Can a Director be made redundant?

Can a Director be made redundant?

Redundancy Pay for Directors

We find that Directors are surprised when they ask if a director can claim redundancy. In fact, It is not uncommon that directors assume that they are not entitled to redundancy or other claims from the Redundancy Payments Office (RPO) at all. The truth is that directors can claim, but like all employees, they must show that they meet the eligibility criteria.


Eligibility Criteria for a Director to Claim Redundancy Pay

Firstly, it should be noted that your claim will only be based on the sums you are paid through the PAYE scheme. Therefore, if you only pay yourself a minimum sum then your entitlements are based on that amount. If you took a lot of your salary in dividends, then these will not be included when your entitlements are calculated.

Secondly, the RPO requires directors to complete additional forms to prove that they are in fact an employee of the Company, as compared to say a director who holds advisory or non-executive roles.

Some of the areas that you need to cover are as follows.


Can I claim redundancy if I strike off my Company?

The simple answer is no. One of the main disadvantages of the strike-off route is that employees, including directors, are unable to make a claim against the RPO. The RPO rules are clear in that they require formal insolvency to have taken place before the processing of claims.

Therefore, you may need to consider the costs of liquidation versus the benefits of entitlements owed to you and your staff via the RPO scheme.

Beware! We have seen various sites which claim they can help employees and directors submit their claim to the RPO. The process is designed to allow anybody to submit the claim on their own and so paying a fee or commission to a third party should never be necessary.

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