Can I count long service leave in the asset pool?
For individuals who have accumulated a large amount of long service leave, such leave may become a point of contention during property settlement. Generally, the ex partner of the individual will desire for the Court to consider the other party’s long service leave within the asset pool to be split during the property settlement process.
Whether or not long service leave is counted in the asset pool will depend on whether the Court considers the long service leave an asset or as a financial resource. This decision will depend on the particular circumstances of the case and whether such leave is or will be used.
Long service leave entitlement
An employee is generally entitled to long service leave after they have worked for a long period with an employer. Each state and territory has its own laws regarding long service leave entitlements. These laws stipulate:
- How long an employer has to be working with an employer to be entitled to long service leave
- How much long service leave an employee is entitled to.
Long service leave in NSW
For example, in NSW long service leave applies to most NSW employees regardless of whether they are full-time, part-time or casual workers.
The Long Service Leave Act 1955 stipulates that if an individual has been working for the same employer for 10 years then the employee is entitled to 2 months (or 8.76 weeks) of paid leave to be paid at the employee’s ordinary gross weekly wage.
The Long Service Leave Act 1995 also states that an employee is entitled to a pro-rata entitlement after 5 years of work if the employee resigns because of:
- An illness
- Domestic duties or other pressing necessities.
To claim this entitlement, an employee will have to advise their employer of their reason for resigning in writing when they give notice of their resignation.
Another employee entitlement gained after work with the same employer for more than 5 years under the Act is a pro-rata entitlement if an employee’s work is terminated for any reason other than serious and wilful misconduct or the employee’s death.
The difference between an ‘asset’ and ‘financial resource’
The process of property settlement under the Family Law act 1975 starts first with determining all the assets to be included in the asset pool. It is only after this step that the Court considers how the assets should be split between the separating parties.
Hence, it is important for the Court to first consider whether the long service leave in question is an asset or a financial resource. If the Court determines that the long service leave is an asset, it will be included within the overall asset pool to be divided amongst the two parties. If however, it concludes that the long service leave is only a financial resource, it will not be included in the asset pool.
An asset in family law generally includes things such as real property, such as the family home or car. A financial resource normally refers to a resource that has the ability to generate an income. This is normally not something that the party is in possession of but instead is something that the party may be entitled to at a future date.
Prior cases indicate that in the past, Courts have treated accrued long service leave as a financial resource and not an asset. However, if the leave has already been paid as a sum, the Court could likely decide to include this sum in the overall asset pool.
Long service leave as a financial resource
As stated above, if long service leave is categorised as a financial resource, it will not make up part of the asset pool. However, this does not mean that it will be disregarded altogether. It will instead be regarded as a financial contribution made by the party who has accrued it and hence it can be considered by the Court and can lead to a percentage adjustment of the asset pool in favour of the other party without long service leave.
An important part of property settlement involves the Court considering the future financial needs of both parties. As one party is considered to have a likely source of future income because of their accrued long service leave, it is likely that they may get less assets when compared to their ex partner.
If you need any assistance regarding any property settlement matters please feel free to reach us via the contact form.
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