Can I claim redundancy from my own limited company?
Yes, you can claim redundancy from your own limited company, even if you were the sole director and the sole 100% shareholder and you put the company into liquidation yourself.
So, contact CFS Redundancy Payments Ltd today on 0800 472 5512 and let us help with your claim.
Who can help me?
Only claims management companies authorised and regulated by the Financial Conduct Authority can assist with your redundancy claim. CFS Redundancy Payments Ltd is a CMC authorised and regulated by FCA.
Please call us on 0800 472 5512 to start your claim today.
Am I eligible to claim?
Various factors are taken into consideration when determining eligibility, including
- You were employed by the company for more than 2 years
- With less than 2 years service you can still claim unpaid wages, notice pay & holiday pay
- Taking all or part of your remuneration as a salary under PAYE
- You received P60’s at the end of each tax year
- You got sickness pay and the company contributed to your pension scheme
- You invested your own money in the company and held shares in it
- You were not classed as a non-executive director
- You worked more than 16 hours per week
- You are owed wages and holiday pay
Please call us on 0800 472 5512 to start your claim.
How do I claim?
Claims for directors redundancy pay must be made through the Redundancy Payments Service (RPS). If you are eligible for redundancy, then this will be paid from the National Insurance Fund. Some of the information requested by RPS is ambiguous and confuses many directors. One simple mistake on any one of the online forms can result in your entire claim being rejected. CFS Redundancy Payments Ltd can guide you through the whole process. Call us today on 0800 472 5512 to start your claim.
When can I make a redundancy claim?
A claim for directors redundancy pay must be made within 6 months of the redundancy occurring. The date of the directors redundancy is often the date the company went into liquidation. So contact us straight away to start your claim.
When can I make claim for holiday pay I am owed?
A claim for holiday pay must be made within 12 months of your redundancy. You can claim for unpaid holidays not taken from your entitlement arising during the 12 month period preceding the liquidation. Contact us as soon as you can to start your claim.
When can I make claim for unpaid wages?
There is no time limit within which you can claim for unpaid wages, so your claim can be made at any time. You can claim up to a maximum of 8 weeks unpaid wages and where you have been unpaid for a long period of time, we will help you to claim the most advantageous 8 week’s pay. But don’t wait too long to claim as it is likely that your can claim for other entitlements where there are strict time limits.
How long does the process usually take from claim to payment?
RPS aims to process 92% of claims within 6 weeks from the date of receipt of your claim by the RPS. So, the sooner we submit your claim to RPS, the quicker the money will hit your bank account.
When can I claim statutory notice pay?
You can claim for notice pay which is 1 week’s pay for each year of service, up to maximum of 12 weeks pay. As it is a statutory entitlement it does not matter what it may say about the length of your notice period in your contract of employment, if you have one.
We will complete a second online application to get this money for you. We can only complete this second application after the time your notice period has ended. By this stage you should have already received your redundancy payment, your unpaid wages and your holiday pay.
Don’t worry about keeping track of when your notice period ends. We will contact you when the application can be made.
Each person’s notice period is different, so don’t worry if we contact some of the former directors before we contact you.
Benefits and other income during your notice period?
If you’ve been made redundant, it’s very important you apply for unemployment related benefits. Universal Credit has replaced the following benefits:
- Child Tax Credit
- Housing Benefit
- Income Support
- income-based Jobseeker’s Allowance (JSA)
- income-related Employment and Support Allowance (ESA)
- Working Tax Credit
If you apply for statutory notice pay, we will ask you about benefits you applied for during your notice period and also money you earned during that period. RPS normally deduct from your payment the value of any benefits you received and any money you earned during your notice period.
If you choose not to apply for benefits, RPS may still make a deduction from your statutory notice payment. RPS may deduct the value of the benefits you could have received if you’d chosen to apply.
We suggest that you apply for any benefits for which you may be eligible. You can find information about what benefits you may be eligible for at: www.gov.uk/benefits-calculators
What can I claim for?
By law, eligible directors are entitled to claim half a week’s pay for each full year of service under 22 years of age; one week’s pay for each full year of service between 22 and 41 years of age; and one and a half week’s pay for each full year of service over 41 years of age.
Company directors and other employees can claim up to 30 weeks Redundancy pay, which is currently capped at £538 per week. They can also claim up to 8 weeks unpaid wages and 6 weeks holiday pay; together with a maximum of 12 week’s notice pay, again all capped at £538 per week.
What is the maximum I may be entitled to claim?
The maximum available for redundancy and other statutory entitlements is as follows:
- Redundancy pay – £16,140 capped at 30 weeks pay. This is tax free.
- Notice pay – £6,456 capped at 12 weeks. Earnings and benefits are deducted and the balance is taxed at 28%.
- Unpaid holidays – £3,228 capped at 6 weeks and taxed at 28%.
- Unpaid wages – £4,304 capped at 8 weeks and taxed as above at 28%.
Can I claim redundancy pay if my company goes into Administration?
Yes, you can claim redundancy from your own limited company, even if you were the sole director and the sole 100% shareholder and you put the company into administration yourself. If your company goes into liquidation following a period of administration, you can claim redundancy pay and notice pay from the date of liquidation. However, your claims for unpaid wages and holiday pay will be based on the date of the administration. So contact CFS Redundancy Payments Ltd today on 0800 472 5512 and let us help with your claim.
What can I claim if my company was previously in a CVA?
If your company goes into liquidation following a Company Voluntary Arrangement, you can claim redundancy pay and notice pay from the date of liquidation. However, your claims for unpaid wages and holiday pay will be based on the date the company entered into the CVA. Contact us today on 0800 472 5512 and let us help put together your claim.
What would prevent a redundancy claim being approved?
There are many reasons why a claim can be refused. The most common ones are; the company having traded for less than two years before it is liquidated, or your employment has been transferred, using TUPE regulations, to the new company which bought the assets and business of the old company.
How is redundancy pay calculated?
By law, eligible directors are entitled to claim half a week’s pay for each full year of service under 22 years of age; one week’s pay for each full year of service between 22 and 41 years of age; and one and a half week’s pay for each full year of service over 41years of age.
What is Transfer of Undertakings Protection of Employment (TUPE)?
The Transfer of Undertakings (Protection of Employment) Regulations (TUPE) protects employees’ terms and conditions when a business is transferred from one owner to another. This can happen to insolvent companies if the insolvency practitioner sells the whole of the business or certain assets of the business to a purchaser. Employees of the insolvent company become employees of the new owner on the same terms and conditions.
Company directors and minimum wage
As long as directors have been taking a salary through the PAYE system, regardless of the amount, they will typically be entitled to claim redundancy. When a company is experiencing financial difficulties, more often than not, its directors will do everything within their power to try and improve the fortunes of the business. This means implementing cost-cutting measures wherever possible. Usually one of the first areas to be cut is the salary that directors pay themselves. This is an area that can be cut as minimum wage legislation does not apply to directors of limited companies; consequently, they are free to pay themselves as little as they choose.
If you have told your liquidator you have been paying yourself an amount which falls below the National Minimum Wage (NMW) or National Living Wage (NLW), they may simply take this information and submit confirmation of your claim using these figures leaving you with a pay-out which is undervalued. However, what your liquidator may not know is that everyone (including directors of limited companies) is eligible to claim redundancy based on the NMW (or NLW for those aged over 25) regardless of the level of salary which has actually been taken.
NMW is an implied legal right for all employees (a director is an employee) regardless of what their verbal or written contracts states. If a director pays themselves below this rate, they are entitled to claim from the RPS what the company is legally entitled to pay them e.g. NMW.
In order to make sure your liquidator is maximising your redundancy claim, you first need to know exactly how much you are entitled to. You can do this by contacting CFS Redundancy Payments Ltd who will assess your position and quantify the value of any potential claim. You can then use this figure to compare against what your insolvency practitioner is forecasting you will receive.
My company is insolvent but I cannot afford an insolvency practitioner
It is unavoidable that company liquidation comes with a cost attached. As part of the liquidation procedure, a company’s assets will be sold, or ‘liquidated’, by the appointed insolvency practitioner in order to raise as much money as possible with which to settle the business’s liabilities. Ordinarily liquidation costs are funded as part of this process, with the insolvency practitioner ring-fencing a portion of the money raised to cover their own fees before distributing the remainder amongst the outstanding creditors.
Should this not be possible due to the company having insufficient assets, the director would look to pay these fees from their own personal finances. In some cases, however, this simply may not be possible. Unfortunately, if a company is insolvent it goes without saying that there is often very little money going spare, both in the business, and also for the director on a personal level.
If your company has insufficient assets and your personal finances cannot stretch to funding the cost of the liquidation, there may be another way of raising the money.
It is not widely known that company directors are entitled to make a claim for redundancy should their company become insolvent and consequently enter liquidation. However, should you qualify, director redundancy can be used to pay for the closure of your insolvent company.
As well as claiming for redundancy you may also be entitled to receive additional compensation for unpaid holidays, notice pay, and unpaid wages.
Do I need an employment contract with my limited company?
A contract of employment does not have to be written; it can also be verbal or implied. Its existence will help to confirm your status as an employee and it will give clear evidence of your start date, hours worked and holiday entitlement amongst other things.
Who is liable for business debts in a limited company?
Once a company gets to the stage where it is struggling to keep up with its liabilities as and when they fall due, options need to be considered to protect the business and its creditors from incurring further losses. If your company has a significant amount of debt, you may be wondering who is liable for paying this back should the business is unable to do so. Limited liability is one of the main benefits of trading as a limited company. Limited liability offers the director a layer of protection against their company. In the eyes of the law, a limited company is seen as a complete separate entity from its directors. When it comes to a company experiencing financial issues, limited liability really comes into play. Any debts accrued by the company, in the company’s name, belong entirely to the company. Therefore, should an insolvent business cease trading and enter liquidation unable to fully satisfy its outstanding creditors, the debts will die with the company.
The exception to this rule is if any debts were personally guaranteed. A personal guarantee (PG) is when the borrower makes an agreement with the lender that should the business be unable to pay back the money it owes, responsibility will then switch to the individual who will be required to take on this debt and pay it back from their own personal funds.
PGs are often requested on property leases, company credit cards, and large loans particularly those offered to newly incorporated businesses. If you are in any doubt as to whether you have personally guaranteed company debts you should make it a priority to check through the original paperwork and find this out. If your company is struggling financially and you have personally guaranteed a significant portion of the debts, your options may well be different to those available to you if no personal guarantees had been signed.
Settling your Personal Guarantees
Many PG’s given by directors turn out to be invalid and therefore unenforceable against them by the relevant creditors. Our legal team will be happy to review any documentation you can get your hands on and let you know if the PG’s are valid. Where they turn out to be valid then, if you would like, we can help to negotiate favourable settlements terms with the creditor in question. This can be either a discounted lump sum payment or a series of deferred payments over an extended period of time. In certain circumstances, we may be able to use your directors redundancy payment from RPS to settle the whole of the debt owed.
So, please contact CFS Redundancy Payments Ltd today on 0800 472 5512 and let us help you.
Making your Claim
The average director redundancy claim is for around £12,000, which can prove to be a real lifeline when your insolvent company has just been closed down. Claims must be made through the Redundancy Payments Service, which is part of the Insolvency Service. If the claim is successful, it will then be paid by the National Insurance Fund.
Claims for redundancy and other statutory payments should usually be made within six months of the liquidation, although this can be extended to 12 months in some circumstances.
Contact CFS Redundancy Payments Ltd today on 0800 472 5512, and we can get the process started.