Originating in India during British Colonial rule as a restricted privilege for some Government employees and practically non-existent elsewhere in the world, employee long service leave entitlements have nonetheless grown to become culturally ingrained in the Australian workforce.  Generally the entitlement is for two calendar months of paid leave on attaining 10 years of continuous employment with these rights to increase pro rata for extra time.  In some cases, these entitlements can amass to over 10 months and be worth tens of thousands to hundreds of thousands in dollars.  Nationally the collective entitlement is estimated at around $16.5billion.

On the breakdown of a marriage, a worker who may hold these entitlements will often face a challenge or complaint from the other spouse to say that these entitlements ought to in some way be shared financially.  When these disputes have come before the Courts, the issue has typically come down to a question of whether the entitlements should be treated as an “asset” or a “financial resource”.

For example, in a case where the entitlements are held by the husband and are worth say $40,000.00 with the parties holding other divisible assets totalling $300,000.00 and the entitlement is to be treated as an asset.  On a 50/50 split, the result would be as follows:

As can be seen, the worker husband in the scenario would be made to accept $40,000.00 less in the other divisible assets simply because they retain the long service leave entitlement.

If by comparison the Court was to treat the entitlements as a mere financial resource, then in the same scenario above, the Court would only consider the $300,000.00 as the divisible asset pool, but might for example adjust the percentages away from 50/50 so as to reduce the worker spouse’s entitlement and increase the non-worker spouse’s entitlement to take into account the presence of the potential long service leave entitlements.  In the above scenario for example, a Court might make an adjustment of between 0% and 5% taking the division to a maximum of 55/45% in the Wife’s favour.  The maximum additional payment to the wife therefore would be $15,000.00 (ie. $165,000.00) but it could be $0.

A determination of the entitlement as an “asset” or a “financial resource” will depend on the facts of each case but below are some guidelines:

• Generally for so long as the entitlement remains only an entitlement to be taken as leave, the Court will treat the entitlement as a mere financial resource.
• If the entitlement is actually accessed after separation and is taken as leave, the Court is likely to ignore the entitlements altogether.
• If the evidence shows that the spouse is likely to take the leave payment/time, but then work elsewhere during the break, then the Court is more likely to treat the entitlements as a divisible asset.
• If the entitlements are likely or have actually been paid to the worker spouse in a lump sum as part of a redundancy (or live) package, then again if the evidence is that the spouse has managed to find alternate employment then the long service leave entitlement is likely to be treated as a divisible asset.
• In all circumstances if the long service leave is to be treated as a divisible asset, then any tax which would be payable upon those entitlements will be deducted from the value.

Michael Zande is a Queensland Law Society accredited family law specialist with over 25 years experience in the field. He is the principal at Zande Law Solicitors, Suite 7, Norwinn Centre, 15 Discovery Drive, North Lakes to contact Michael for advice phone 3385 0999.

The information in this article is merely a guide and is not a full explanation of the law. This firm cannot take responsibility for any action readers take based on this information.  When making decisions that could affect your legal rights, please contact us for professional advice.