How can a redundancy payment impact on your family law settlement? The Coalition Government’s decision to cut 12,000 public sector jobs during its term means that some government departments have started to offer or will be offering redundancies, both voluntary and
A redundancy payment, whether voluntary or forced, can impact on a family law property settlement. It can also have consequences with respect to a superannuation
Who gets the redundancy
If one party to a relationship receives a redundancy payment, and that redundancy payment relates to employment engaged in during the relationship, then it is arguable that the other party could have an entitlement to share in that payment. This may be the case whether or not the redundancy payment is received before or after
Take the example of a couple who have been either married or in a de facto relationship for a period of 10 years: for the whole period, the husband was engaged in employment as a public servant and was the primary income earner, while the wife was the primary carer for the children and the homemaker. The wife may be entitled to include the husband’s redundancy payment in the asset pool on the basis that she made indirect contributions to his employment and to that payment. It will also depend on how the redundancy is used: if the recipient quickly moves to other work, the cash benefit of the payment can more readily be regarded as a capital
Members of the CSS or PSS are eligible to access superannuation benefits if they receive a redundancy, either voluntary or involuntary and even if they are below retirement age. You may be able to access a lump sum, a pension or a combination of the two from your superannuation entitlements. Members of the CSS or PSS may access their superannuation after receiving a redundancy and do not need to prove financial hardship or medical illness. There may be restrictions on how much of your CSS or PSS you can access if you have not yet reached the preservation age.
In family law settlements, superannuation is treated like property and can be divided between the parties. However, in cases where your former partner is a public servant and receiving a redundancy, be aware that they may also seek and tap into their superannuation. Steps can be taken to ensure you can protect your interest in the superannuation or to prevent it being accessed without your knowledge or consent.
The importance of seeking specialist advice
It is important to obtain specialist advice (both legal and financial) about these issues if you or your former spouse have already accepted or are considering accepting a redundancy. To make an appointment with one of our specialists in family law contact us on 6212 7600