In the Netherlands, child and spousal maintenance are set based on the long-term earning capacity of the person owing maintenance. But what happens to maintenance payments if your earning capacity is impaired due to the Covid-19 crisis?
The global economic effects of Covid-19 are likely to continue for the foreseeable future. You could be affected by a short-term decrease in income due to lockdown, but you could also face a long-term decline forcing a change of career with less income or unemployment.
Change of circumstances
Dutch law allows maintenance to be revised if a material change in circumstance happens which means that the original maintenance is no longer reasonable. Loss of income is one of the main reasons for requesting maintenance to be adjusted. These cases often revolve around two questions:
- whether the loss of income was due to any fault of the maintenance payer and
- whether there is a sufficient long-term loss of income.
Short term income loss for business owners
Many businesses have been directly affected by the recent lockdowns. However, not only current cashflow is considered by the courts, but also the general financial situation of a company. If a company has built up reserves in the good times, then these can be used to continue paying management fees or salary. In most cases, the courts use your average income from the past three years to calculate maintenance. Losses in 2020 only may not materially affect the outcome of the calculation.
However, if there there have been no earnings for a long period, then reserves may already have been exhausted. For example, parties working in the aviation, tourism or hospitality industry have been seriously affected by the Covid-19 crisis. You may not be able to continue taking the same salary in order to fulfil commitments to staff or creditors. To be successful in court, it will be crucial to prove losses with financial statements, preferably vetted by an independent accountant or financial advisor.
Going out of business
If the company has not been doing well, then 2020 may be the tipping point resulting in your company going out of business. Depending on your field of expertise, you may be able to find a job or other activity with similar earnings. In such a case there will be no grounds for reducing maintenance. However, if you can only find a job with lower earnings, then you can request the courts to reduce maintenance.
Of course, the prospect of reduced maintenance may come as a nasty shock to the other party. They may argue in court that the loss of income is reversible or unnecessary as there is other work available at better rates. The courts will determine on a case by case basis whether the loss of income is unavoidable. If the court finds that the loss of income is easily reversible, then the case will fail.
Unemployment does not always immediately result in a case for lowering maintenance.
Firstly, child maintenance is often not set at maximum earning capacity, so even with a lower income in the form or unemployment benefit, the amount may still be reasonable. The same may apply for spousal maintenance, but with unemployment benefit in The Nertherlands set at a maximum of 70 % of former income, there are more likely to be grounds for reduction.
Secondly, you may have received a severance payment, which is meant to compensate loss of earnings for a certain period. Until the severance payment has been used up, the courts do not consider there to be a loss of income.
If you have not received any severance payment of substance, then you can apply for a reduction based on the amount of unemployment benefit. You will have to prove you are doing your utmost to find new employment.
Warn your ex-partner
If you incur a loss of income, it is important to inform your former partner as soon as possible. You need open a dialogue about reducing maintenance as soon as possible. If your former partner is amenable, you can have the maintenance recalculated together and agree a lower amount (in writing). This may also be a temporary arrangement until earnings improve.
If your ex-partner does not cooperate, then you may have to start court proceedings. Warning your ex-partner at an early stage can also affect the date from which the court will lower maintenance payments. The courts do not usually lower maintenance retrospectively, unless the other party has had fair warning. You are expected to continue payment of the original amount until the court has decided on a new amount. Until then, the maintenance collection agency, LBIO, may still collect the original maintenance.
How we can help you
At Dutch Divorce Lawyer, we would be happy to help you with maintenance calculations and negotiations regarding future maintenance. We also regularly litigate maintenance cases. Please feel free to contact us with your queries regarding maintenance payments and the Covid-19 crisis.
For more information on maintenance in The Netherlands, please see our main pages: