I work for my spouses' company. What rights do I have now we are separating?

If you work at your spouse's company, you may be considered an employee, and you may have employment rights.

It is important to remember that employee status and employment law rights apply to spouses employed in a family business, regardless of any breakdown in the marriage.

If your ex-spouse's business has employed you for at least two years, you may have acquired the right not to be unfairly dismissed.

Additionally, if you feel that you have been forced to resign from the business because of the divorce, you may have a constructive dismissal claim.

This means your spouse cannot "fire" you just because you are considering a divorce.

If you are on the payroll of your spouse's company, it is important to take legal advice at an early stage.

Although you may agree to depart from the company on divorce, careful consideration needs to be given to your employment position in the interim period pending a final divorce order being made to ensure your income stream can be suitably protected.

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If my spouse is to retain their business on divorce, how will I be compensated for this?

The court has wide-ranging powers when deciding how a business asset should be dealt with on divorce.

More detail can be found here:  How Are Businesses Dealt With On Divorce? | Myerson

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I am a director of my spouses' company but have no role in the business. Should I be concerned now that we are separating?

All directors of limited companies in England and Wales have certain duties and responsibilities that must be complied with under the Companies Act 2006.

Directors have a duty to promote the company's success and act in the company's interests.

Therefore, if you are appointed as a director of your spouse's company but have no active role in the same, it is important to take early legal advice when separating to ensure you are not at risk and are complying with your legal duties and responsibilities.

Equally, suppose you have not been involved in the company's day-to-day running.

In that case, company decisions may have been made without your consent, particularly if no other directors are within the business.

Certain company decisions may need to be reviewed to consider if they have been properly made.

Certain protections will also need to be considered on divorce to protect you against any liability which may arise from decisions made which you have not been actively involved with.

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Can my spouse terminate me as a director of their company now we are getting divorced?

Depending on whether your spouse is a shareholder, and if so, what number and class of shares they hold, they may be able to terminate your directorship lawfully without your consent.

Specific procedures must be followed to lawfully terminate a director of a company.

If your directorship has already been terminated unreasonably, you may have claims against the company, such as for unfair prejudice (if the conduct has been unfairly prejudicial to your interests) or for compensation or damages.

You may also have claims under employment law as an employee of the company.

Naturally, it is preferable to prevent this step from being taken before it can happen, and therefore early legal advice is key if you are getting divorced and are a co-director with your spouse.

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I am a Shareholder of my spouses' company. My spouse does not want me to remain a Shareholder in the business now we are separating. Should I be concerned?

Companies are governed by their articles of association and provisions under the Companies Act 2006.

If the company has bespoke articles of association, then these will need to be carefully reviewed to consider the provisions as to how any shares can be transferred or sold.

If you have not been actively involved in the company's running, then it may be agreed that it is sensible for you to step away from the company to not interfere with its operations moving forwards on divorce.

It may be agreed that you will remain a company shareholder but without voting rights.

If you have been involved in the running of the business, then it may be agreed you should remain a shareholder.

Tax consideration also must be given to any intended transfer or sale of shares on divorce.

Whether it is appropriate to remain a Shareholder in your spouse's business depends on the case's circumstances.

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Can I be given shares in my spouses' company on divorce if I am not currently a Shareholder?

The Family Court has the power to order a transfer of shares on divorce; however, whether this will be possible or appropriate in your case will depend on your circumstances.

If the business is to remain trading (and it is not to be sold), then the Family Court will want to ensure that any changes made to the ownership or management of the company on divorce are not likely to jeopardise its future success.

It is important to take legal advice on this position from an early stage, as there are several considerations to be made when deciding how a business should be treated on divorce, and the company's constitutional documents will need to be reviewed.

For example, some company articles of association are drafted to include transfer restrictions, which prohibit or limit who shares can be transferred to where the business owners wish to retain control of its ownership.

The company articles may specifically prohibit transfers of shares to ex-husbands or ex-wives.

Equally, if shares are to be transferred on divorce, consideration will need to be given as to what rights will attach to those shares to be held, such as whether they will have voting rights and whether you will be entitled to income from those shares.

It may be agreed that although you will be entitled to receive income by way of any issued dividends, that you will not be entitled to vote if you have had no previous involvement in the running of the company.

Receiving shares in your husband or wife's company is only one consideration on divorce, and other considerations need to be given as to how you may be entitled to income on divorce.

It may that there are other non-business assets on divorce which can be re-allocated, or it may be that an order for spousal maintenance payments moving forward is more appropriate.

Tax consideration will also be important in determining the best way to treat a business asset on divorce.

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I am divorcing my spouse, but we wish to remain in business together after the divorce. Is this advisory?

If you are to remain in business after divorce, there are inherent risks to your future in the company that may never have been considered during the marriage.

In some cases, the husband or the wife may be concerned about their ability to secure sufficiently lucrative employment elsewhere, such as if they have been working in the family business for many years with little experience outside of the company.

Equally, you may be close to retirement and not wishing to change the status quo.

You may consider your separation to be amicable and consider that you can continue an effective professional relationship together.

If circumstances arise such that you will remain in business together, ensuring that your role in the business is sufficiently protected on divorce is paramount.

It may be that the company articles of association need to be amended, and consideration will need to be given as to whether you should enter into a new or amended shareholders agreement.

For example, you must agree on issues such as when shares can be transferred or issued, how a director can be terminated, and how new directors can be appointed.

If you are equal shareholders and directors, it is important to try and protect against a risk of deadlock in decision-making, where decisions will require both of you to agree.

The likelihood of reaching a deadlock on decision-making will likely increase after divorce, where you may have more conflicting objectives.

Therefore, consideration needs to be given to how decision-making will be handled so it does not jeopardise the success and effective running of the business moving forward.

If you are co-directors of the company, you must ensure that your entitlement to pay, benefits and holidays are protected more formally than may have been necessary during the marriage, such as by entering into director's service contracts setting out your entitlement.

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Whilst many divorcing couples decide to remain in business together after divorce for various reasons, unintended consequences may occur if you do not take sufficient legal advice on divorce as to how your interests in the company can be protected moving forward.

At Myerson, our Family Team are specialists in advising on divorces involving business assets, and the support provided by our Corporate Team and our Employment Team ensures we can provide you with comprehensive wraparound advice to best protect you and your business interests when going through a separation.