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Director Redundancy Claims

When your company enters insolvency, you may be entitled to claim statutory redundancy payments as a director-employee through the government's Redundancy Payments Service. To qualify for statutory payments, including redundancy pay, unpaid wages, and holiday pay, you must meet strict eligibility criteria.

What are Director Redundancy claims?

When a company enters formal insolvency proceedings, directors who hold employment contracts with the business may be entitled to claim statutory redundancy payments and other employment-related entitlements. These claims are processed through the Redundancy Payments Service (RPS), a government scheme that ensures eligible directors receive their statutory payments when their company can no longer afford to pay them. 

Director redundancy claims can include statutory redundancy pay, unpaid wages, accrued holiday pay, and notice pay. To qualify, directors must meet specific criteria regarding their employment status and relationship with the company. Our licensed Insolvency Practitioners can assess your eligibility and guide you through the claims process.

Do I qualify for Director Redundancy?

Director redundancy claims are not automatic—you must meet specific criteria to be eligible. The Redundancy Payments Service scrutinises director claims carefully to ensure the employment relationship was genuine and not simply a nominal arrangement for tax purposesThis scrutiny exists because directors occupy a dual role as both employees and decision-makers. 

Essential requirements 

To qualify for director redundancy payments, you must satisfy all of the following conditions: 

  • Genuine employment contract: You must have a formal, written employment contract with the company that establishes a true employer-employee relationship 
  • Active working role: You must have been actively working for the company in a genuine capacity, not merely holding a directorship for administrative purposes 
  • PAYE salary: You must have been drawing a regular salary through PAYE (Pay As You Earn), with appropriate tax and National Insurance contributions deducted 
  • Continuous employment: For statutory redundancy pay, you typically need at least two years' continuous employment with the company 
  • Formal insolvency proceedings: The company must be entering or have entered a formal insolvency process.  
  • Financial inability to pay: The company must be unable to pay your redundancy entitlements directly 

Additional considerations 

You should consider making a claim if: 

  • You have outstanding wages, holiday pay, or notice pay owed to you 
  • Your employment relationship can be evidenced through contracts, payslips, and company records 
  • You have been working regular hours or fulfilling specific duties beyond standard directorship responsibilities 
  • Your salary was reasonable and proportionate to the work undertaken 
  • You want to ensure you maximise your recovery from the insolvency process 
  • You need professional guidance on what you can legitimately claim 

Common disqualifications 

You may not qualify if: 

  • You hold more than 50% of the company's shares and have control over the employment relationship 
  • Your employment contract was created solely for the purpose of claiming redundancy 
  • You have not been actively working for the company 
  • You only received dividends rather than a PAYE salary 
  • Your employment relationship was nominal or not genuine 

Our licensed Insolvency Practitioners can assess your specific circumstances and advise whether you meet the eligibility criteria for director redundancy claims.

How the Director Redundancy claims process works

Initial assessment

Your Insolvency Practitioner reviews your employment contract and working arrangements to confirm you meet the eligibility criteria for director redundancy claims.

Documentation gathering

We help you compile all necessary documentation, including employment contracts, payslips, company accounts, and evidence of your working relationship with the company.

Claim preparation

Your Insolvency Practitioner prepares and submits your redundancy claim forms to the Redundancy Payments Service, ensuring all calculations are accurate and supporting evidence is complete.

RPS review

The Redundancy Payments Service reviews your claim. Your Insolvency Practitioner liaises with the RPS on your behalf and responds to any queries or requests for additional information.

Payment

Once approved, the RPS processes your payment directly to you. Your Insolvency Practitioner ensures you understand what has been paid and advises on any additional claims you may be entitled to make as a creditor of the company.

Expert Director Redundancy support

Director redundancy claims are just one aspect of the wider liquidation process. Our experienced Insolvency Practitioners provide comprehensive support throughout your company's insolvency journey, from the initial consultation through to the final closure of the liquidation.  

Whether you're considering liquidation or need advice on potential statutory entitlements, our team are here to make the process as straightforward as possible.

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Insolvency Practitioners is a trading name of BTG Begbies Traynor (Central) LLP a limited liability partnership registered in England and Wales No. OC306540. The firm is authorised by the FCA to undertake debt counselling and debt adjusting and its reference number is 660455. Copyright 2026 Insolvency Practitioners, all rights reserved.

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