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The impact of redundancy upon divorce

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An issue that we as family lawyers are being asked to look into more frequently is what the impact of a redundancy on a financial settlement in the context of a divorce. Without sounding too "doom and gloom", there is no getting away from the fact that more and more employees have been or are being made redundant; and the financial worries caused by the economic climate have caused cracks between already unhappy couples to widen, leading to more arguments, separation, and divorce in many cases.

Aside from money worries and loss of employment potentially being a cause for the breakdown of relationships, there is another angle to this. What happens if a couple separate, and then after the separation, one of the parties is made redundant? Should the redundancy package be open to a claim from the other party as part of the divorce settlement?

Our job as family lawyers is to look at what is in the marital "pot" of assets, and then determine how these should be divided. If acting for the party who has been made redundant, post separation, then our starting point will be to argue that the redundancy package is not a marital asset, given that it was not in existence during the course of the marriage, and its purpose is to compensate our client for his or her loss of employment. The redundancy money is obviously paid to the party to assist in managing until alternative employment is found. If another job is secured quickly then it may be difficult to argue that point. If not and, is unfortunately happening at the moment where it is taking people sometime to fins alternative employment, then it may be excluded.

Difficulties can however arise when, for example, the party was aware prior to separation that they were going to be made redundant, and therefore their spouse would have been able to share in the monies had the parties stayed together. If they then go on to separate, it is may be in these circumstances that the other spouse will receive a share of the redundancy package. Other examples are when the marital pot is not sufficient to satisfy the capital needs of the couple after separation; the redundancy monies are likely to be brought into play as a resource available, for example to buy a spouse out of the former matrimonial home.

As with many aspects of financial settlements on divorce, there are unfortunately no right or wrong answers and without knowing the full circumstances of the case this is another grey area. The above is general guidance only and it should be borne in mind that the courts have an incredibly wide discretion when determining who should get what. The courts will look at a number of factors, in addition to the resources available to the parties, such as the duration of the marriage, who the children live with (as this will affect their housing needs), and contributions made by the parties throughout the marriage. The relevance of the redundancy monies will be determined having had regard to all of the circumstances of the particular case. If you would like to discuss any of the issues raised in this blog, or any aspect of family law, then please contact our family team on 0113 222 3241.

Disclaimer: Anything posted on this blog is for general information only and is not intended to provide legal advice on any general or specific matter. Please refer to our terms and conditions for further information. Please contact the author of the blog if you would like to discuss the issues raised.