Redundancy claims for company directors in liquidation
Redundancy claims are only for employees, right?
In fact, the large majority of limited company directors are entitled to make a redundancy claim when liquidating a limited company; these payments are made by the RPS (Redundancy Payments Service).
If you’re liquidating a limited company that has been trading for more than 2 years and you are on the payroll, it is worth looking into.
This is because there are a number of statutory entitlements which could provide a much needed windfall in troubled times.
The average UK redundancy claim is £9,000; this isn’t even taking into account notice pay, holiday pay or unpaid wages.
Many company directors are not aware that these entitlements are available to themselves as well as their employees. The National Insurance Fund processes these claims tax-free, via the RPS (Redundancy Payments Service).
Your redundancy pay-out can be used to put towards any liquidation costs incurred when closing your limited company, and it is therefore possible to appoint a liquidator with no upfront payment. This is on the understanding that a percentage of the redundancy claim will be paid to the liquidator further down the line.
Am I eligible for a redundancy payment?
As above, you will need to be on the payroll to claim a redundancy payment; in other words, you must be seen to be an employee of the company as well as a director. Other criteria include;
- You must have worked a minimum of 16 hours per week
- You must have worked under a contract of employment for at least two years (whether written, oral or implied)
- You must be registered on the PAYE system
- The company must be going into liquidation
The more hours you have worked, the larger the redundancy pay-out will be.
Thinking of liquidating your company?
Find out if it qualifies for Liquidation with our Limited Company Liquidation Test →
How much redundancy pay will I get?
The amount of redundancy you are entitled to depends on;
- Your age
- The length of your service
- Your rate of pay
The basis of calculating how much redundancy you will receive is your gross weekly wage (up to £479 per week) and your length of time in service (this is capped at 20 years). As above, backdated salary and holiday payments are also claimable through redundancy.
How to make a claim for redundancy when liquidating a limited company
Give us a call today on 0800 975 0380. We will go through with you the information that is needed, free of charge, to see whether you are eligible.
We would also be happy to discuss the options available to you when closing a limited company; you can sort everything out in one go.
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