Directors can claim redundancy pay?

hethmar · 24 September 2018 at 2:42PM

Help please. My husband and I have run a small building maintenance business for over 30 years, the last 13 as a limited company. During that time we cut down our small work force until it was just the two of us - husband doing manual work and me doing secretarial work.

We have slowed down over last few years until we were actually having to feed the business account with personal funds to pay standing orders for premises etc. We stopped taking dividends and basic pay over 18 months ago

At the age of 68 we have now wound up working and as such applied to have the company struck off. Having done that we have received a phone call and communication from a company advising that we should apply for liquidation rather that striking off as that way we could claim several thousands in redundancy payments for ourselves?

Is this genuine and is it legal? The company says that we only pay if we are successful in claiming?

superbigal36 · 24 September 2018 at 4:51PM

https://www.thegazette.co.uk/all-notices/content/101126

Pennywise · 24 September 2018 at 7:33PM

You would also need to appoint liquidators to strike off the company (instead of doing the cheap DIY option) and liquidators can typically charge a few thousand pounds which you'd have to pay as you'd be the ones appointing the liquidator.

greyteam1959 · 24 September 2018 at 7:49PM

Yes directors can claim redundancy pay.
My wife & I were in a similar situation & claimed about £5000 each.
I would take advice from your accountants & not ' a company advising' you.

hethmar · 5 October 2018 at 9:27PM

Many thanks. I did contact our accountants who said rather stiffly that they thought we wanted the cheapest option ie. voluntary striking off and that they were not qualified as liquidators. So not a lot of help sadly.

Pennywise · 6 October 2018 at 7:41AM

hethmar wrote: »

Many thanks. I did contact our accountants who said rather stiffly that they thought we wanted the cheapest option ie. voluntary striking off and that they were not qualified as liquidators. So not a lot of help sadly.

They're actually telling you the situation, as I posted earlier. You'd need to appoint liquidators and they're expensive. You have to weigh up whether the cost of liquidators is worth any potential claim from the redundancy fund - also whether you have contracts of employment as employees.

hethmar · 9 October 2018 at 10:05PM

Hi, well the company is on a no win no fee basis and assures us that nothing will be charged unless they are successful. I read the details re claiming for redundancy for directors and whilst one of the points made is about a contract of employment, it does say this is not essential (this was general info not on the firms site). TBH, a contract could be produced and backdated anyway,, surely?

Pennywise · 10 October 2018 at 5:46PM

hethmar wrote: »

TBH, a contract could be produced and backdated anyway,, surely?

Not only would that be fraud, but it may also mean that you'll fall foul of minimum wage legislation and maybe other employment law issues. The whole reason that directors can do the low wage/high dividend route is because they're not employees because they don't have a contract. You really can't have your cake and eat it.

Did the no win no fee company say anything about the cost of liquidators that you'll have to pay whether you get anything or not? That's nothing to do with them, unless of course, they're going to stump up your liquidators costs too. No I didn't think so.

Directors can claim redundancy pay?

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