If your company is considering closing down due to financial troubles (such as HMRC debts, creditor pressure, cash flow worries or potential insolvency), you should be aware that you may be entitled to a director redundancy claim which could total up to PS9,000*. In addition, you could also be entitled to other statutory entitlements such as notice pay, holiday pay and unpaid wages. However, many directors are not aware that they are eligible for these payments.
To make a successful director redundancy claim, the company in question must be in liquidation and you must meet certain criteria. For example, you must have been taking a regular salary paid through the PAYE system and fulfilling more than an advisory or non-executive role with the company, in order to qualify for redundancy. You must also have worked for the company directors redundancy claim continuously for two years or more in order to receive a statutory redundancy payment. You must also be able to provide evidence that you worked at least 16 hours a week for the company in order to receive redundancy payments.
If you have met all of the required criteria, you can submit a claim to the Redundancy Payments Service, who will then pay you with money taken from the National Insurance Fund. This is the same funding that employees get from their employers and it is used to cover statutory schemes such as state pensions, unemployment benefits and redundancy payments. If you are unsure whether or not you are eligible to claim director redundancy, we recommend that you contact a fully regulated firm who specialises in helping companies and individuals with their claims. We can recommend a number of firms who have assisted thousands of directors to successfully claim the payments they are owed.
In some cases, it can be difficult to ascertain your eligibility for a redundancy payout, especially if you are an IR35 contractor or have been receiving your salary solely through dividends and drawings. The best thing that you can do is to contact a highly-regulated independent firm, such as the ones we recommend, who will be able to assess your situation and advise you accordingly.
The amount of your statutory redundancy payout will be dependent on several factors, such as your weekly wage rate, the length of your employment with the company and your age. The average UK redundancy payment is PS9,000* and you can use the director redundancy calculator below to see how much you could be entitled to if your company enters liquidation.
It is important that you submit your redundancy claim within the relevant timescales, both before and after your company enters liquidation. The sooner you start the process, the more likely you are to be successful. In addition, you should be aware that HMRC have a right to offset your redundancy payments against any tax debts the insolvent company owes them – which is why it’s so important to seek advice as soon as possible.