A guide, not advice. This explains how things generally work. A licensed insolvency practitioner will tell you what applies to your company or to you.
Can Directors Claim Redundancy?
Yes - and it's one of the most overlooked entitlements when a company closes. If you are a director and also an employee of the company (on the payroll), you may be entitled to claim redundancy and other statutory payments from the Redundancy Payments Service (RPS), funded by the National Insurance Fund.
Many directors assume they are not eligible because they are owners. In fact, the law treats employed directors the same as any other employee, provided they meet the qualifying conditions.
Who Qualifies?
To claim, you generally need to:
- Be an employee of the company - on the payroll, with a contract of employment
- Have worked for the company continuously for at least two years
- Be owed wages, holiday pay, notice pay, or redundancy pay
- Have been made redundant as a result of the company's insolvency
What You Can Claim
Qualifying directors can claim:
- Statutory redundancy pay - based on age, length of service, and weekly pay (subject to a statutory cap)
- Notice pay - pay in lieu of the notice period you were entitled to
- Holiday pay - for accrued but untaken holiday
- Unpaid wages - up to a statutory limit
- Arrears of pension contributions - in certain cases
How Much Could It Be Worth?
A director with two years' service earning £600 a week could be entitled to several thousand pounds in redundancy alone, plus notice and holiday pay. For longer-serving directors, the sums can be significant - and can often fund the cost of the liquidation itself.
How to Claim
Claims are made to the Redundancy Payments Service once the company is in formal insolvency. The liquidator can provide the necessary paperwork. Claims are assessed and paid by the RPS, usually within a few weeks to a few months.
Speak to a Licensed IP
We'll tell you honestly whether you qualify and help you understand what you might be entitled to. For many directors, redundancy pay makes a real difference - and can cover the cost of putting the company into liquidation. Call our Manchester team.