Photo: Rubberball/Getty Images
Photo: Rubberball/Getty Images

ParentsDecember 15, 2017

Why are so few women compensated for lost earnings after a split?

Photo: Rubberball/Getty Images
Photo: Rubberball/Getty Images

Last week, a Supreme Court decision awarded a woman $520,000 to make up for the fact that she gave up her career and potential income to look after the couple’s children and home. The Law Commission’s Stephen Day discusses the Property (Relationships) Act 1976 as it stands and what could be done to change it.

This is the second in a series looking at this law and how it impacts families; here’s the first.

Here’s a common Christmas tale. Two rangatahi, just starting in their first jobs, meet at the office Christmas party. Tyler’s a junior accountant. He still wears a tie his mum bought him. Taylor’s an intern at the firm while she finishes her studies. They joke about their boss who’s trying to barbecue the sausages. They agree to hook up over New Year.

Six months later they’ve met each other’s parents. Tyler buys Taylor a pot plant.

A year later they’re sharing a flat. She paints a mural on the wall, which the landlord orders they take down.

Two years later they get married, with a baby already on the way.

Twelve years later they’ve got two rowdy kids, and one tamaiti who is surprisingly well-behaved.

Tyler’s now a senior associate at a firm. He is earning $150,000, likely to become a partner in the firm and get reasonable pay rises most years.

Taylor finished her studies and worked a couple of contract jobs but then took time off to raise the kids. The youngest one is now at school and she’s thinking it’s time to return to work. With no recent work experience, she’s starting part-time, in a job paying $35,000.

They have a big mortgage on a new house and few other assets.

And they’ve just split up.

Taylor has the kids on weekdays, and suddenly she finds getting a job that fits with school is a whole new challenge. Tyler has the kids on weekends and pays child support. They split their assets fifty-fifty.

Fifty-fifty does not always mean that partners leave a relationship on an equal footing.

The law says when a relationship ends partners should usually share their relationship property equally. It also says that one partner may need to pay the other partner compensation if there is a big difference between the partners’ future income and living standards. Taylor has put her career and earning potential to one side for ten years as she cared for the kids. Now she faces another ten years of managing her job around raising a family. Tyler has worked hard to support his family over ten years. He has advanced his career and is in a much stronger financial position.

The part of the law that tries to fix an unequal financial outcome is section 15 of the Property (Relationships) Act 1976. It allows one partner to claim compensation if he or she can show a significant difference in income and living standards because of the roles each partner took during the relationship. If the court thinks it is just, it can award him or her a greater share of the relationship property.

When I say ‘he or she’, I pretty much mean ‘she’.

Women will not be surprised to read that when a heterosexual relationship ends and the two ex-partners have different economic outcomes that usually means the woman ends up poorer.

Section 15 was meant to help fix that, but there are still problems.

When courts apply section 15 they consider the earning capacity of each person in the relationship, the responsibilities each person had, such as caring for children, and any other relevant circumstances.

It’s not easy to claim such compensation. The costs of making a claim under section 15 can be huge, which can put off many people, even if they would be entitled to compensation. Courts have awarded compensation in less than half of cases they have heard. And the level of compensation has not been high. It is rare for the court to award more than one tenth of the total relationship property.

The Law Commission wants to write a new law that is simple. It needs to be something that most people can understand and apply without going to court. And it needs to come up with a result that most people think is fair.

But people have different ideas about what ‘fair’ is.

That’s why we need many different people to tell us. We’ve got flash legal experts advising us how to write a law that works, but first we need to know what the law we ask them to write should be. And that is where you come in.

Stephen Day is  Communications Adviser at the Law Commission. He helps lawyers with their jargon and they help him with his conveyancing. He’s also a parent of three kids and is in a long-term de facto relationship that is definitely covered by the Property (Relationships) Act.

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