Do you qualify for a Director Redundancy?
The large majority of directors are entitled to redundancy payments if their company should enter liquidation. Most people assume that when their company is having trouble with its finances that there isn’t anywhere for them to go and that liquidation is the only option. Even if you do not have the funds to liquidate you may still be entitled to statutory entitlements to alleviate some of the financial pressure and settlements are paid to the director based on their eligibility criteria. The redundancy payout can be used in any way in which a director sees fit and can help ease any financial troubles they might have.
To qualify for a director redundancy, you must be an active employee and director working 16 hours a week minimum, the company must have been trading for over two years and paying you a salary for that amount of time. As long as the company is being closed due to financial pressure and the previously mentioned criteria applies to you, you will be entitled to a redundancy payout.
Most directors are unaware that they can also claim for other entitlements along with the redundancy such as notice pay, holiday pay and unpaid wages. Redundancy claims are tax free and can be made from the national insurance fund via the redundancy payment service.
The National Insurance Fund is where National Insurance Contributions are held and used to pay for statutory schemes.
How much are you entitled to?
The amount of redundancy pay you will be entitled to would be dependent on your length of service at the company, age and how much you were paid at the company.
The rate of gross weekly wages at the time of redundancy at a maximum of £538 per week and length of service at a maximum of 20 years are used as the basis for calculating how much you would receive from a director redundancy. You may also be able to claim unpaid backdated salary as well as accrued holiday pay.
When a company becomes insolvent any employees owed money for outstanding wages (up to a maximum £800) or holiday pay become preferential creditors meaning they get paid first.
How to claim redundancy?
We can help you to ascertain if you qualify for a director redundancy. If you have any questions or need any support then do not hesitate to contact me at help@lucasross.co.uk.
