Do I Have To Share My Workers Compensation Or Redundancy With My Ex Spouse?

Do I Have To Share My Workers Compensation Or Redundancy With My Ex Spouse?

Do I have to share my workers compensation payment with my former spouse?

Separation can be a complex and emotionally charged process, particularly when it comes to the division of assets. One question that often arises is whether a workers compensation or redundancy payout must be shared with a spouse after separation.

Unfortunately, the answer to this question is not clear cut and it depends on several factors, including the nature of the payout and the circumstances of the relationship.

The Family Law Act 1975 governs the division of property following a separation. The court aims to achieve a fair and equitable distribution of assets, considering the contributions of both parties and their future needs. The term “property” is broadly defined and can include various types of assets, such as real estate, superannuation, savings, and compensation payouts.

Workers Compensation Payouts

Workers compensation is a form of insurance providing wage replacement and medical benefits to employees injured in the course of employment. These payouts are intended to cover lost wages, medical expenses, and rehabilitation costs. The nature of the payout can vary, including lump-sum payments for permanent impairment or ongoing payments for temporary incapacity.

What is a Redundancy Payout?

A redundancy payout is a sum of money paid to an employee when their position is made redundant. This payout typically includes severance pay, accrued leave entitlements, and other benefits. The purpose of the redundancy payout is to provide financial support to the employee while they seek new employment.

Lump Sum Payouts as Property

The treatment of a worker’s compensation or redundancy payout in property settlements can be complex and depends on the specific circumstances of each case.

Generally, compensation for lost wages and medical expenses is not considered property, as it is intended to replace income and cover costs directly related to the injury. However, lump-sum payments for permanent impairment may be treated as property, as they represent a form of compensation for the loss of future earning capacity.

Redundancy payouts can be considered part of the asset pool if they are received during the marriage or shortly after separation. In the case of in the Marriage of Zorbas (1990) FLC 92-107, the court held that a redundancy payout received shortly after separation was part of the asset pool. The court reasoned that the payout was a financial resource accumulated during the marriage and should be considered in the division of property.

Factors Considered by the Court

When determining whether a workers compensation payout should be included in the property settlement, the court will consider several factors, including:

  1. Nature of the Payout: The court will examine whether the payout is for lost wages, medical expenses, or permanent impairment.
  2. Timing of the Payout: The court may consider whether the payout was received before or after the separation.
  3. Purpose of the Payout: The court will assess whether the payout is intended to cover specific expenses or provide long-term financial support.
  4. Contributions of Both Parties: The court will evaluate the financial and non-financial contributions of both parties to the marriage, including homemaking and caregiving roles.
  5. Future Needs: The court will consider the future needs of both parties, including their earning capacity, health, and financial resources.

If you are going through a divorce and have received a lump sum payout, it is essential to seek legal advice. A family lawyer can help you understand how the payout may be treated in the property settlement and advocate for a fair distribution of assets. Additionally, it is important to keep detailed records of the payout, including the amount received and the purpose of the payment.

For expert guidance on family law matters in the Sutherland Shire, comsult our team of Family Lawyers at Solari and Stock. Whether you need assistance with divorce, asset division, or any other aspect of family law, our experienced team is here to help. Contact us on 02 8525 2700 or click erhe to request an appointment.

Article written by Nikita Ward
Photo by Marek Studzinski on Unsplash