The Single Most Important Thing to Know
Company directors who are ALSO employees of their own company ARE entitled to claim statutory redundancy pay from the National Insurance Fund when the company enters liquidation.
This is not a loophole. It's a statutory right under the Employment Rights Act 1996. But the rules are strict, and the Insolvency Service scrutinises director claims carefully. Here's everything you need to know to claim successfully.
Are You Eligible? The 5 Tests
To claim statutory redundancy pay as a director, you must pass ALL five of these tests:
How Much Can You Claim? (2026 Rates)
Statutory redundancy pay is calculated based on your age, length of service, and weekly pay (capped):
| Age During Employment | Weekly Pay Multiplier | Max Weeks |
|---|---|---|
| Under 22 | 0.5 week per year | — |
| 22 to 40 | 1.0 week per year | — |
| 41 and over | 1.5 weeks per year | 20 years max |
Current cap: £700 per week (from April 2026).
Example: A director aged 48 with 15 years' service at £700/week:
- • Age 33-40 (8 years × 1 week) = 8 weeks
- • Age 41-48 (7 years × 1.5 weeks) = 10.5 weeks
- • Total: 18.5 weeks × £700 = £12,950
4 Common Reasons Director Redundancy Claims Are Rejected
1. No Employment Contract
The RPS will look for evidence of a genuine employment relationship: a written contract, regular salary payments through PAYE, payslips, and pension contributions. Taking only dividends? You're a shareholder, not an employee — no redundancy pay.
2. Salary Manipulation Before Liquidation
Raising your salary dramatically in the months before liquidation to maximise your redundancy claim is a red flag. The RPS will examine salary history and may reject claims where the salary is not "genuine and reasonable."
3. Less Than 2 Years' Service
This is the most common rejection reason. If your company has been trading less than 2 years, you cannot claim statutory redundancy. No exceptions.
4. MVL Instead of CVL
Members' Voluntary Liquidation is for solvent companies. If your company can pay its debts, redundancy pay is NOT available. Some directors mistakenly pursue MVL thinking they can still claim — they cannot.
Beyond Redundancy: What Else You Can Claim
As an employee-director, you may also be entitled to claim:
Up to 6 weeks' accrued holiday pay, capped at £700/week
1 week per year of service, up to 12 weeks, capped at £700/week
Up to 8 weeks' unpaid wages, capped at £700/week
Unpaid employer pension contributions may also be recoverable