1.3 All amounts in clause 1.1 are subject to deduction of applicable income tax (PAYG withholding) and superannuation obligations as required by law.
2. EX GRATIA SETTLEMENT PAYMENT
2.1 In full and final settlement of the Claim and all related claims (including all claims under the Fair Work Act 2009 (Cth) and any applicable state or territory anti-discrimination legislation), and in consideration of the releases and covenants given by the Employee in this Deed, the Employer will pay to the Employee an ex gratia payment of AUD $[Ex Gratia Amount] (the "Settlement Sum") [Payment Deadline].
2.2 The Settlement Sum is subject to applicable income tax withholding. The Parties acknowledge that the tax treatment of the Settlement Sum will depend on its characterisation as a genuine redundancy payment, an employment termination payment (ETP), or an ex gratia payment under the Income Tax Assessment Act 1997 (Cth) and associated legislation, and that each Party is solely responsible for their own tax obligations. The Employee is encouraged to seek independent tax advice.
2.3 Payment of the Settlement Sum will be made by electronic funds transfer to the Employee's nominated bank account within the agreed deadline. Time is of the essence.
2.4 The Settlement Sum does not constitute an admission of liability or wrongdoing by the Employer. The Employer enters into this Deed as a commercial resolution of the Claim without any admission of liability.
3. RELEASE BY EMPLOYEE
3.1 In consideration of the Employer's payment obligations under this Deed and the matters contained herein, the Employee, for and on behalf of themselves, their heirs, executors, administrators, and assigns, hereby fully, finally, and irrevocably releases, acquits, and forever discharges the Employer and its related bodies corporate (within the meaning of section 50 of the Corporations Act 2001 (Cth)) and each of their respective officers, directors, employees, agents, successors, and assigns from all actions, suits, claims, demands, debts, and causes of action of any nature whatsoever arising out of or in connection with the Employee's employment with the Employer or the termination of that employment, including (without limitation):
- any claim for unfair dismissal under Part 3-2 of the Fair Work Act 2009 (Cth);
- any general protections claim under Part 3-1 of the Fair Work Act 2009 (Cth), including any adverse action claim under section 340;
- any claim for unlawful termination under Part 6-4 of the Fair Work Act 2009 (Cth);
- any claim under the applicable state or territory anti-discrimination legislation;
- any claim for breach of contract, including breach of the employment contract or any enterprise agreement;
- any claim for unpaid wages, bonuses, commissions, or other remuneration (other than entitlements preserved under clause 1.1 of this Deed);
- any claim for breach of the Australian Consumer Law (Schedule 2 to the Competition and Consumer Act 2010 (Cth)) in connection with the employment relationship;
3.2 The Employee covenants with the Employer that the Employee will not commence, maintain, prosecute, or encourage any action, claim, suit, or proceeding in any court, tribunal, commission, arbitral body, or other forum in connection with any of the claims released under clause 3.1.
3.3 The Employee acknowledges that the release in clause 3.1 does not release or waive: (a) any entitlement that cannot lawfully be waived under the Fair Work Act 2009 (Cth) or applicable state or territory legislation; (b) any accrued superannuation entitlement; or (c) any entitlement to enforce the terms of this Deed.
4. RELEASE BY EMPLOYER
4.1 In consideration of the Employee's obligations and releases under this Deed, the Employer hereby releases and discharges the Employee from all claims the Employer has or may have against the Employee arising out of or in connection with the Employee's employment or the termination of that employment, other than: (a) any claim arising from fraud, gross misconduct, or deliberate destruction of property; (b) any claim to recover property belonging to the Employer; or (c) any claim arising from obligations that survive termination of employment (such as post-employment restraints or confidentiality obligations under the employment contract, which continue in accordance with their terms).
5. RETURN OF COMPANY PROPERTY
5.1 The Employee must return to the Employer [Return Deadline] all property belonging to the Employer, including but not limited to: [Company Property].
5.2 The Employee confirms that, following the return of all company property, the Employee will not retain any copies of confidential information, documents, or data belonging to the Employer, whether in physical or electronic form.
6. GENERAL
6.1 This Deed constitutes the entire agreement between the Parties in relation to the subject matter of the Claim and supersedes all prior negotiations, representations, and agreements relating to the Claim.
6.2 Any amendment to this Deed must be in writing and signed by both Parties as a deed.
6.3 If any provision of this Deed is held invalid, void, or unenforceable, the remaining provisions continue in full force and effect.
6.4 This Deed is governed by and construed in accordance with the laws of [Governing State], Australia and the Fair Work Act 2009 (Cth). Each Party submits to the non-exclusive jurisdiction of the courts of [Governing State] and the Federal Court of Australia in relation to any dispute arising under or in connection with this Deed.
6.5 Each Party has obtained independent legal advice from a lawyer of their choice before executing this Deed and acknowledges that they understand its terms and legal effect.
EXECUTED AS A DEED
EMPLOYER: [Employer Name]
Executed by [Employer Name] in accordance with section 127 of the Corporations Act 2001 (Cth):
Signature of Director/Secretary: ___________________________
Full name: ___________________________
Title (Director / Company Secretary): ___________________________
Signature of Director: ___________________________
Full name: ___________________________
Date: ___________________________
EMPLOYEE: [Employee Name]
Signed, sealed and delivered by [Employee Name] in the presence of:
Signature of Employee: ___________________________
Name of Witness: ___________________________
Signature of Witness: ___________________________
Address of Witness: ___________________________
Date: ___________________________
Employer
________________
Signature
Date: ________________
Employee
________________
Signature
Date: ________________
What Is a Deed of Settlement (Employment) (Australia)?
A Deed of Settlement (Employment) in Australia sets out the duties, hours, pay, leave, and termination terms between employer and employee, consistent with the minimum entitlements guaranteed by the Fair Work Act 2009 (Cth). It defines duties, remuneration, working hours, leave, and termination procedures binding employer and employee.
The document is governed primarily by the Fair Work Act 2009 (Cth), which establishes the national workplace relations framework for most Australian employers and employees, and by Australian common law principles regarding deed execution and contract formation. The Fair Work Act creates specific rights for employees that cannot be waived or contracted out of — most importantly, the National Employment Standards (NES) in Part 2-2, which set minimum conditions of employment including minimum notice, annual leave, and redundancy pay. A Deed of Settlement must preserve all NES entitlements in full; any settlement term that purports to reduce an NES entitlement below the statutory minimum is void.
The deed achieves finality by: (1) recording the employer's obligations to pay the employee's NES entitlements in full; (2) providing for an additional ex gratia (voluntary) payment to resolve the employee's claims; (3) obtaining a full and final release from the employee of all employment-related claims; (4) imposing a mutual release of claims by the employer; and (5) including ancillary provisions such as confidentiality, non-disparagement, return of property, agreed reference, and Fair Work Commission discontinuance. Execution as a deed under section 127 of the Corporations Act 2001 (Cth) confirms the document is enforceable without any additional consideration requirements.
The legal framework governing the Deed of Settlement (Employment) (Australia) in Australia draws on several key statutes and regulatory bodies. Under the Fair Work Act 2009 (Cth), the Fair Work Commission (FWC) adjudicates workplace disputes. Section 394 of the Fair Work Act 2009 governs unfair dismissal claims. The Fair Work Ombudsman (FWO) enforces compliance with the National Employment Standards (NES). The Privacy Act 1988 (Cth) and Australian Privacy Principles (APPs) govern personal data handling. The Australian Taxation Office (ATO) administers PAYG withholding and superannuation guarantee obligations under the Superannuation Guarantee (Administration) Act 1992. Parties executing a Deed of Settlement (Employment) (Australia) in Australia should confirm the document reflects current law, including any amendments enacted since the original drafting date. The Fair Work Act 2009 (Cth) sets the foundational requirements.
When Do You Need a Deed of Settlement (Employment) (Australia)?
An Employment Deed of Settlement is needed whenever an employer and an employee wish to achieve a full and final resolution of an employment dispute, typically following the termination of employment. It is appropriate in a wide range of situations under Australian employment law.
The most common situation is the settlement of an unfair dismissal application under Part 3-2 of the Fair Work Act 2009 (Cth). An employee whose employment has been terminated (and who has completed the minimum employment period — 6 months for employers with 15 or more employees, 12 months for smaller employers) may file an unfair dismissal application with the Fair Work Commission within 21 days of the dismissal taking effect. Most unfair dismissal matters are resolved at conciliation, and a deed of settlement is the standard instrument for recording the settlement.
A deed is also used to settle general protections — dismissal applications under section 365 of the Fair Work Act, which arise when an employee alleges that their dismissal was taken in contravention of the general protections provisions — for example, because they exercised a workplace right (such as making a complaint), took personal leave, or were the subject of discriminatory treatment. General protections claims carry the potential for uncapped compensation, which makes early settlement commercially attractive for employers.
Additionally, the deed is used to resolve: adverse action claims (even outside the dismissal context); claims for breach of award, enterprise agreement, or employment contract; underpayment and wage theft claims (subject to the ATO's careful treatment of back-pay settlements); and discrimination complaints under federal and state anti-discrimination legislation. In each of these situations, a formal deed provides both parties with the certainty and finality they require, particularly where the dispute has escalated to formal proceedings before the Fair Work Commission or a court.
What to Include in Your Deed of Settlement (Employment) (Australia)
A well-drafted Australian Employment Deed of Settlement must contain several key provisions to be legally effective under the Fair Work Act 2009 (Cth) and Australian common law.
The preservation of NES entitlements is the most critical provision. The deed must clearly identify all NES entitlements payable — including minimum notice (section 117), accrued annual leave (section 90), long service leave, and redundancy pay (section 119 where applicable) — and confirm that they are paid in full. Any term that purports to reduce these entitlements is void under section 55 of the Fair Work Act. The deed should state that NES entitlements are paid in addition to (not as part of) any ex gratia settlement sum.
The ex gratia settlement payment records the additional voluntary payment made by the employer to resolve the employee's claims. The deed should specify the amount in Australian dollars (AUD), the payment deadline, and address the tax treatment (including PAYG withholding obligations and potential ETP characterisation under the Income Tax Assessment Act 1997 (Cth)).
The release clause must be carefully drafted to cover all claims the employee may have arising from the employment relationship or its termination, including Fair Work Act claims, anti-discrimination complaints, and contractual claims. The release must expressly preserve claims that cannot lawfully be released (such as claims for superannuation, claims under the workers' compensation legislation, and personal injury claims in some jurisdictions).
The Fair Work Commission discontinuance clause is essential where a formal application has been filed — it requires the employee to notify the Commission of the settlement and file the necessary discontinuance documents, and it conditions the settlement payment on the employee completing this step.
The confidentiality and non-disparagement clauses are standard features of employment settlements in Australia, protecting both parties from disclosure of the settlement terms and from damaging public statements. The deed should include a carve-out for disclosures to the ATO and to legal and financial advisers. The agreed reference clause provides the employee with certainty about the reference the employer will give to prospective employers, which is often a key concern for employees in settlement negotiations.
Additional compliance elements for a Deed of Settlement (Employment) (Australia) used in Australia include: Under the Fair Work Act 2009 (Cth), the Fair Work Commission (FWC) adjudicates workplace disputes. Section 394 of the Fair Work Act 2009 governs unfair dismissal claims. The Fair Work Ombudsman (FWO) enforces compliance with the National Employment Standards (NES). The Privacy Act 1988 (Cth) and Australian Privacy Principles (APPs) govern personal data handling. The Australian Taxation Office (ATO) administers PAYG withholding and superannuation guarantee obligations under the Superannuation Guarantee (Administration) Act 1992. Forms-legal.com provides this template as a starting point for Australia-compliant documentation.
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Reference this free template in an article, syllabus, or research note:
Forms Legal. (2026). Deed of Settlement (Employment) (Australia) (Australia) [Legal document template]. Forms Legal. https://forms-legal.com/australia/employment/termination/deed-of-settlement-employment-australia
"Deed of Settlement (Employment) (Australia) (Australia)." Forms Legal, 2026, https://forms-legal.com/australia/employment/termination/deed-of-settlement-employment-australia.
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author = {{Forms Legal}},
title = {Deed of Settlement (Employment) (Australia) (Australia)},
year = {2026},
howpublished = {\url{https://forms-legal.com/australia/employment/termination/deed-of-settlement-employment-australia}},
note = {Free legal document template. Based on Fair Work Act 2009 (Cth)}
}Frequently Asked Questions
Under the Fair Work Act 2009 (Cth), the following employment claims can be settled by a deed of settlement: unfair dismissal applications under Part 3-2 (section 394), which must be filed within 21 days of the dismissal taking effect; general protections — dismissal applications under Part 3-1 (section 365), which must be filed within 21 days of the dismissal; adverse action claims under section 340 (broader than dismissal — covering actions taken against an employee because they exercised a workplace right); unlawful termination applications under Part 6-4 (section 723), available to employees not covered by the national workplace relations system; and claims for unpaid wages, entitlements, and breach of modern award or enterprise agreement obligations under Part 4-1. A deed of settlement is the preferred instrument for resolving these claims because, unlike a simple agreement, it does not require consideration for each obligation, it is enforceable for 12 years, and its formality gives both parties greater confidence in the finality of the settlement. However, parties should be aware that the Fair Work Act (section 202) provides that a term of an enterprise agreement or employment contract that requires an employee to perform unpaid work in lieu of entitlements is unenforceable — meaning some types of 'settlement' arrangements that purport to trade away NES entitlements are void.
No. Under section 61 of the Fair Work Act 2009 (Cth), the National Employment Standards (NES) provide a safety net of minimum conditions that cannot be contracted out of. Section 55 of the Fair Work Act provides that a modern award, enterprise agreement, or employment contract cannot exclude, modify, or reduce an NES entitlement to the detriment of an employee. This means that a deed of settlement cannot require an employee to waive, reduce, or trade away their NES entitlements, including: the minimum notice of termination under section 117; accrued annual leave pay under section 90; accrued long service leave under applicable state or territory legislation; redundancy pay under section 119 (where applicable); and superannuation contributions under the Superannuation Guarantee (Administration) Act 1992 (Cth). These entitlements must be calculated and paid in full as part of any settlement, regardless of what the parties agree. An ex gratia settlement payment (the additional amount paid to resolve the claim) is separate from NES entitlements and can be negotiated freely, but no part of the settlement can be structured in a way that reduces the employee's NES entitlements below the statutory minimum.
The tax treatment of an ex gratia employment settlement payment in Australia is complex and depends on the nature and characterisation of the payment. Under the Income Tax Assessment Act 1997 (Cth), settlement payments in connection with the termination of employment may be characterised as: (1) an employment termination payment (ETP) — a payment made in consequence of the termination of employment, which is concessionally taxed up to a specified tax-free amount (the ETP cap, which is indexed annually by the ATO); (2) a genuine redundancy payment — if the dismissal constitutes a genuine redundancy within the meaning of section 83-175 of the ITAA 1997, a portion of the payment may be tax-free; or (3) a general income payment — if the payment is characterised as compensation for lost income, it is taxed at the employee's marginal tax rate. In practice, payments made to settle unfair dismissal and general protections claims are typically treated as ETPs. The ATO has issued detailed guidance on the tax treatment of termination payments, including in Tax Ruling TR 2003/13. Both parties should obtain independent tax advice before entering into the deed, and the employer should require that the correct amount of PAYG withholding is deducted from the settlement payment.
In Australia, most unfair dismissal and general protections claims are referred to conciliation (mediation) at the Fair Work Commission before a formal hearing. Conciliation is conducted by a conciliator and is a private, without-prejudice process. If the parties reach agreement at conciliation, they typically sign a deed of settlement (or terms of settlement) to record the agreed terms, which is then filed with the Commission. The deed of settlement in this template includes a clause requiring the employee to discontinue their Commission application following the signing of the deed and payment of the settlement sum. Under the Fair Work Act, once a settlement has been reached through conciliation, the Commission will typically note the settlement and terminate the application. If the settlement is recorded in a formal written deed, either party can apply to the Federal Court or Federal Circuit and Family Court of Australia to enforce the deed as a contract if the other party fails to comply with its terms. A bare oral settlement agreement reached at conciliation may be enforceable under section 595 of the Fair Work Act as a 'term of settlement,' but a written deed provides much greater certainty and enforceability.
Employees have several important protections when signing a deed of settlement under the Fair Work Act 2009 (Cth). First, as discussed above, NES entitlements cannot be waived — the deed cannot require an employee to accept less than their statutory minimum entitlements on termination. Second, section 340 of the Fair Work Act provides that adverse action (including dismissal) taken because an employee exercised a workplace right (such as the right to make a complaint, the right to be represented by a union, or the right to request a flexible working arrangement) is unlawful — and a deed cannot retrospectively validate such adverse action. Third, the general protections under Part 3-1 of the Fair Work Act prohibit coercion, undue influence, and misrepresentation in connection with workplace rights — which means an employer cannot pressure an employee to sign a deed by threatening further adverse action. Fourth, the Fair Work Act provides a right to be represented by a union or other bargaining representative in settlement negotiations. Fifth, in the specific context of general protections claims, a deed of settlement does not extinguish any right to bring a complaint under applicable anti-discrimination legislation (such as the Age Discrimination Act 2004, Disability Discrimination Act 1992, Sex Discrimination Act 1984, or Racial Discrimination Act 1975 at the federal level, or their state equivalents) unless those claims are specifically and expressly included in the release.
This template is provided for informational purposes only and does not constitute legal advice. Laws vary by jurisdiction and change over time. Consult a qualified attorney for advice specific to your situation.Full disclaimer
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