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Can directors still make claim for redundancy if it’s been six months since they were made redundant?

Business Director

Although there is no specific time limit for making an application to the RPS for a redundancy payment, it should be noted that Employment Rights Act 1996 section 166(1) stipulates that an employee can only claim payment from the RPS if his or her employer is “liable to pay” a statutory redundancy payment, and the employer can only be said to be liable to pay if, within six months of the “relevant date” (i.e. the date of termination of employment) the employee takes one or more of the steps listed in ERA 1996 section 164(1) as necessary to establish his or her right to claim a payment, namely:

(1) the employee makes a written claim for the payment to the employer (section 164(1)(b)); or

(2) the question as to the employee's right to, or the amount of, the payment has been referred to an Employment Tribunal (section 164(1)(c)); or

(3) the employee presents a claim of unfair dismissal to a Tribunal (section 164(1)(d))

In practical terms, so long as the employee has a ‘live' claim against the employer triggered by having made a written claim within six months of termination, the employee is entitled to apply to the RPS for a redundancy payment if the employer is insolvent.

As far as the other payments are concerned, there is no time limit (other than, arguably, the normal six-year time limit for breach of contract claims). The employee need only show that the debt was unpaid at the “appropriate date”, which, for the purposes of claiming arrears of pay and holiday pay, means the date on which the employer became insolvent (see ERA 1996 section 185(a)). Where the employer first enters into a creditors' voluntary arrangement (CVA) and is later wound up, the appropriate date is the date of the CVA. For the purposes of notice pay, the appropriate date is the later of the date on which the employer became insolvent, and the date of the termination of the employee's employment.

The RPS is liable if the employer would be liable. Since these are essentially contractual debts in relation to non-payment of pay, an employer would only cease to be liable after the expiry of a six-year limitation period.

One final point. Since the liability of the RPS is to pay the holiday pay due at the appropriate date (i.e. the date of insolvency), it is a liability to pay holiday pay for all holiday taken (but not paid) or pay in lieu of holiday not taken to which the employee was entitled, in the 12-month period prior to the date of insolvency.

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