Can I Claim Directors Redundancy If I Liquidate My Company?

calculator, desk plant, paper, pen and paper clips on a white table

If you are liquidating your company, it’s likely that you’ll have plenty of queries regarding how the process evolves for your employees and shareholders, but also for yourself as a director. One of the queries you may have is, am I entitled to claim directors redundancy?

When a company enters liquidation, it is widely accepted that employees are likely to be made redundant, and as a result will receive the necessary payments from the government. Whilst it is largely known that employees will receive redundancy payments, it is less well known if this is the case for directors. 

The good news is that as the director of a limited company, you have just as much right to claim directors redundancy pay as your employees, should you decide to liquidate your insolvent company that has been trading for more than two years. You should also be able to claim other statutory entitlements including notice pay, holiday pay and unpaid wages. 

Claims for directors redundancy can be made from the National Insurance Fund via the Redundancy Payments Service (RPS), so long as you meet the necessary criteria. In order to be entitled to directors redundancy you must:

  • Be registered on the PAYE system 
  • Have worked a minimum of 16 hours per week
  • Worked under a contract of employment for at least two years 

It’s important to emphasise that directors redundancy can only be claimed if the company is insolvent, and closed down via a Creditors Voluntary Liquidation (CVL). If you are choosing to liquidate your company whilst it is still solvent, via a Members’ Voluntary Liquidation (MVL), you may only be entitled to claim directors redundancy in limited circumstances.

The average directors redundancy claim in the UK is £9000. The payments can be used to contribute towards the costs of the liquidation (if necessary), or to start a new business venture after the closure of the old company. 

When Can Directors Redundancy Be Claimed?

If you would like to claim directors redundancy, it’s important that you apply within a specified time period. The best time to claim directors redundancy is just before you start the liquidation process. This means that you can use the money to contribute towards liquidation costs if necessary. You can make a claim for directors redundancy after the company has been liquidated, however this must be within 12 months of the start of the process. The licensed insolvency practitioner who has been appointed as liquidator will be able to talk you through the redundancy entitlements for directors that are available, as well as helping you through the claims process. 

If you are considering liquidating your company, and would like further guidance on the process, including your entitlements as a director, please don’t hesitate to get in touch with My Liquidation. Our experienced team of licensed insolvency professionals, will be able to guide you through the best options for your business, whilst protecting your financial interests as a director.

Contact Us

I'm looking for more information on ...


Choose from the options below