Redundancy Pay for a Company Director

I recently ceased my Limited Company business and made all of my employees redundant. As I was dealing with the day to day running of the company am I also entitled to redundancy pay?

1st July 2008

You can only receive redundancy payments if you are an employee working under a contract of employment whether written, verbal or implied. As you were presumably a director of the company, you will only be classed as an employee if you work under a contract of employment.

Also, directors do not qualify if they only have a controlling interest in the company. Therefore, for you to qualify you need to have a 50% shareholding or less in the company, and be working under a contract of employment, so that your relationship to the company is similar to that of other employees.

Directors also do not qualify if they deal only with company policy and go to board meetings in return for fees. Equally Self-employed people and members of a partnership do not qualify for redundancy pay either.

By Jo Nockels

Disclaimer: The information provided is based on current guidance (at date of publication) from HMRC and may be subject to change. Any advice shared here is intended to inform rather than advise. Taxpayer's circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this information, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

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