---
title: "Deed of settlement and release on termination of employment, with payment and tax treatment checklist"
url: "https://ailawframework.com/precedents/employment-and-workplace-relations/termination-settlement-deed-and-tax-checklist"
type: "precedent"
site: "AI Law Framework"
id: "a14-termination-settlement-deed-and-tax-checklist"
area_id: "A14"
kind: "deed"
ai_level: "yellow"
version: 1
task_ids: ["A14-A20260923-1"]
law_stated_as_at: "2026-10-18"
---

# Deed of settlement and release on termination of employment, with payment and tax treatment checklist

> A deed between an employer and a departing employee: agreed termination date, settlement payment, release of claims, confidentiality and non-disparagement, return of property, reference and withdrawal of proceedings,…

Canonical page: https://ailawframework.com/precedents/employment-and-workplace-relations/termination-settlement-deed-and-tax-checklist  
Law stated as at: 2026-10-18

Site index for agents: https://ailawframework.com/llms.txt

A deed between an employer and a departing employee: agreed termination date, settlement payment, release of claims, confidentiality and non-disparagement, return of property, reference and withdrawal of proceedings, with a checklist splitting each payment into its tax category.

## Key facts

- Kind: Deed. A deed that must be executed as a deed.
- Practice area: [Employment & Workplace Relations](https://ailawframework.com/precedents/employment-and-workplace-relations.md)
- Jurisdictions: Australia, Commonwealth
- AI level: Yellow. AI can help in set ways. A lawyer checks specific points before use.
- Law stated as at: 2026-10-18
- Status: Maintained. Checked on 2026-10-18 against the 3 authorities it cites, for Australia and Commonwealth.

## When to use it

Use to resolve a dispute about a dismissal or an agreed exit, including after an unfair dismissal or general protections application, or a without prejudice negotiation. Not a substitute for paying minimum entitlements, which must be paid whatever the deed says.

## Used for these tasks

- [Draft a without-prejudice settlement deed and tax-treatment checklist for a termination](https://ailawframework.com/practice/employment-and-workplace-relations.md#A14-A20260923-1)

## How AI may be used

AI may fill the deed from the agreed terms and split the payments into the checklist categories from payroll data, but the lawyer settles the release and the payment characterisation, and the employer’s payroll or tax adviser confirms the withholding.

**AI may:**

- Fill the deed from the agreed heads of terms and the employee’s payroll details
- Prepare the payment table separating wages, leave, notice, redundancy, ETP and compensation amounts, with the source for each figure
- Check that the release, confidentiality and withdrawal clauses match the proceedings and claims on foot

**AI must not:**

- Must not characterise a payment for tax (genuine redundancy, ETP, compensation for personal injury) or decide withholding
- Must not draft terms that stop the employee from making a protected disclosure, reporting to a regulator or police, or claiming statutory entitlements that cannot be released
- Must not process the employee’s personal or health information in a tool that retains or trains on it

**The lawyer checks:**

- Minimum entitlements (final wages, accrued leave, notice and NES redundancy pay where due) are paid in addition to, or clearly identified within, the settlement sum
- The release covers the claims intended, excludes what cannot lawfully be released, and the employee has had a real opportunity to get independent advice
- The tax characterisation of each payment is supported by the facts (for example, a genuine redundancy meets the ATO conditions) and checked by the payroll or tax adviser
- Proceedings are withdrawn by the agreed date, and confidentiality and non-disparagement are mutual where agreed and carve out protected disclosures

## Authorities

- [Australian Taxation Office, Employment termination payments (what an ETP includes, such as payments in lieu of notice and gratuities; what it excludes, such as unused annual and long service leave and the tax-free part of a genuine redundancy payment)](https://www.ato.gov.au/tax-rates-and-codes/key-superannuation-rates-and-thresholds/employment-termination-payments)
- [Australian Taxation Office, Redundancy and early retirement (genuine redundancy tax-free limit = base amount plus service amount for each year of service, indexed annually; conditions)](https://www.ato.gov.au/businesses-and-organisations/hiring-and-paying-your-workers/engaging-a-worker/when-a-worker-leaves-your-business/taxation-of-termination-payments/redundancy-and-early-retirement)
- [Fair Work Act 2009 (Cth) s 117 and s 119 (NES notice and redundancy pay, which are minimum entitlements)](https://classic.austlii.edu.au/au/legis/cth/consol_act/fwa2009114/s119.html)

## Full text and drafting notes

The full text and the drafting notes are not part of this public page. Signed-in firm accounts can read them at https://ailawframework.com/precedents/employment-and-workplace-relations/termination-settlement-deed-and-tax-checklist and through the signed-in MCP connector https://ailawframework.com/mcp/firm.

*Practice guidance for planning and review. Confirm current primary sources and the requirements of the actual matter. This is general information, not legal advice.*