Director Redundancy Pay Guide (UK): Eligibility, Entitlements & How to Claim
Being a director does not rule you out of statutory redundancy pay. If you were also genuinely employed by the company, you can claim redundancy pay, notice pay, holiday pay and unpaid wages from the government when the company goes through company liquidation, just as any other employee can.
What a director redundancy claim is worth depends on your age, your length of service, and your weekly pay. We do not quote an average, because the spread is wide enough that any single figure flatters one director and misleads the next. The gov.uk calculator will give you your own number in about two minutes.
Check it before you assume the liquidation fee has to come out of your own pocket. The claim is paid by the government, not by the company, so the company having no money does not reduce it. Once paid, the money is yours, and you can choose to put it towards the cost of the liquidation.
Whether you can claim depends on one question: were you genuinely employed by the company, or did you only ever hold the office of director without a job under it? The distinction matters in law, and the Redundancy Payments Service (RPS) will check it against your payroll records.
Three things carry a claim: a salary paid through PAYE, at least two years’ continuous employment, and evidence that you did a real job for the company, even if it was never written down.
What Director Redundancy Pay Actually Is
It is the same statutory redundancy pay any employee gets. When an insolvent employer cannot pay it, the RPS, which is part of the Insolvency Service, pays it instead from the National Insurance Fund.
It is not charity and it is not discretionary. It is a legal entitlement under the Employment Rights Act 1996 for those who qualify.
Once it has paid you, the RPS takes your place as a creditor in the liquidation for the amount it paid. That is a matter between the RPS and the liquidator: it does not reduce or delay your payment.
The point the whole claim turns on: holding a director appointment does not automatically make you an employee. Equally, it does not automatically prevent you being one. Your status is determined by the substance of your working relationship with the company, not by your job title.
Director Redundancy Eligibility: The Criteria That Decide Your Claim
To qualify for director redundancy pay, you must satisfy the employment conditions in sections 135 and 230 of that Act. Start with the first two points below: without employee status there is no claim at all, and without two years’ service there is no redundancy pay.
Employee status under section 230. You must have worked under a contract of employment. A formal written contract is the cleanest evidence, but the RPS also looks at the substance: did you have set duties, regular hours, management accountability, and a genuine employment relationship rather than just a directorship?
The substance test is where a borderline claim is decided.
A company secretary’s role or a non-executive director role typically fails this test. An operational director who ran a department, managed staff, and had day-to-day accountability usually passes it.
Minimum two years’ continuous service. Under section 155, you need at least two years of qualifying employment. The two-year period is counted continuously, which means gaps in your employment record matter.
If you were a director for four years but only drew a PAYE salary for the last eighteen months, the claim is weaker than it looks on paper.
PAYE salary. Being paid through PAYE is the strongest single piece of evidence the RPS looks for. Directors who paid themselves only through dividends are usually treated as shareholders, not employees, because dividends are a return on investment rather than wages for work.
If you mixed dividends and PAYE, the PAYE element supports your claim; the dividend element does not count toward weekly pay for redundancy calculation purposes.
Formal insolvency process. The company will normally be in a formal insolvency process. Redundancy pay alone can also be claimed if the company has refused or failed to pay after you took all reasonable steps to recover it.
Creditors’ Voluntary Liquidation (CVL) and compulsory liquidation both qualify. A Members’ Voluntary Liquidation (MVL) is a solvent process, so the company normally pays employees itself and the RPS is rarely involved. An administration can also lead to RPS claims, depending on whether employees are dismissed. A voluntary strike-off does not qualify.
Consistent substantive work. The old 16-hour weekly threshold was removed, but the RPS still needs to see evidence of a genuine, ongoing working role. Nominal directorships held on paper while you ran another company full-time are examined closely.
What You Can Claim as a Director
Qualifying directors can claim multiple heads of payment, and the total matters. Check each head of payment, not only redundancy pay.
Statutory redundancy pay is calculated using your age, your length of qualifying employment, and your weekly gross pay, subject to the statutory weekly cap. From 6 April 2026, that cap is £751 per week.
The multiplier per year of service is half a week’s pay for service before age 22, one week’s pay for service between 22 and 40, and one and a half weeks’ pay for service aged 41 and over, up to a maximum of 20 years.
Statutory notice pay covers the notice period you should have received but didn’t. Under the Employment Rights Act, you are entitled to at least one week’s notice, rising to one week for each full year of service from two years, up to a maximum of 12 weeks. This is claimed as a separate secondary application to the RPS, after your statutory notice period ends.
Holiday pay covers accrued but untaken annual leave at the point your employment ended, up to six weeks’ worth from the last 12 months.
Unpaid wages can be claimed up to eight weeks’ worth. If the company fell behind on payroll in its final months, those arrears are claimable through the RPS.
Two details change the total more than any other. Notice pay is claimed separately and later, which makes it the easiest head to leave out, and a start date entered too late shortens the service the whole redundancy calculation rests on.
How to Claim Director Redundancy from the RPS
The process is administered online through the RPS and normally starts once your company is in formal insolvency. Your insolvency practitioner is the gateway.
Once your licensed insolvency practitioner is appointed, they will register your company with the Insolvency Service and issue you a case reference number (CN number). Without this, the RPS portal will not accept your application.
You then complete your primary application online via the RPS portal at gov.uk/your-rights-if-your-employer-is-insolvent. The primary claim covers redundancy pay, unpaid wages, and holiday pay.
You’ll need your National Insurance number, bank details, employment history with the company, payslip evidence if available, and any written contract or correspondence that supports your employment status.
The secondary application, for statutory notice pay, is submitted separately after your notice period has run. Your IP will tell you when this is due, and we flag this deadline in our initial case management to avoid it being missed.
The RPS typically processes complete applications within six weeks. Missing start dates, missing payslips and figures that do not match the payroll records the IP holds are what slow a claim down, so check those three before you submit.
Using Director Redundancy Pay to Cover Liquidation Costs
One of the more useful things a director redundancy claim can do is reduce the out-of-pocket cost of the liquidation itself. A CVL has professional fees attached, and they are paid from company assets where there are any, which leaves the question of how a company with no money pays them.
If your redundancy entitlement arrives before the liquidation costs are settled, it can be directed toward the IP’s fees. This is not guaranteed: timing depends on how quickly the RPS processes your claim relative to the pace of the liquidation. We raise it as a possibility, not a certainty, because both the claim amount and fee level depend on your specific circumstances.
What to Do if Your Director Redundancy Claim Is Rejected
A claim is usually refused for one of three reasons: insufficient evidence of PAYE employment, a gap in continuous service that breaks the two-year threshold, or a finding that you were not genuinely an employee in substance.
If your claim is rejected, ask the RPS to explain why. If you disagree, you can make a claim to an employment tribunal against the Secretary of State. Tribunal is a live route, but it takes time and works best with professional support.
Speak to an employment solicitor or to the insolvency practitioner who handled the liquidation. They will have the background documentation that strengthens the appeal.
If your claim is weak on the evidence because your records are incomplete, honest early engagement with a specialist is better than submitting a thin application and hoping. The RPS probes the employment relationship methodically.
Your Next Step
If your company is entering or considering liquidation and you believe you were a genuine salaried employee, check your eligibility before the liquidation process starts. Claims fail before they start for two reasons: the director assumed they could not claim and never checked, or the records that prove the employment were not kept.
Start gathering evidence now: employment start date, payslips or PAYE records, any employment contract, and details of your role and duties. If you’re unsure whether you qualify, our team can assess your position in a free initial call.
FAQs on Director Redundancy Pay
Can I claim director redundancy pay if I was only paid in dividends?
Usually not. Dividends are a return on shareholding, not wages for employment. The Redundancy Payments Service looks for evidence of a PAYE salary as the strongest proof of employee status. Directors paid entirely by dividends are usually treated as shareholders rather than employees, and so rarely qualify for statutory redundancy pay from the National Insurance Fund.
What is the maximum director redundancy pay I can receive?
Statutory redundancy pay is capped at the weekly pay limit (£751 from 6 April 2026) and a maximum of 20 years’ qualifying service, giving a maximum statutory redundancy payment of £22,530. Notice pay and unpaid wages are calculated separately and are also capped.
Total claims vary widely with age, service and pay, which is why we calculate each one at the first call rather than quote an average that would fit almost nobody.
Do I need to formally liquidate before claiming, or can I claim during administration?
You do not have to wait for a liquidation if the company is in administration and you have been dismissed, but most director claims follow a creditors’ voluntary or compulsory liquidation. A solvent members’ voluntary liquidation is different, because the company pays its own employees.
For notice pay, wage arrears and holiday pay the company must be formally insolvent. A company that is simply struck off the register is not, so closing it that way gives the RPS nothing to pay against.
I was the only director and sole employee. Can I still claim?
Potentially, yes. Being the only director does not automatically disqualify you. The RPS will examine whether a genuine employment relationship existed: were you genuinely an employee of the company in substance, receiving a PAYE salary, performing employee-level duties? These cases are scrutinised more closely than multi-employee claims, but they do succeed where the evidence is sound.
How long does the Redundancy Payments Service take to pay?
A complete application is usually paid within about six weeks. A claim where your employee status is in question takes longer, because the RPS will ask for evidence before it decides.
Will claiming director redundancy affect my personal liability for company debts?
No. Claiming statutory redundancy pay does not affect your personal liability position. Your liability as a director is assessed under company law and insolvency law separately from your employment entitlements. Personal guarantees are enforced through their own terms. Wrongful trading concerns are assessed by the liquidator. Your redundancy claim is a separate matter entirely.
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Related Guides
- How Much Does It Cost to Liquidate a Company?: what a CVL actually costs, and how a redundancy claim can fund it.
- Creditors’ Voluntary Liquidation: the process your redundancy claim is assigned into.
- What to Do When You Cannot Afford to Liquidate: every funding route, not just redundancy.
- Members’ Voluntary Liquidation: the solvent route, where redundancy works differently.
