How might redundancy impact your divorce settlement?

Posted: 01/09/2020

The coronavirus pandemic has had a significant impact on so many aspects of our lives. It is estimated that more than 9 million jobs were furloughed in the United Kingdom as part of the Government's job retention scheme. Despite this, we have still seen redundancy programmes in many businesses and, as the scheme comes to a close, it is expected that further redundancies will follow. A difficult time under any circumstances, redundancy (and redundancy pay) also has implications in divorce proceedings.

How does this interact with resolution of finances on divorce?

Where a maintenance order is in place, it is important to realise that this is a variable order. It is open to the payer who is facing redundancy to make an application to vary downwards the level of maintenance or periodical payments. The court may not immediately be persuaded to reduce the payments as the redundancy package itself is intended to compensate for loss of income and the court may regard it as a capital fund from which maintenance can be paid.

However with no alternative employment on the horizon and the redundancy payment running out, an application to vary maintenance downwards is the appropriate route along with an application to remit, or waive, arrears if they accrue.

Anyone subject to a child support assessment who has been made redundant should contact the Child Maintenance Service and ask for a reassessment on the basis of their altered circumstances.

It goes without saying that you should communicate with your (former) spouse about your financial difficulties so that they are not taken by surprise. They may agree to a variation after all.

Will your spouse have a claim against your redundancy payment?

The court would take into account all assets that are disclosable, whatever their source. One may be able to argue that a redundancy payment received after separation should be non-matrimonial and not be available for division if there are sufficient other assets to meet a spouse’s needs.

What if the redundancy was expected, the other spouse had a legitimate expectation of sharing it and it was paid the day after separation?

Cases turn on their own facts so one cannot say with certainty what the outcome might be in a particular case.

What if you feel that you are at risk of redundancy as you approach settlement of financial and property matters?

In theory, an application for an adjournment could be made until the position becomes clearer. In practice, applications for adjournment are rare and matters proceed on the basis of each individual case as it stands.

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