many company directors can claim redundancy when their company enters liquidation
If you cant afford a Liquidation – it could be paid from part of your redundancy payment.
Average claim is £12,000.
If you liquidate, your employees can claim redundancy from the government.
Could CVL be an option?
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Redundancy for directors
As director of a limited company, you may be entitled to redundancy pay when your company is struggling and liquidation seems to be the likely solution. A large majority of directors seem to be unaware that this option is available to them and it is an option that can greatly benefit your personal situation.
After the shareholders meeting, the shareholders appoint an insolvency practitioner (IP) to call a creditors meeting. A creditors meeting is convened and agreement is reached on the appointment of a liquidator. This will start the liquidation process and put an end to the company for good.
Criteria for claiming redundancy
There are certain criteria you will need to fulfil to be able to claim for redundancy as a director. You should be:
- A director of a limited company and an employee. This means that you work at the company as any other employee would do and you receive a monthly wage for work and hours completed.
- Working as an employee for at least two years.
- Working a minimum of 16 hours per week.
- Owed money from the company.
How to claim for redundancy
If you fulfil the criteria above then you may be able to make a claim for redundancy. We are regulated insolvency practitioners who can asses your eligibility for you.
Once we have assessed your eligibility, we will then advise you on the best practice for obtaining your state entitlements and how much you may be entitled to.
All claims for redundancy will be made through the National Insurance Fund which is where National Insurance contributions are held to pay for statutory schemes, like redundancy and state pensions.
You may also be able to claim for any unpaid wages (up to 8 weeks) and holiday pay (up to 6 weeks) when submitting your claim.
How the amount you receive is worked out
Your claim will be assessed to confirm that you are eligible for redundancy funds. Then an amount will be calculated based on the length of your service with the company, your age and your current rate of pay.
It is worth noting your rate of gross weekly wages at the time of redundancy is capped at £479 a week and the length of your service is capped at 20 years.
Employers who are owed by an insolvent company become preferential creditors so your claim is likely to be dealt with quickly and efficiently; much like that of your employees.
As mentioned earlier, you may also be able to claim backdated salary and holiday pay, this is dependent on circumstances.
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