I am in the process of getting divorced and questions are being asked about my annual bonus. It varies every year but is usually quite substantial. I understand that until an overall settlement is reached between us, my bonus will be treated as per previous years. But is there a claim against future bonus payments?
Sofia Louca, an associate solicitor at the law firm Bishop & Sewell, says the treatment of bonuses on divorce can be a difficult and sensitive topic, especially where they are linked to your efforts at work many years after your separation.
We would first need to consider whether this is a case where there can be a clean break or, if ongoing, whether maintenance is going to have to be paid. If there can be a clean break, any future bonuses cannot be the subject of a claim.
If this is not possible, the amount of maintenance will be based on factors including financial needs, what you and your spouse can earn, and whether you have children. Maintenance is not open-ended and you need to look at how quickly it can come to an end, typically when your spouse is able to adjust financially without any unnecessary hardship (usually allowing them a period to be earning enough to be self-supporting).
That said, the courts can and do impose an obligation to maintain any needs a relationship has created. Exactly how long and what level of needs are to be met will depend on the resources available, the length of the marriage, the children and their age, and on the standard of living during the marriage.
Where children are involved, maintenance payments may be required until aged 18, but by then it is usually expected that both sides have sufficient earning capacity to be self-supporting and financially independent. If there are no children and your spouse is employed, future maintenance payments are unlikely.
A broadly acceptable approach where bonuses make up a significant element of income is to calculate a maintenance figure that covers ordinary expenditure and a separate sum that covers discretionary spending that might vary from year to year; for example, holidays. Maintenance payments will be based on that monthly salary and a percentage of your bonus (so that any inherent risk is shared between you), typically capped and based on historic average bonuses received.
The ability of your spouse to claim maintenance from future bonuses can only be justified on their needs and where your standard of living depends on those bonuses.
I have recently set up my own business, which is growing quickly, and I am about to move out into a purpose-built workshop in my garden. I am also thinking about employing someone part-time to help me out but is it OK if they work with me at my home? Are there any issues I need to consider?
Emma Sharman, lawyer at consultancy The Legal Director, says expanding your business by taking on your first member of staff is an exciting step — congratulations. However, it is also a big responsibility and the obligations that come with it can have a big impact on a small business, so you are right to ask this question.
There is nothing to stop you from hiring someone to work with you at your home, but as with all workplaces, you must ensure this is safe and suitable for the employee considering any health and safety requirements. Also, think about any impact on your neighbours and parking, just in case this triggers a planning issue.
There are a lot of other things to consider, including if you have incorporated a company for your business or if you will employ your member of staff in your personal capacity. If the latter, note that any liability will sit with you personally. Before recruiting you should also decide on a budget (note that you must pay at least the national minimum wage) and prepare a contract — it’s a legal requirement to record the main terms of their employment in a written document or statement.
Best practice is to prepare a contract of employment that you both sign. Before that happens you also need to check their legal right to work in the UK and set up and run a payroll — you will need to notify HMRC that you are becoming an employer so that you can then make arrangements to pay any income tax and national insurance directly to HMRC.
Remember too that employees benefit from a number of rights that arise automatically at law. These include the right to equal pay and the right to statutory maternity, paternity or adoption leave, statutory sick pay, and a variety of others. It is worth becoming very familiar with these rights.
By law, all employers must offer a workplace pension scheme. If your employee is eligible you will need to enrol them and, unless they decide to opt out, make the minimum employer pension contribution each month.
Employers are advised to purchase employer’s liability insurance. This protects you if there are claims and, in a worst-case scenario, failing to do so can get you into trouble with the Health and Safety Executive.
You may want to consider whether you need to take someone on as an employee, or use a contractor instead. Taking on a contractor is generally much simpler for you. However, it’s important to be sure whether they are operating as a contractor or an employee because getting this wrong can lead to serious issues for you and them.
The opinions in this column are intended for general information purposes only and should not be used as a substitute for professional advice. The Financial Times Ltd and the authors are not responsible for any direct or indirect result arising from any reliance placed on replies, including any loss, and exclude liability to the full extent.
Do you have a financial dilemma that you’d like FT Money’s team of professional experts to look into? Email your problem in confidence to yourquestions@ft.com.
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