60 Second Test
Understand your company's position and learn more about the options available
Understanding eligibility for director redundancy pay
Share: 
Published:
What is director redundancy pay?
When a company enters an insolvent liquidation process such as a Creditors’ Voluntary Liquidation (CVL), the directors of that company are often entitled to claim redundancy pay and other statutory entitlements. This is because as well as being directors of the company, it is usually the case that they are also classed as employees of the business as well. The amount of redundancy pay a director may be entitled to will depend on a range of factors including age at the time of redundancy, length of service, and the salary taken during this time.
Am I eligible for redundancy pay as a company director?
In many instances, company directors are eligible for redundancy pay, also known as directors redundancy, in the event of insolvent company liquidation or closure.
Redundancy pay can only be claimed in the event of formal insolvency proceedings such as liquidation. Only the directors of an insolvent company will be eligible for a redundancy payment.
As well as being the director of an insolvent company entering liquidation, you must have also worked for the company for a minimum of two years for at least 16 hours per week and have taken a salary via PAYE during this time.
Redundancy can be paid to all eligible parties so any co-directors you may have will also be able to submit a redundancy claim.
10,000+ Tests Completed
Free 60 Second Test
For Ltd Company Directors
What are you looking to do?
Choose below:
“Spoke with Chris who put me at ease straight away. He was very knowledgeable and listened intently to all my worries and concerns. Will definitely be using Real Business Rescue and advise anyone with business issues to give them a call.”
Diana
Can IR35 contractors claim director redundancy?
Yes IR35 contractors operating as a limited company can claim director redundancy in the same way as other limited company directors so long as they meet the criteria.
Claiming redundancy pay as an IR35 contractor includes working under a contract of employment for at least two years continuously, and receiving a regular salary under PAYE.
UK’s number one for director advice
We handle more corporate insolvency appointments than any other UK firm; demonstrating our commitment to helping directors and business owners in financial distress.
The team are available now - 0800 644 6080
Get a Quote Find Your Nearest Office
How much is director redundancy pay?
Just like with employees, the amount of director redundancy pay you might be entitled to depends on a number of factors including your length of service with the company, your age at the time of redundancy, and the salary you took from the company via PAYE.
If you are eligible, you will be entitled to one weeks' pay for each full year worked up to the age of 40, with one and a half weeks' pay for each full year worked aged 41 and above.
As well as redundancy pay, you may also be able to claim any arrears of wage, holiday pay, and pay in lieu of notice. While redundancy pay is tax-free, some of the additional entitlements will subject to tax at your applicable rate.
Need to speak to someone?
If your company is struggling with unmanageable debts, squeezed cash flow, or an uncertain future, you are far from alone. We speak to company directors just like you every single day, and we are here to give you the help and advice you need.
Call our team today on 0800 644 6080
How to make a claim for redundancy
If the company is not in a financial position to pay the redundancy monies owed, this will instead be paid from the National Insurance Fund.
Once you enter into formal insolvency proceedings, such as liquidation, your appointed insolvency practitioner will be able to talk you through the redundancy claims process and determine whether you are eligible. If you are, they will be able to arrange for your application for director redundancy to be submitted.
If you are considering liquidating your insolvent company, speak to the experts at Real Business Rescue today for free confidential advice on 0800 644 6080.
Real Business Rescue are here to help
Still unsure whether liquidation is right for your company? Don't worry, the experts at Real Business Rescue are here to help. Our licensed insolvency practitioners will take the time to understand the problems your company is facing before recommending the best course of action going forward based on your own unique circumstances.
- UK’s Largest Liquidators
- 100+ Offices Nationwide
- 100% Confidential Advice
- Supported 25,000+ Directors
Looking for immediate support?
Complete the below to get in touch
10,000+ Tests Completed
Free 60 Second Test
For Ltd Company Directors
What are you looking to do?
Choose below:
Real Business Rescue Recommended
Next Steps
We provide free confidential advice with absolutely no obligation.
Our expert and non-judgemental team are ready to assist directors and stakeholders today.
Office Locator
Find your nearest office - we have more than 100 across the UK. Remote Video Meetings are also available.
Contact Us Today
Free, confidential, and trusted advice for company directors across the UK.