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March 2020

Entering into a deed of release must be voluntary

Entering into a deed of release must be voluntary

The Case

Salisbury v Sigmatek Pty Ltd (2019)

Sigmatek Pty Ltd (Sigmatek) employed Mr Salisbury for more than 20 years. Mr Salisbury’s role as Director/Regional Sales Manager was made redundant.

At the time of his employment termination, Mr Salisbury signed a Deed of Release (deed) with Sigmatek. The deed included a bar preventing Mr Salisbury from commencing proceedings against Sigmatek, including for unfair dismissal.

Mr Salisbury commenced proceedings in the Fair Work Commission (FWC), claiming the dismissal was unfair because other employees of Sigmatek were performing the duties he once performed. Mr Salisbury claimed he signed the deed under duress, believing that was the only way he could receive his employment entitlements.

Sigmatek applied to the FWC, requesting it dismiss Mr Salisbury’s application pursuant to s587 of the Fair Work Act 2009 (Cth) (FW Act), on the grounds that it either was frivolous and vexatious or had no reasonable prospects of success.

The Verdict

The FWC found that Sigmatek had not applied any duress on Mr Salisbury to execute the deed. Sigmatek had provided the deed to Mr Salisbury for review 10 days before his last day of employment. Sigmatek had also invited Mr Salisbury to discuss the contents of the deed. Mr Salisbury did not ask any questions or seek clarification. He signed and returned the deed within 3 days of it being provided to him. As such, the FWC found the deed was valid. Therefore, Mr Salisbury could not bring his claim and his application was dismissed.

The Lessons

This case demonstrates the value of providing departing employees with:

  • sufficient time to consider any deed you offer them; and
  • the opportunity to ask questions.

If you present employees with deeds with a mandate to immediately sign and return, this can greatly increase the risk of a claim of duress or coercion being successful. This may then void the deed.

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