This guidance is for company directors who are claiming redundancy related payments from the Insolvency Service.
Employees are legally entitled to certain payments when they are made redundant.
- redundancy pay
- compensation for any unpaid notice period
- any money they are owed by their employer (for example unpaid wages, holiday)
When an employer enters a formal insolvency process, these payments are made by the Insolvency Service, within certain statutory limits.
Only employees who are made redundant are entitled to payments from the Insolvency Service.
A director, who is an office holder, can also be an employee and be eligible for payment.
Directors applying to the Insolvency Service for monies owed will need to provide evidence to support their claim that they were an employee.
The Insolvency Service will have to consider whether there was a contract of employment in place at the time (which can be express or implied).
Additional information will be asked for based on your circumstances and may include:
- the structure of the company in terms of directorships and shareholders
- the last 3 years’ P60s
- the last 3 months’ wage slips
- employer’s bank statements for the last 12 months to review regularity of payments
- a comparison of the contracted hours being claimed in relation to the work being undertaken
- whether the national minimum wage was paid
- a copy of the contract of employment and whether the terms of the contract were enacted
- dividends received in the last 3 years
- holiday pay arrangements
- workplace pension arrangements
- sick leave procedures
- grievance and disciplinary procedures
How to apply
There are two application forms.
Use HMRC primary application to claim money if your employer owes you a redundancy payment or money like wages, holiday and commission. Your employer must be unable to pay you, for example because they’re insolvent.
You do not need to provide extra information about your employment status with your online claim.
The Insolvency Service will contact you after you submit a claim and explain what we need.
Claim for loss of notice pay
The secondary application is for compensation for loss of notice pay.
You do this application later, after your notice period ends. You must complete the primary application first.
If you apply for loss of notice pay, the Insolvency Service will again ask you for additional information. This can include:
- information about who started discussions with the insolvency practitioner about the formal insolvency
- the date when the insolvency practitioner was contacted
- the date when the insolvency practitioner advised that the company should enter a formal insolvency process
If your claim is rejected
The Insolvency Service will reject your claim and not make you any payments if we cannot confirm that you were an employee of the company.
If you disagree with the decision, you can also make a claim to an employment tribunal.
You have 3 months from the date of your rejection letter to make a claim to an employment tribunal, unless your claim is relating to redundancy pay (as opposed to holiday pay, arrears of pay or loss of notice pay).
There is a different time limit if your claim includes redundancy pay, which is usually 6 months from the date of your dismissal.
Before you can make an employment tribunal claim
You must first tell the Advisory, Conciliation and Arbitration Service (Acas) that you intend to go to tribunal.
If you do decide to go to tribunal, you’ll be asked to provide contact details for the person or organisation you’re making a claim against (‘respondent’s details’).
You should list both your former employer and the Secretary of State for Business, Energy and Industrial Strategy as respondents.
For the Secretary of State:
The Secretary of State for Business, Energy and Industrial Strategy
The Insolvency Service
RPS Employment Tribunal Section
PO Box 16684