Divorce and Annual Bonus: Can Future Bonus Payments be Claimed?
Sofia Louca, an associate solicitor at the law firm Bishop & Sewell, states that handling bonus payments during divorce can be a complex and sensitive matter, especially when these bonuses are tied to your post-separation work contributions.
First, it is crucial to determine if a clean break is possible or if ongoing maintenance will be required. If a clean break can be achieved, future bonuses cannot be claimed.
If a clean break is not possible, the amount of maintenance will depend on various factors such as financial needs, earning capacity of both parties, and childcare responsibilities. Maintenance is not indefinite and should come to an end once your spouse can achieve financial stability without undue hardship. Factors determining the duration and level of maintenance include available resources, duration of marriage, presence of children, and the standard of living during the marriage.
In cases involving children, maintenance payments may be required until they turn 18. However, it is typically expected that both parties will have sufficient earning capacity by that time to support themselves. If there are no children and your spouse is employed, future maintenance payments are unlikely.
When bonuses form a significant portion of income, it is commonly accepted to calculate maintenance to cover regular expenses and a separate amount for variable discretionary spending like vacations. Maintenance payments will be based on a combination of the monthly salary and a percentage of your bonus, with the inherent risk shared between you. Typically, these payments are capped based on the historical average bonuses received.
The determination of whether your spouse can claim maintenance from future bonuses depends on their needs and whether your standard of living relies on these bonuses.
Employing Someone and Working from Home: What to Consider?
Emma Sharman, a lawyer at consultancy firm The Legal Director, congratulates you on expanding your business and hiring your first employee. However, she advises that there are important considerations and obligations that may impact your small business when employing someone to work from your home.
While there are no restrictions on hiring someone to work with you at home, you must ensure that the workspace is safe and suitable, taking into account any health and safety requirements. Additionally, consider the potential impact on your neighbors and parking, as this could trigger planning issues.
Other factors to consider include whether you have incorporated a company for your business or if you will employ the staff member personally. Note that personal liability rests with you if you choose the latter option. Before hiring, establish a budget (keeping in mind the national minimum wage) and prepare a written contract that outlines the main terms of employment, as this is a legal requirement.
It is recommended to have both parties sign a contract of employment. Before that, ensure your prospective employee has the legal right to work in the UK and set up a payroll system. You will also need to inform HMRC that you are becoming an employer to arrange payment of income tax and national insurance contributions.
Remember that employees have rights under the law, including equal pay, statutory leave (maternity, paternity, adoption), statutory sick pay, and more. Familiarize yourself with these rights.
As an employer, you must offer a workplace pension scheme, and if your employee is eligible, you must enroll them and make the minimum monthly employer pension contribution unless they choose to opt out.
It is advisable to purchase employer’s liability insurance, as it protects you in case of claims and failure to do so can result in trouble with the Health and Safety Executive.
Consider whether it’s necessary to hire an employee or if using a contractor would be more suitable. While hiring a contractor is generally simpler, it’s crucial to correctly determine their status to avoid potential issues for both parties.
This column provides general information and should not be taken as professional advice. The Financial Times Ltd and the authors are not liable for any reliance placed on the provided information.
If you have a financial dilemma you’d like FT Money’s experts to address, email [email protected].
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