For a fortunate few in the UK, the transition to a four-day working week has had no impact on their income. Their hours may be slightly longer but they are paid the same as their employers consider that employees are more productive when their hours are condensed and they have more time off. If their income remains constant and the amount of time spent caring for their child is unchanged then this should have no effect on their obligation to pay child maintenance. What happens with child maintenance, however, if the change from a five day to a four day working week results in a 20% drop in income for the paying parent?
Child maintenance when parents agree informally
If separated parents have reached informal agreement between themselves about child maintenance then they may well assume that a 20% pay cut should correspond with a 20% reduction in the amount of child support payable, particularly if the paying parent's reduced hours have been imposed on him or her due to Covid-19 rather than requested by them. They may agree an adjustment between themselves if they are on good terms. If they cannot resolve matters, the paying parent (sometimes called non-resident parent) may cease making payment altogether.
Child Maintenance Service (CMS) assessment
Provided that both parents and the child or children for whom maintenance is payable all live in the UK, it is possible for either of the parents to apply to the Child Maintenance Service (CMS) for an assessment. The receiving parent is likely to apply to the CMS if the paying parent suddenly stops making payment or reduces the payments without agreement. Both parents may assume that the CMS would base the calculation on the paying parent's current income. In fact, that is unlikely to be the case. The CMS usually uses historic income information from HMRC which can be from a previous tax year and not even necessarily the most recent complete tax year. The paying parent is only able to insist that current income is used by the CMS if their historic income was at least 25% higher than the current income! This could cause considerable hardship to a paying parent who has had a 20% pay cut.
Child maintenance – formal agreement
There will also be separated parents who have entered into a formal written agreement regulating child maintenance (or "child aliment" in Scotland). Such Scottish agreements will remain in force in for at least one year unless varied by a supplementary agreement or unless during that first year one of the parents succeeds with a court application for variation of the amount payable in the event of a material change in circumstances.
Child maintenance – a material change in circumstances?
Is a 20% pay cut a material change in circumstances? My view is that this will vary from case to case but it is unlikely to be worth applying to the court for a variation if the agreement is nearly 12 months old when financial difficulties hit.
When the agreement is one year old, provided that both parents and the child or children for whom maintenance is payable all live in the UK, either party can apply to the CMS for an assessment and the calculation which follows would supersede the terms which relate to child maintenance. After the first anniversary of the agreement the parents will not normally be able to apply to the court to vary or determine the amount of child maintenance as these powers are held by the CMS alone in most cases.
For parents who use the CMS to calculate child maintenance a 20% reduction in the paying parent's income will not justify a reduction in the amount payable as it is within the range of 25%. It may be at the annual review a year or two later before the calculation will reflect that lower income.
What should parents consider if they are facing a four day working week?
A formal written agreement may be beneficial for paying parents who have suffered or are about to experience a 20% drop in their income. They may also be desirable for receiving parents too. This is a complex and technical area of law so we'd recommend taking advice at an early stage.