Director of insolvent company defeats government to win redundancy pay award

At a recent tribunal regarding a claim for redundancy payments to the director of a company which entered liquidation, a judgement ruled in favour of the company director, entitling her to a redundancy payment of £7,296 from The Insolvency Service.

If you are in a similar situation, Lucas Johnson will work with you to claim for a redundancy payment.

Mrs. Knight was the sole shareholder and Managing Director of her company for over 10 years. During the final 2 years she did not draw a salary in order to ensure that her employees and creditors were paid, which is a typical situation we saw in the companies we work with. After the company become insolvent, she applied for a redundancy payment.

Initially this request was denied by the Secretary of State. However, if a decision is rejected a director can appeal to an employment tribunal, which she did. On appeal the decision was overturned as it was ruled that Mrs. Knight was an employee of the company (as well as director) and was entitled to the payment.

She was able to prove her employment with the company via an unsigned contract of employment and P60 forms. But her claim was turned down because she had take a 2 year salary holiday, which is not consistent with someone who has an employment contract. However, the tribunal found that Mrs. Knight had not changed her contract of employment by choosing not to take a salary for 2 years; she had only decided not to enforce her right to take her salary. Therefore her entitlement to a redundancy payment stood.

If your company has been liquidated or you are facing insolvency, call Lucas Johnson to find out how we can help you claim money you are entitled to.

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