A director does not automatically qualify for redundancy pay simply because their company enters liquidation. The main question is whether they were also an employee.

• The Redundancy Payments Service decides whether a claim is accepted.
• Evidence may include an employment contract, PAYE salary payments, payslips, working hours and the duties actually performed.
• Eligible claims may include redundancy pay, unpaid wages, holiday pay and compensation for loss of notice, although notice pay is claimed through a separate RPS process.
• Share ownership or being the sole director does not automatically prevent a claim.
• Dividends are not treated in the same way as wages.
• Any redundancy claim is separate from money the director may owe the company.
• A claim should not be treated as guaranteed or relied upon as immediately available funding.
• We can explain the process as part of a free, confidential discussion about the company’s options.

Can a Company Director Claim Redundancy?

Yes, a company director may be able to claim redundancy pay if they were also genuinely employed by the company.

Being registered as a director at Companies House does not automatically qualify you. The key issue is whether you were also an employee and can provide evidence of that employment relationship.

DCA Business Recovery can explain how director redundancy claims work alongside a possible Creditors’ Voluntary Liquidation.

When might a director be treated as an employee?

Many owner-directors perform several roles at once. They may hold shares, make strategic decisions as a director and also carry out day-to-day work under an employment relationship.

Evidence considered by the Redundancy Payments Service may include:

• a written employment contract;
• the work actually undertaken;
• regular salary payments through PAYE;
• payslips and payroll records;
• working hours and holiday arrangements;
• whether the company was obliged to provide work and the individual was obliged to perform it;
• the degree of control and independence involved; and
• the overall reality of the relationship.

No single document automatically decides the issue. A contract created shortly before liquidation will not outweigh the real history of the arrangement, while the absence of a formal written contract does not necessarily end the enquiry.

What payments could be available?

Subject to eligibility and the statutory limits applying at the time, an employee may be able to claim for amounts such as:

• statutory redundancy pay;
• arrears of wages;
• accrued holiday pay; and
• statutory notice pay.

For redundancies on or after 6 April 2026, the statutory weekly pay cap is £751, and the maximum statutory redundancy payment is £22,530, subject to eligibility and the applicable rules.

Different rules and deductions can apply to each element. Notice pay, for example, takes account of earnings and certain benefits received during the notice period.

The amount depends on matters including age, length of service, weekly pay and the applicable statutory caps. It is better to use the official claim calculation than rely on an online headline suggesting that every director receives the same amount.

Does the company need to enter liquidation first?

Claims of this type normally depend on the employer entering a formal insolvency process and the individual’s employment ending. Simply applying to strike the company off does not provide the same route.

This is one reason the wider company position must be considered. A liquidation should not be recommended solely because a director hopes to make a redundancy claim. It must be appropriate for the company and its creditors.

If the business cannot afford the process, read our guidance on liquidating a company with no money or assets.

How does a director make a claim?

Once the company has entered formal insolvency and the necessary case details are available, the claimant normally applies online to the Redundancy Payments Service.

You may be asked to provide evidence of employment, earnings and service. Useful records can include:

• employment contracts and board records;
• payslips, P60s and payroll reports;
• bank statements showing salary payments;
• holiday records;
• correspondence about duties and working arrangements; and
• accounting records showing remuneration.

It is sensible to gather these records before access to systems or premises is lost. The Redundancy Payments Service, rather than the liquidator, decides whether a claim is accepted and how much is payable.

What Evidence Does a Director Need for a Redundancy Claim?

The Redundancy Payments Service may ask for evidence showing that you were genuinely employed by the company.

Useful records can include:

• an employment contract;
• payslips and PAYE records;
• P60s;
• bank statements showing salary payments;
• working hours;
• holiday records;
• evidence of the duties you performed; and
• correspondence relating to your employment.

The Insolvency Service considers the overall working relationship rather than relying on one document alone.

What if I was paid mainly through dividends?

Dividends are a return to shareholders and are not the same as wages. Receiving a modest salary alongside dividends does not automatically prevent employee status, but the claim will be assessed using the evidence of employment and the remuneration that counts under the statutory scheme.

There may also be a separate issue if dividends were declared when the company did not have sufficient distributable profits. A liquidator may review those payments. An overdrawn director’s loan account can also affect the overall personal position.

Can the expected claim fund the liquidation?

Directors sometimes hope to use a future redundancy payment to cover the cost of closing the company. That may be possible in practical terms only after a valid claim has been approved and paid, so it should not be treated as certain or immediately available money.

We will explain the likely cost of liquidation and the available funding options separately from any potential employee claim.

What if the director owes money to the company?

A redundancy claim and a debt due to the company are distinct matters. If a director has an overdrawn loan account, the liquidator may be required to seek repayment even if the same director has an accepted employee claim.

Do not assume that one will simply cancel the other. Set-off and claim treatment can be technical and depend on the facts.

Speak to DCA before relying on a claim

We understand why director redundancy is important, particularly when a business has provided the household income for many years. Our role is to give a balanced explanation without exaggerating the likely payment.

During a free initial meeting, we can consider the company’s debts, assets, employees, director accounts and available closure or rescue options. If liquidation is appropriate, we will explain the formal process and the information likely to be needed for an employee claim.

Contact DCA Business Recovery for a confidential discussion.

Frequently asked questions

Do all directors receive redundancy pay after liquidation?

No. A director must establish that they were also an employee and satisfy the rules for the particular payment claimed.

Does owning all the shares prevent a claim?

Share ownership is relevant to the overall relationship but does not, on its own, answer whether the director was also an employee. The Redundancy Payments Service considers the evidence as a whole.

Who decides whether the claim is accepted?

The Redundancy Payments Service assesses and decides the application. The liquidator supplies case information but does not guarantee approval.

Can a sole director claim?

A sole director can apply where they believe they were also an employee. The facts and supporting evidence will be assessed in the same way.