Wait a minute - Directors can get Redundancy pay?

We like to give our clients nice surprises. Not as nice as a box of Dunkin’ Donuts at meetings but when we let them know that they’ve got more options about closing their company and that it’s going to be less expensive and stressful than they thought, they’re as happy as if we’d brought them donuts.


Wait a minute – Directors can get Redundancy pay?

Donuts

 

 

 

 

 

 

 

 

 

 

 

 

 

Another source of surprise and delight is when they find out that even if they were a director of their company, they may still be entitled to redundancy payments as any of their employees were. 

 

Depending on how their income from the business was structured – the split between Pay As You Earn (PAYE) and dividends for example – the amount they are due will affect the potential of how their salary rate is calculated. 

 

The key point is that in order for a director to be able to access any redundancy payments from the Redundancy Payments Service (RPS), they actually have to be an employee of the company – not just an officer holder or a controlling shareholder who wasn’t also employee director. 

 

Carrying out daily activities for the company and getting paid a salary with a portion of it going through PAYE is a strong indicator of actual employment even if they are a director and 100% shareholder. 

 

Another strong piece of employment evidence is having a written contract of employment. While many shareholders and directors don’t have one, it should be noted that the absence of one doesn’t automatically prevent them from successfully accessing appropriate redundancy payments later on.

 

Whether you’ve considered applying for redundancy payments after your business has closed or not, why not contact us anyway for advice on liquidation? 

 

It costs nothing to click a link and it  costs nothing for one of our expert advisors to arrange a free initial consultation to discuss how best to close your business. 

 

If we progress your case then our friends at Redundancy Assist can review your employment entitlements. Don’t worry – they’re real experts, know redundancy law and practice inside and out and unlike us, they do bring donuts to their meetings!

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