Divorce: Compensation for a career cut short?
A mother was recently awarded £400,000.00 on top of her equal share of the matrimonial assets to ‘compensate’ her for giving up her career to look after her children. Both the parties were solicitors and the mother had given up her role to take on primary responsibility for the care of the children, whilst the father had gone on to have a ‘stellar’ career. The total assets in this case were around £10 million.
Justice Moor referred to the mother’s position as a ‘relationship-generated disadvantage’. This term has been used in previous cases to describe a situation where one party had been denied the opportunity to maximise their earning capacity as a result of giving up a career to support their family in other ways.
For many people who are divorcing, and frequently wives who gave up professional careers to take care of the family, the idea that they should be compensated for this seems intuitively fair. For others, the idea that giving up a career to take care of one’s own home and children is a ‘sacrifice’ that requires compensation is unsavoury.
It is also important to note that matrimonial law has long recognised that working spouses and homemakers can make equal contributions to a marriage, and this is reflected in the principle that ‘equal sharing’ of capital is the starting point when determining finances on divorce.
Q: So why would the court order that a home-maker spouse should receive an additional amount in ‘compensation’?
A: Even if a non-working spouse received half of the total capital that was accrued during the marriage, their higher-earning and more experienced spouse is likely to be able to build up even more wealth post-divorce, whilst they will never have the same opportunity to do this and will always need live within the same parameters.
The ‘compensation’ argument is usually successful only in a very limited set of circumstances.
Generally, compensation arguments will succeed where there is an almost near certainty that one party had given up a very high-earning career, which, if they had pursued it, would have given them an income that was at least as high as their spouse.
It is important to remember that even if the ‘compensation’ argument cannot be applied to your case, the court is nevertheless obliged under Section 25 of the Matrimonial Causes Act 1967 (the key piece of legislation which covers finances on divorce) to consider each parties earning capacity both now and in the future when deciding on an order to make.
This means that the court will consider the impact of giving up a career to look after the children on a party’s ability to earn, and will order spousal maintenance to ‘bridge the gap’ where appropriate.
Our team of family solicitors are experts in the field of matrimonial finances on divorce. If you would like to speak to one of team, please do not hesitate to contact our family team on 0118 977 4045. We are happy to speak to you over the phone or via video call (using FaceTime or WhatsApp).
This reflects the law and market position at the date of publication and is written as a general guide. It does not contain definitive legal advice, which should be sought in relation to a specific matter.
Sarah Speed
Partner, Family Law
t: 01276 854 924
e: sarah.speed@herrington-carmichael.com
Sign up
Enter your email address for legal updates on Private Client & Family Law.
Latest Articles & Legal Insights
Mediation: We Can Work It Out
Any relationship breakdown can be an emotionally and financially difficult time for families, especially when there are children involved.
Family Law Unwrapped: Pre-Nuptial Agreements – things to consider
In this episode, we focus on Valentine’s Day and in particular Pre-Nuptials and what couples need to consider when deciding to marry.
Living Together – What You Need to Think About
When couples begin to think about taking the next step in their relationship, they will often choose to start living together.
Family Law Unwrapped: Navigating Separation in the New Year
In the first episode of the new Family Law series, we focus on how the Christmas and New Year period impacts upon relationships and families.
Divorce and Finances: Will I have to share my inheritance?
Many clients contemplating divorce ask whether they will have to share a current or future inheritance. The answer is that it depends.
Separated Parents: Navigating the Christmas period
Now is the time to try and agree how your children will share their time between their parents and extended families over the holiday period.
Top read insights in 2019
Contract Law
Material Breach of Contract
What is a ‘material’ breach of contract by a party to a commercial contract? This is a critical issue regularly considered by the courts. What constitutes a material breach and what are the remedies?
Property Law
Purchasing Land – Option Agreements
A developer and a landowner can enter into an Option Agreement. What are the strategies that can be employed by both landowners and developers to assist in such land deals?
Divorce and Family Law
What are the Tax Implications of a Civil Partnership?
Is there a significant tax saving to be made by a couple who are married or in a civil partnership that cohabitating couples simply don’t qualify for?
Land & Property Dispute
Restrictive Covenants – The Price of Modification
Having identified that your land is burdened by a restrictive covenant and for the purposes of this article the covenant in question will be that only one residential building can be erected on the land. What do you do next?
Award winning legal advice
Herrington Carmichael offers legal advice to UK and International businesses as well as individuals and families. Rated as a ‘Leading Firm 2024’ by the legal directory Legal 500 and listed in The Times ‘Best Law Firms 2023 & 2024’. Herrington Carmichael has offices in London, Farnborough, Reading, and Ascot.
London
60 St Martins Lane, Covent Garden, London WC2N 4JS
Camberley
Building 2 Watchmoor Park, Riverside Way, Camberley, Surrey GU15 3YL
Wokingham (Appointment only)
4 The Courtyard, Denmark Street, Wokingham, Berkshire RG40 2AZ
info@herrington-carmichael.com
© 2020 Herrington Carmichael LLP. Registered in England and Wales company number OC322293.
Herrington Carmichael LLP is authorised and regulated by the Solicitors Regulation Authority.
Privacy | Legal Notices, T&Cs, Complaints Resolution | Cookies | Client Feedback