Insolvent Company Director's Redundancy Payments: Process and Costs

We'll always be pleased to offer a free initial consultation to run through your individual circumstances. If you choose to instruct Redundancy Assist to process your application to the Redundancy Payments Service, however, you can expect the following:

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1. An Initial Assessment

Speak with a Redundancy Assist advisor who will be able to make an initial assessment of your outstanding statutory employment entitlements. We can advise whether you’ll be likely to make a successful application to the National Insurance Fund, and how much you are likely to receive.

2. Engagement

If you wish to proceed, engage us and forward any relevant documentation and information to support your application. Usually this will include, for example:

• Your written employment contract if available
• Any further details concerning the terms and conditions of your employment
• Recent P60s and payslips you have received from the company

NB where any of the above aren’t available, there are usually suitable alternatives that we can request/arrange

3. Application

We will forward your application back to you for electronic review. Depending on the date of your company’s liquidation, we’ll aim to do this within two weeks of being engaged. Once you have agreed and authorised the information, the claim will be submitted to the Redundancy Payments Service.

Submission is done in two parts. The RP1 is filed first containing your claims for redundancy, unpaid wages, and holiday pay as appropriate. The claim for loss of notice will be filed once your notice period has ended.

The Redundancy Payments Service initially requests six weeks to assess and evaluate your application. During this time, we’ll respond to any requests for further information and keep you updated as to progress.

4. Payment

Once the Redundancy Payments Service has agreed your entitlement, a notification letter will be forwarded to you and payment will be received into your nominated bank account within five to seven days of notification.

Cost

We like to keep it simple – we charge 15% plus VAT of the net amount you receive from the Redundancy Payments Service.

Working Example: Claim Entitlements and Redundancy Assist Fees

In this example, the director was 54 when the company stopped trading. They had worked 40 hours per week and had 4 full years’ service. The company had been unable to pay any salary for approximately 2-3 months prior to stopping trading; 20 days holidays were also owed.

This estimate shows the entitlements due for a PAYE salary of £30,000 pa and salary paid at the National Minimum Wage rate*

*If the director had received approximately £8000 per annum (or less than the National Minimum Wage) through the company PAYE, the claim would be paid at NMW rate regardless.

Employment Information Claim based on salary of £30,000 Claim based on National Minimum Wage

Redundancy Pay six weeks

£3,228

£2,092.80

Notice Pay (notice worked, not paid) four weeks

£2,152

£1,395.20

Unpaid Wages eight weeks

£4,304

£2,790.40

Holiday Entitlement 20 days

£2,152

£1,395.20

Est Net Award (after deductions at source of 20% tax & 12% NI)

£9,530

£6,191.00

Estimation of RA Fees (15% of New Award)

£1,429.50

£9,28.65

VAT on Fees (20%)

£285.90

£185.73

Estimated director's payment after RA fees and deductions**

£7,814.60

£5,076.62

** Please note that this example does not take into account any fees for the liquidation of your limited company.

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Helping director employees get back what they’re due

Redundancy Assist was formed with the sole purpose of helping directors receive their redundancy entitlements in the event of insolvency.

Our staff have operated within the insolvency sector for several years and have a deep understanding of its procedures and requirements. Coupled with our strong working relationship with the Redundancy Payments Service, our experience enables us to expertly advise company directors of insolvent companies. All our case managers hold up to date CIPD qualifications in Employment Law.