Written by Jonathan Munnery, Insolvency & Restructuring Expert | Last updated: 20 May 2026 | Reading time: 3 mins
Do I qualify for director redundancy?
In order to qualify as an employee of the company, and therefore be entitled to redundancy, a director must:
- Have a formal contract of employment
- Work at least 16 hours per week for the week
- This work must assist with the day to day running of the business rather than acting simply as an advisory role
Concerned about National Living Wage and NI increases?
With the rates of both National Living Wage and employer National Insurance Contributions increasing in recent years, this additional cost of employing staff has added more pressure onto already squeezed cash flows. If you are worried about the impact this is having on your company's finances, talk to the experts at UK Liquidators. As licensed insolvency practitioners we can explain your options and help you plot a way forward. Call today on 0808 253 9878.
How much redundancy may I be entitled to claim?
The amount you may be entitled to claim is based on several factors including your age at the time of redundancy, your length of service, and your gross weekly pay. For the purposes of redundancy, length of service is capped at 20 years, and gross weekly pay is capped at £571 per week. For each full year served you will be entitled to the following amount:
- age 18 to 22 - half a week's pay
- age 22 to 40 - 1 week's pay
- age 41 and above - 1.5 weeks' pay
Additional statutory entitlements
As well as being eligible for a redundancy pay-out, you may also be entitled to additional statutory entitlements including holiday pay, notice pay, and unpaid wages. Depending on your circumstances you could be entitled to up to six weeks of accrued holiday pay, and up to eight weeks of unpaid wages. You are also likely to be entitled to up to 12 weeks’ notice pay depending on your length of service.
Director redundancy and liquidation
While it is likely that many company directors do qualify for redundancy once their company becomes insolvent, it is important to note that redundancy can only be claimed if the company enters a formal liquidation process such as a Creditors’ Voluntary Liquidation (CVL). If the company is struck off – or dissolved – using the DS01 form, directors will be unable to make a claim. Placing a company into a CVL does come with a price tag attached, however, this cost may be eclipsed by the potential redundancy claim. Closing your company by way of a CVL also provides peace of mind that all outstanding creditors and company matters are handled in the appropriate manner and in accordance with the Insolvency Act 1986.
Start your online liquidation today
If you have decided liquidation is the right option for your limited company, you can take the first step and begin the process online using our online portal. Starting the process is quick, simple, and can be done at a time that suits you. Your information will be submitted to your local UK Liquidators insolvency practitioner who will be with you every step of the way. Click here to start your company’s liquidation online.
How is director redundancy paid?
When a company makes redundancies, it is the company’s responsibility to cover the redundancy payments owed. However, in the case of an insolvent company, this is simply not possible. In this instance, payment is made by the Redundancy Payments Service who take payment from the National Insurance Fund. This is used to pay both employees and directors.
How to make a claim for redundancy
Directors can make a claim for redundancy themselves, or alternatively there are a number of independent firms who can assist with the application. At UK Liquidators we can recommend a fully regulated claims management firm who have helped thousands of eligible company directors successfully claim the money they are entitled to.
