The Legal Practitioner's Guide

4.4.2 (c) Unemployment clauses

CSA cannot vary or suspend an assessment that is based on a court departure order or agreement that sets the periodic amount of child support. Where no provision is made for periods of unemployment, the payer is liable to pay the same amount of child support during any such period of unemployment. If the payer cannot afford to do so, he or she can negotiate with the payee about making a child support agreement for a lower amount of child support, or apply to the court to set aside their existing court order or agreement. If their existing agreement is a binding agreement, the normal rules about ending the agreement would apply – that is, the requirement to seek legal advice – and the court could only set aside the agreement in exceptional circumstances. A better alternative is to avoid the problem by including a suitable unemployment clause in the original departure order or child support agreement.

Court departure order

• That pursuant to section 117 of the Child Support (Assessment) Act 1989 there be a departure from the administrative assessment of child support payable by [Parent A's name] for the child(ren) [child(ren)'s names] as follows:

• For the period from [start date] to [end date] the annual rate of child support be set at $x per child.

• The annual rate of child support payable under this order will reduce to $y for any period in which [Parent A's name] is not in full time employment. For the purpose of this clause, 'full time employment' means [definition – eg working at least X hours per week or earning a gross income of $x per week].

OR

• The annual rate of child support payable under this order will reduce to $y for any period in which [Parent A's name] receives an income tested social security Benefit or pension at the full rate.

(The italicised words are optional – see 'Tips and problems'.)

Child support agreement

• [Parent A's name] and [Parent B's name] agree that [Parent A's name] will pay child support to [Parent B's name] of $x per month for [child 1's name] and $y per month for [child 2's name] for the period from [start date] to [end date].

• The child support payable under this agreement will reduce to $z per month for any period in which [Parent A's name] is not in full time employment. For the purpose of this agreement, 'full time employment' means [definition – eg working at least X hours per week or earning a gross income of $x per week].

OR

• The child support payable under this agreement will reduce to $z per month for any period in which [Parent A's name] receives an income tested social security Benefit or pension at the full rate.

OR

• The child support payable under this agreement will reduce to $z per month for any period in which [Parent A's name]'s gross income falls below $300 per week.

OR

• The child support payable under this agreement will reduce to [$z per month/the minimum amount of child support that would be payable under a formula assessment] for any period in which [Parent A's name]'s income falls below the equivalent of the self-support amount that would be used in the calculation of a formula assessment of child support.

(The italicised words are optional – see 'Tips and problems'.)

Tips and problems

How much child support should be paid during a period of unemployment?
The appropriate level of child support will vary according to the circumstances of the parents and children.

However, as a guide, under the usual formula assessment provisions, a payer whose income is less than the self-support amount ($18,272 for child support periods starting in 2008, indexed to Male Total Average Weekly Earnings each year – updated information available from www.csa.gov.au) for example, because he or she derives his or her income solely from a social security benefit, is liable to pay the minimum child support assessment (section 66). For child support periods starting in 2008, this is $339 per annum. From 1 July 2008, the minimum child support assessment will generally be payable for each child support family (up to a maximum of three families) rather than being shared between payees, but will not apply in cases where the paying parent has regular care (14% or more) of the children, as the parent is making a contribution and incurring costs during that care.

If the order or agreement provides for more than the minimum assessment amount during a period of unemployment, and there is more than one child, specify the amount, or proportion, for each of the children. If this rate should be reduced to nil where the parent has at least 14% care, this should be specified in the agreement.

Choosing the 'trigger' for an unemployment clause
There is no foolproof way to choose the right 'trigger' for an unemployment clause. The important thing is to think through the possibilities and make sure that the parents understand what is meant, and that the intention is properly reflected in the clause used.

Here are some things to consider:

• a clause that operates only when a person is "unemployed" will not change the rate of child support when they are working part-time, even if they earn less than the rate of a social security payment. Consider inserting a clause that suspends or modifies the amount payable if a person earns at a rate that is no greater than a specified social security payment, or no greater than the self-support amount;
  
  Note: this can be a difficult clause for CSA to administer. Difficulties may include: fluctuations in a person's income; requests for retrospective changes; lack of supporting evidence as to the exact level of, or changes to, earnings. Consequences such as the creation of overpayment or arrears often result. Consider inserting clauses limiting retrospectivity and specifying requisite proof of income. You may also wish to discuss this with CSA before you consider inserting such a "low income" clause;

• CSA can readily administer a clause that makes reference to the payer receiving an income tested social security Benefit or pension, as it can readily obtain this information from Centrelink. However, not every person who is unemployed will be entitled to a social security benefit. Apart from the obvious case of a person whose income or assets preclude them from payment, a person may be ineligible because of their new partner's income or assets;

• similarly, an unemployment clause that operates only when a person receives an income tested social security Benefit or pension at the full rate will substantially narrow the range of circumstances when the clause applies. An unemployed person with some investments or a casual job may receive a reduced rate of pension or benefit. Similarly, if their partner works part-time, or has casual work, this may reduce their social security benefit;

• defining the 'trigger' term is a good way to ensure you have canvassed the possibilities, as well as making sure CSA can apply the term as was intended by the court and/or the parents. Check with CSA to make sure there is no problem with an intended clause;

• defining the trigger income level as being equal to the self-support amount that CSA uses in formula assessments means that it will keep up with changes in the cost of living;

• in some cases, it may be appropriate to insert a clause which terminates the agreement when a paying parent becomes unemployed. This may be appropriate where it is foreseen that a person may not re-enter the same industry after unemployment so the terms of the agreement are unlikely to provide an adequate assessment of child support payable.

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