Director Redundancy
Making a Director Redundancy Claim
When a company finds itself in a position of extreme financial and operational difficulty, and there is no alternative but to place the company into liquidation, it is widely accepted that any employees of the insolvent company will be made redundant and will subsequently be entitled to a redundancy payment.
What is less understood, however, is that the directors of insolvent limited companies are also entitled to claim redundancy from their company once it enters liquidation. This is because, as well as being its director, many company directors are also classed as employees of the business.
Director redundancy works in the same way as redundancy for employees. There are certain criteria which must be met in order to qualify, with the amount an individual is entitled to calculated based on age and length of service with the company.
Director Redundancy Entitlement
Did you know that as a limited company director, you may be entitled to claim redundancy if your company enters into an insolvent liquidation process? We can point you towards a fully regulated third party who can provide advice on your right to claim director redundancy if this is applicable to your situation. To understand if you are entitled, give a member of our team a call on 03301200807, or email help@bussinessdebtsadvice.org.uk.
Do I qualify for director redundancy?
In order to qualify as an employee of the company, and therefore be entitled to redundancy, a director must:
- Have a formal contract of employment
- Work at least 16 hours per week for the week
- This work must assist with the day to day running of the business rather than acting simply as an advisory role
How much redundancy may I be entitled to claim?
The amount you may be entitled to claim is based on several factors including your age at the time of redundancy, your length of service, and your gross weekly pay. For the purposes of redundancy, length of service is capped at 20 years, and gross weekly pay is capped at £538 per week. For each full year served you will be entitled to the following amount:
- age 18 to 22 - half a week's pay
- age 22 to 40 - 1 week's pay
- age 41 and above - 1.5 weeks' pay
Additional statutory entitlements
As well as being eligible for a redundancy pay-out, you may also be entitled to additional statutory entitlements including holiday pay, notice pay, and unpaid wages. Depending on your circumstances you could be entitled to up to six weeks of accrued holiday pay, and up to eight weeks of unpaid wages. You are also likely to be entitled to up to 12 weeks’ notice pay depending on your length of service.
How can I Contact for Director Redundancy Advice?
Business Debts Advice are here to help you find the right solution, with professional advice. Our team are available to call on 0330 120 0807.