Compensation For Career Sacrifice On Divorce
Often when married couples start a family there will need to be a discussion about whose career will take a backseat, especially where both parents have been working in lucrative roles. Whilst they may have supportive childcare there is usually one parent who finds they need more flexibility with their work and, with that flexibility may come a different career trajectory and consequent change in earnings.
Our family courts have, perhaps understandably, been reluctant to engage with the debate sometimes raised in subsequent divorce proceedings.
Even if there is clear evidence that one parent has forfeited a lucrative career to be the main homemaker, how should a court go about quantifying the compensation element?
This explains why there are so few reported cases dealing with compensation in this context. There has been a small trickle since the cases of Miller and McFarlane in 2006.
In Waggott v Waggott 2018, the Court of Appeal proposed that the test for applying the compensation principle is that the court should determine, on a balance of probabilities, that the applicant’s career would have resulted in them having resources greater than those which they would be awarded under the needs or sharing principles. The court should then determine whether, and if so how, compensation should be reflected to ensure fairness to both parties. In Waggott, the wife’s claim for compensation was rejected because her retained award under the needs principle would be greater than a lost net income of no more than about £64,000 per year.
This topic was raised again in RC v JC in 2020 and in TM v KM in 2022.
In RC v JC the wife was awarded £400,000 in compensation for giving up her career as a city solicitor to raise the family.
The judge was clear that this was an exceptional case and fact specific and that the judgment should not be viewed as a ‘green light’ to raise compensation claims. The judge was of the view that in this case the wife had shown a clear path to partnership before she gave up her career.
In TM v KM the judge found that it was an exceptional case in which a discrete compensation award was appropriate in favour of the wife who had given up her career as an investment banker at a time when her earnings were at a level similar to the husband’s. The result was that she received a higher maintenance award pegged at the top end of the range, rather than an additional capital payment.
It remains difficult to successfully argue a separate and distinct compensation claim on behalf of a party in divorce proceedings, because any element of compensation will usually be subsumed in the needs and/or sharing principles applied.