Director Redundancy
What is Director Redundancy?
Director redundancy is a financial compensation available to company directors who are made redundant through no fault of their own.
If your company becomes insolvent, you could be eligible for a redundancy payment, which can offer vital financial support during challenging times.
Redundancy typically occurs when a business needs to reduce staff due to operational or financial difficulties.
Both employees and business directors can be entitled to claim redundancy. While many directors assume they are not eligible, the law provides redundancy rights for directors as well as employees.
If you are considering closing your company, you may be entitled to statutory redundancy pay.
Statutory redundancy is fixed by law, whereas contractual redundancy varies from company to company.
If you have a contract of employment, you should check it for any additional entitlements.
Can Directors Claim Redundancy Pay?
Yes, company directors are entitled to redundancy pay, despite common misconceptions.
In fact, directors of insolvent companies often miss out on the full amount of redundancy and other statutory payments they are entitled to.
At Business Helpline, we specialise in helping directors secure the redundancy pay they deserve.
If you’re closing down your company, our expert advisors can guide you through the process.
Are You Eligible for Director Redundancy Pay?
To qualify for director redundancy, there are several key criteria that must be met:
- You must have a contract of employment.
- You must have worked at least 16 hours a week for the business.
- You must have actively contributed to the day-to-day running of the business (not just in an advisory role).
- The company must be insolvent.
It is worth noting, that even if you do meet these criteria, you aren’t guaranteed to receive director redundancy pay.
How to Claim Director Redundancy
Claims for director redundancy are made through the Redundancy Payments Service (RPS). If your claim is successful, payments will be made from the National Insurance Fund.
In most cases, your insolvency practitioner will help you claim director redundancy as part of the liquidation process.
They’ll guide you through the steps, ensuring you receive the correct amount.
Director Redundancy Forms and Questionnaires: RP1, RP2 and the Director’s Questionnaire Explained
When you claim director redundancy through the Redundancy Payments Service (RPS), you’ll come across two application forms and because you were a director, one extra questionnaire.
Here’s what each one does and how to complete them without delaying your claim.
The primary application (RP1): redundancy pay, wages and holiday
The first form you’ll complete is the primary application, still widely known as the RP1 form. You use it to claim statutory redundancy pay plus any money your company owed you when it entered insolvency, including unpaid wages, holiday pay and commission.
You apply online through GOV.UK once your company is in a formal insolvency process, using the case reference number your insolvency practitioner gives you. Payments come from the National Insurance Fund (not from the company) so there’s no cost to your former business or its creditors.
The secondary application (RP2): loss of notice pay
The RP2 form (the secondary application) covers compensation for loss of notice — the notice period you were entitled to but didn’t receive. Two things catch directors out here:
- You must complete the primary application (RP1) first.
- You apply after your notice period has ended, not at the same time as your main claim.
Statutory notice is one week per complete year of service, up to 12 weeks. You can claim loss of notice even if you never had a written contract, statutory notice rights apply to implied contracts too.
The Director’s Questionnaire: proving you were an employee
Because directors are office holders, the Insolvency Service needs evidence that you were also an employee before it can pay you. After you submit your claim, the RPS will send you the official Director’s Questionnaire to complete you don’t need to download it in advance, and you shouldn’t send extra employment information with your initial claim.
The questionnaire asks about your role and how you were paid. Based on your answers, the RPS may ask for supporting documents such as:
- your last 3 years’ P60s and last 3 months’ payslips
- company bank statements for the last 12 months, showing regular salary payments
- your contract of employment (written, or details of an implied arrangement)
- dividends received in the last 3 years
- your contracted hours compared with the work you actually did
- whether you were paid at least the national minimum wage
- holiday, pension, sick leave and disciplinary arrangements
How to complete the RPS Director’s Questionnaire without getting rejected
The RPS rejects claims where it can’t confirm employee status and incomplete or inconsistent questionnaires are the most common reason. Before you submit:
- Be consistent: your stated salary, hours and duties must match your payslips, P60s and bank statements.
- Show regular payment: irregular, dividend-only remuneration is the biggest red flag for rejection.
- Describe your day-to-day work, not just your statutory duties as a director — the RPS wants evidence you genuinely worked in the business.
- Don’t guess dates or figures. Check them against records first; inconsistencies trigger further enquiries and delay payment.
If your claim is rejected, you can challenge the decision at an employment tribunal — but strict time limits apply (usually 3 months from your rejection letter, or 6 months from dismissal for redundancy pay claims). Getting the questionnaire right first time is far quicker.
Unsure of How Much You Could Receive? Try Our Director Redundancy Calculator
If you want to claim director redundancy but you’re unsure how much you might receive then try our useful calculator below. The director redundancy calculator will give you a rough estimate of the amount you may get.
The amount you may receive in director redundancy payments is based on a few factors such as your age, length of service and also your gross weekly pay.
Please be aware that not all director redundancy claims are successful.
Director Redundancy Payment Calculator
Estimated total claim
Estimate only. Statutory weekly pay cap of £751 applied; redundancy service capped at 20 years; notice pay capped at 12 weeks. Your actual entitlement depends on your claim being accepted by the Redundancy Payments Service.
Director redundancy and liquidation
Director redundancy can only be claimed if your company enters liquidation. It’s important to understand the types of liquidation that may apply to your business:
- Compulsory Liquidation: This occurs when a creditor files a winding-up petition (WUP) with the court to force your company into liquidation.
- Creditors’ Voluntary Liquidation (CVL): This process is initiated by the directors, usually due to creditor pressure and financial difficulties.
In both cases, an insolvency practitioner is appointed to handle the liquidation process, including the sale of assets and repayment to creditors.
Can I claim redundancy if my company isn’t in, or isn’t facing liquidation?
Unfortunately, you cannot claim director redundancy unless your company is facing liquidation.
Redundancy is intended for individuals who lose their jobs involuntarily, so it does not apply to solvent companies where the director voluntarily steps down.
If your company is still solvent and you are simply choosing to leave, you will not be eligible for redundancy payments.
Not Sure if You Qualify? Get in Touch
If you’re uncertain about whether you qualify for director redundancy, or you’d like to understand how much you could potentially claim, don’t hesitate to reach out to us.
Our compassionate team of experts is here to help.
Call us at 0800 088 2142 or email us at advice@businesshelpline.uk
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Director Redundancy FAQs
How much will you make when claiming Director Redundancy?
The most you can receive for redundancy and other statutory entitlements is:
▪️ Redundancy pay – £22,530 capped at 20 weeks
▪️ Notice pay – £6,456 capped at 12 weeks
▪️ Unpaid holidays – £3,228 capped at 6 weeks
▪️ Unpaid wages – £4,304 capped at 8 weeks
▪️ Payments are limited to £751 per week
How long does the process usually take from claim to payment?
A director should receive payments within 4-6 weeks, after the creditors’ meeting, so long as you have filled in and returned the relevant paperwork.
How long does it take to make a liquidation claim after redundancy?
You should be making a claim within 6 months of the company entering liquidation and ceasing trading. Some circumstances could lead to that time frame extending to 12 months but the process, in this case, is a little bit trickier.
What can you claim for with redundancy?
What you are eligible for with redundancy comes down to several factors:
▪️ How long you have been in the role
▪️ Your age at the time you have stopped trading
▪️ Your current salary
With redundancy, salary is capped at £544 per-week.
£16,140 is the overall maximum pay amount of redundancy pay that you can get. This remains constant, even if your actual earnings are higher or your length of service is longer than is required.
According to age, this is what you should be entitled to receive:
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
Employer notice
Your employee has to give you a minimum of one weeks’ notice for every year you have worked with them when you are made redundant. This goes up to a maximum of 12 weeks’ notice, worth £6,456.
Unpaid wages – Up to 8 weeks
Unpaid holidays – Up to 6 weeks holiday pay
