Income Fluctuations during COVID-19 and their Impact on Support
April 12, 2021 By: Jenna Preston Read Time: 3 minutes
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Depending on where you live and the industry in which you work, you (and your income) may have made it through the last year of COVID-19 unscathed.

However, for many Canadians, the pandemic has significantly impacted their incomes and the nature of their employment. This impact has come in the form of windfalls for a lucky few, while many others have faced substantial decreases in income and/or loss of employment – whether temporary or permanent.  As if financial uncertainty is not heavy enough, for support payors and support recipients, such income fluctuation carries the additional stress of either trying to budget based on support amounts that were established using incomes that are no longer accurate or available, or of trying to vary the support arrangement in place.

When it comes to child and spousal support after a separation, ex-spouses are expected to maximize their earning capacities and continue earning incomes consistent with their educational and professional backgrounds, income-earning potentials, and incomes prior to separation. In other words, support payors and recipients cannot unilaterally decide to intentionally reduce their incomes post-separation and, in turn, expect that their support obligations or support entitlements will be determined on this depressed income level.

Courts have had to address the question of whether child support and spousal support payments should be varied in cases where one or both parties have experienced significant fluctuations in income due to COVID-19.

But what happens when a force beyond your control – like a global pandemic – causes the drop or loss of income?

Over the past several months, our courts have had to address the question of whether child support and spousal support payments should be varied in cases where one or both parties have experienced significant fluctuations in income due to COVID-19. Although judges have expressed some sympathy for the impact of COVID-19 on the Canadian economy and the job market, they have also made it clear that the pandemic is not a free pass for support payors or recipients looking to dodge their financial responsibilities to their former spouses and/or their children.

In cases where ex-spouses have experienced reductions in income, the courts have held that they must mitigate their losses as much as possible by, for example, applying for emergency relief that the government provides to business owners, employees, and self-employed persons, deferring mortgage and credit card payments and insurance premiums where possible, and looking for other employment in the meantime.  Importantly, given the range of federal and provincial government COVID-19 subsidies, support payors and recipients have several new opportunities that they are expected to explore in attempting to maintain their pre-pandemic income levels.

While a court’s determination of whether to vary a child support or spousal support arrangement between ex-spouses is fact-driven and case-specific, there are relevant factors in the court’s analysis that payors and recipients can and should consider before deciding whether to pursue such a variation, including:

  • the magnitude or size of the change in income;
  • the duration of the change in income (that is, whether the change is permanent or temporary and, where temporary, for how long);
  • the measures and level of effort taken to mitigate or lessen the impact of the change in income (assuming there has been a decrease), including but not limited to applying for government benefits and subsidies as well as looking for employment opportunities within the same and different fields;
  • the availability of alternative employment; and
  • the level of good faith and forthrightness of the individual experiencing the change in income – particularly, in terms of continuing to pay some level of ongoing support (rather than stopping entirely) and continuing to work at full capacity (albeit, perhaps, in a different job or field).

Although the pandemic has been a long-haul for everyone that is not yet over, in dealing with requests to vary support in the context of COVID-19, the courts are recognizing that it will eventually come to an end. Where judges have determined that variations of support are warranted due to pandemic-related changes in income, their resulting orders often include review clauses requiring parties to reengage in discussions, negotiations and/or the court process to assess the appropriateness of the support variations after specific periods of time.

There is a lot to consider in deciding whether seek a reduction or increase of support in light of a change in income, and the ongoing health and economic crises have made this decision more difficult in many ways. If you are a support payor or recipient who is currently experiencing a change in income due to COVID-19 or otherwise, you should consider getting legal advice to explore your options and weigh the potential costs and benefits of seeking a change in your support arrangement. We would be happy to help.

This content is not intended to provide legal advice or opinion as neither can be given without reference to specific events and situations. © 2021 Nelligan O’Brien Payne LLP.

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