How many hours a week does the average director work?

The number of hours a week an average company director works, and the type of work they carry out, are both important issues if the business they run experiences financial difficulty at any time.

Non-executive directors don’t take part in the day-to-day running of their company, but executive directors take on management responsibilities and are often also employees of the business.

So why does it matter how many hours a week the average director works? It’s because the number of hours they work may help with eligibility for statutory redundancy pay if the company should ever enter insolvent liquidation.

Directors as employees

A director is an office holder of the company, but they can also be an employee under certain conditions. Working under a contract of employment continuously for two years or more, and taking a salary through the company’s payroll scheme, are just two criteria that must be met to be regarded as an employee as well as a director.

There are other requirements in addition to these, but this status as employee is crucial for a number of reasons, including:

• Qualifying a director to claim redundancy and other statutory payments
• Opening up more choice when it comes to entering liquidation - this in itself can prevent sanctions and penalties being imposed following a liquidator’s investigation

Director/employee and redundancy pay

When a company enters liquidation, all jobs are lost and employees that are eligible can claim redundancy pay and other statutory entitlements. The same applies to directors who can prove their status as employees.

By claiming redundancy pay, which can amount to a significant sum, the director(s) may be able to pay for the Creditors’ Voluntary Liquidation (CVL) process, which might otherwise be unavailable due to lack of funds.

Entering CVL also enables directors to take some control over the process and prioritise the interests of their creditors as demanded by UK insolvency laws, rather than entering compulsory liquidation.

This option to voluntarily liquidate can prevent the allegations of wrongful trading and director misconduct that sometimes accompany compulsory liquidation, where a creditor has petitioned for the company to be wound up.

How many hours a week do you work as a director?

If you work less than 16 hours per week, it’s unlikely that you’ll be eligible to claim redundancy pay should your company enter insolvency and have to be liquidated. Although it’s not the only criteria, the number of hours the average director works every week is an important issue, and it’s worth reflecting on whether you would be viewed as an employee within your company.

Holding office as director is unequivocal, but proving your status as an employee can be difficult unless you clearly meet the criteria laid out.

CFS Redundancy Payments can provide further advice and information, and support you in making a claim for redundancy pay where appropriate. We work closely with the Redundancy Payments Service (RPS) - please contact one of the team to arrange a free same-day consultation.