divorce coronavirus

With the current lockdown beginning to ease, many employers and employees will face the possibility of redundancy especially once the Government’s furlough scheme is phased out. For many people who have reached a maintenance settlement, whether as part of a divorce or separation, the issue will then arise whether that maintenance settlement can be varied in the light of redundancy?

The issue of the effect of redundancy on divorce settlements has been around for a long time and of course pre-dates the Coronavirus crisis but given the unfortunate prospect of mass redundancies it is going to come to the fore.

A redundancy payment which comes in the form of a capital sum is of course intended to compensate, to some extent, for lack of income. It is therefore not usually regarded as capital which can be shared with the other spouse in the way that matrimonial capital would usually be divided. It is a capitalised income fund and is to be used as such. This is why it may be difficult for someone who has recently been made redundant to convince a divorce court that a maintenance order that already exists should be reduced or extinguished due to redundancy. The family court may say that the redundancy fund can be used as continuing maintenance for the time being in the hope that alternative employment can be found by the time it is extinguished.

Of course in the current crisis the prospects of obtaining an alternative job may be very limited and the redundant spouse is well advised to demonstrate this by keeping any “rejection” letters from unsuccessful job applications made as well as a list of actual applications submitted (which are of course, sadly, often never even acknowledged).

At the stage at which the redundancy payment is running out and there is no alternative employment, a downwards variation application is strongly advised together with an application to remit any arrears that have arisen due to lack of funds. Of course that in itself has its problems as the onus is on the paying party to make a variation application, as the order and any arrears remains operative despite loss of a job unless varied by the court. The application of course involves court fees and legal fees but is essential if further arrears are to be avoided.

In relation to the spouse who is dependent on maintenance from their spouse who has been made redundant, this is a difficult and worrying time. If payments have stopped do check your own eligibility for state benefits which may be available to single parents. Seek legal advice as often a letter from a solicitor may be sufficient to ensure that continuing payments are made given the courts’ approach to redundancy payments as described above. Do gather evidence about suitable alternative jobs your spouse could apply for to counter any suggestion that there aren’t alternative jobs to be found. If there are arrears take legal advice as to how these could be enforced against other assets. Act promptly as there are limits on enforcement of older arrears

If child maintenance is being paid through the child support agency then the payer should notify the agency of any changes and a reassessment can be made

All of this takes time and although the family finance courts are certainly operating (largely remotely) there are some delays and therefore the sensible thing is to take urgent legal advice from specialist family lawyers if faced with any of the above issues.