Redundancy Pay for a Company Director

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.

Date published 5 Dec 2012 | Last updated 26 Oct 2020

This article is intended to inform rather than advise and is based on legislation and practice at the time. 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 article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.