What are your options for claiming Director Redundancy?

It is a common misconception that company directors have no right to redundancy but just like any other employee you may be eligible to claim.

We understand that an insolvency process can be complex enough; that’s why we work closely with your insolvency practitioner to take the strain out of the process and ensure your claim is being managed effectively.

Directors of insolvent companies regularly under-claim their entitlement to redundancy and other statutory payments. Our expert and experienced team will ensure that you maximise your redundancy pay-out by claiming for everything you are entitled to. We will coordinate the submission of your claim to the Redundancy Payments Service (RPS) by working with your insolvency practitioner to help make sure the claim is paid out without being subject to an expensive tribunal.

Redundancy claims are a very professional company, Caroline who is dealing with our case is friendly, compassionate and very clear in explaining everything during this difficult time. The service we have received has been amazing, Thank you.

Tina Hill

What is insolvent liquidation?

Broadly speaking there are two main insolvent liquidation procedures: Compulsory Liquidation, and Creditors’ Voluntary Liquidation (CVL).

A compulsory liquidation occurs when one or more of your creditors petition the court to force your company into liquidation; this is done by issuing a winding up petition (WUP) against your business.

As the name suggests, a Creditors’ Voluntary Liquidation, is when the liquidation process is started voluntarily by the directors of an insolvent company. This process is usually entered into due to increasing creditor pressures leaving the director nowhere else to turn. The insolvent company would appoint an insolvency practitioner who would then call a meeting of the company’s creditors and facilitate the process of selling the company’s assets to repay creditors.

Can I claim redundancy if my company isn’t in, or isn’t facing liquidation?

Put simply, no.

Just as an employee would not be able to claim redundancy while still in employment, you as a director are only able to claim redundancy when your company is in the process of going into insolvent liquidation. This is because a redundancy payment is designed to help individuals who have found themselves out of work, not those who actively choose to leave their job.

Due to this, directors cannot claim redundancy in the instance of a solvent liquidation as this is seen as actively choosing to put yourself out of work rather than being made redundant.

When can a claim be made for director redundancy?

While it is possible to make a claim for redundancy both pre- and post-liquidation, the timescales for making your claim are strict. You must start the process either before your company is liquidated, or within 12 months of your company entering liquidation. However, the longer you leave claiming, the more difficult the claims process is. If your company has already been liquidated, we advise you submit your claim within 6 months.

Prior to your company being liquidated is by far the best time to get the ball rolling on your claim. Many find the prospect of receiving a redundancy payment helps make the decision to liquidate their company easier. Waiting until after your company is liquidated could prevent you claiming your full statutory entitlements.