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Our shaykh ‘Abd al-‘Azeez ibn Baaz (may Allaah have mercy on him) was asked about the payment of a lump sum upon redundancy for an employee of a interest-based bank. He replied that it is permissible for him to take something in return for the period that he worked in the riba-based bank before he knew that it was haraam, and that it is not permissible for him to take anything for the period when he worked and was aware of the prohibition.
For example, if we suppose that he worked for 30 years in the bank, and he did not know for 20 years that his work was haraam, then he came to know of the ruling, but he continued to work for another 10 years, then he may take (a lump sum) in return for the twenty years, but not for the last ten years.
With regard to his children, it is permissible for them to take what they need from their father even if his earnings are haraam, because his spending on them is obligatory, and the sin is on him only. But they should advise him and not take too much. And Allaah knows best.