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Posted on: Tuesday 7th November, 2017
When a company is liquidated, its directors may be able to claim a number of statutory entitlements, including redundancy pay. These payments can help considerably when directors have their own personal financial problems to deal with due to their company’s liquidation.
On the company’s closure, along with employees, directors lose what is often their only source of income, so what are the eligibility criteria for claiming redundancy and other payments?
To establish their status as an employee of the company, directors must complete a questionnaire from the Insolvency Service that reflects the above criteria.
Claims should be made from the Redundancy Payments Service (RPS) using form RP1. If successful, payments are generally made around six weeks following receipt of the claim. So how are these claims calculated?
Redundancy pay calculations are based on a director’s age, weekly wage, and the length of time they’ve worked for the company, and are subject to certain limits. The director’s age determines the proportion of weekly wage used in the calculation – this figure is then multiplied by the number of full years’ service.
Length of service is capped at 20 years, weekly wage is currently limited to £489, and redundancy pay is capped at £14,670.
Apart from redundancy pay, what other statutory payments might directors be entitled to?
Directors may also be able to claim Statutory Sick Pay (SSP), and Statutory Maternity, Paternity, or Adoption Pay, but claims for these are made from HM Revenue and Customs rather than the National Insurance Fund.
If your company is going into liquidation and you would like more information on your statutory entitlements as a director, contact our expert team at Redundancy Claim. We’ll explain your rights, entitlements, and how to make a claim.