When is the best time to contact Redundancy Claim UK?
The best time for company directors to contact us is before liquidation so that the options and entitlements available to you can be maximised. We can assist directors post-liquidation but the process is slightly different - please call us to discuss.
What is redundancy payment?
Redundancy payment is compensation because your job has disappeared. You may have the right to claim redundancy from your employer. There are two types of redundancy pay:
- Statutory redundancy pay, which is set down by law
- Contractual statutory pay, which you may get if there is a redundancy scheme in place where you work. The details are set out on your contract of employment.
It is a legal requirement for all employees to hold a contract of employment
Can a director claim redundancy?
Directors are able to claim redundancy entitlements on the insolvency of their company but to do so they must prove that they were employees of the company. A director will be asked by The Insolvency Service to complete an additional form to determine their employment status
What are the principle questions that the director needs to answer?
Does the director have a contract of employment? (It is a legal requirement for a director of a limited company to be in possession of a contract of employment).
Is the money claimed owed by the insolvent company?
Did the director work at least 16 hours per week for the insolvent company?
Was his/her role more than non-executive?
What is Transfer of Undertakings Protection of Employment (TUPE)?
The Transfer of Undertakings (protection of employment) Regulations (TUPE) protects employees’ terms and conditions when a business is transferred from one owner to another. This is something that often happens to insolvent companies where the insolvency practitioner sells the whole or certain assets to a purchaser who will carry on the business of the insolvent company. Employees of the insolvent company become employees of the new owner on the same terms and conditions.
What can you claim for?
Redundancy depends on:
- How long you have been in the job
- Your age at the time you cease trading
- Your current salary – up to a maximum of £479 per week (£490 in Northern Ireland)
There is an overall maximum amount of redundancy pay you can get at £14,250, even if your actual earnings are higher or your length of service is longer than this. Only complete years of service count and service has to be continuous.
Here’s what you should get:
Your age Redundancy pay
Under 22 Half a week’s pay for each year of service
22 to 40 A week’s pay for each year of service
Over 40 A week and a half’s pay for each year of service
Pay in Lieu of notice
When you’re made redundant your employee has to give you a minimum of one weeks notice for each year you’ve worked for them (up to a maximum of 12 weeks notice £5,748.00).
Up to 8 weeks
Up to 6 weeks holiday pay
Who pays the money?
Through the National Insurance Fund, the Insolvency Service will pay you the redundancy payment you would normally have been entitled to from your employer. For this, the basic rules on eligibility and amount are exactly the same as they would normally be for Statutory Redundancy Payments. If your contract of employment promised you more than the statutory minimum, you will not get that extra amount.
What would prevent a redundancy claim being approved?
There are many reasons a claim can be refused as follows:
- Been incorporated for less than two years
- You leave before the company has closed
- Your employer has offered you a suitable job (TUPE)
Must you pay tax on a redundancy payment?
You don’t pay tax on a statutory redundancy.
However, tax and NI are deducted from unpaid holidays and unpaid wages.
How much will you get?
The maximum available for redundancy and other statutory entitlements is as follows:
- Redundancy pay - £14,370 capped at 20 weeks
- Notice pay - £5,748 capped at 12 weeks
- Unpaid holidays – £2,874 capped at 6 weeks
- Unpaid wages - £3,832 capped at 8 weeks
Payments are limited to £479.00 per week.
How long does the process usually take from claim to payment?
A payment should be received by the director 4-6 weeks after the creditors meeting subject to you returning the necessary paperwork.
How long after the liquidation can I make a redundancy claim?
A claim can be made up to 6 months after the employee last worked. In certain circumstances the period could be extended up to 12 months.
How do you claim?
Speak to Redundancy Claim on 0800 063 9261