In February 2026 we published an update on the increasing scrutiny being applied to director redundancy claims at insolvency by the Redundancy Payments Service (RPS). That article focused on recent tribunal decisions, including our own case where directors’ claims were rejected despite PAYE treatment and written contracts.
This companion piece, with insights from specialist adviser Elaine Camm of Ekemp Redundancy Claims Ltd, as well as our own experience of how claims are assessed, looks at the practical side, specifically:
….what evidence the RPS examines, where director claims often fail, and why preparation before insolvency can make a material difference.
1. Directors can claim redundancy – but only if they are employees
A recurring theme in recent tribunal decisions is that formalities alone are not enough. PAYE treatment and a written contract help, but they do not guarantee eligibility.
To be treated as an employee, a director must generally be able to demonstrate:
- A contract of employment (written or implied)
- Regular PAYE salary payments
- A genuine employee role within the business (not purely shareholder/director duties)
- At least two years’ continuous service
This aligns with the position set out in our February 2026 article: that the RPS is now testing the underlying reality of the working relationship, not just the paperwork.
2. The evidence the RPS typically requires
Elaine highlights that the RPS typically asks for a broad range of documentation to establish whether a director was genuinely employed.
This may include:
- employment contracts or written terms
- PAYE payroll records and payslips
- P60s or RTI submissions
- at least 12 months of company bank statements
- the latest filed accounts
- job descriptions or evidence of operational duties
- board minutes confirming salary or employment terms
Where evidence is incomplete or inconsistent, claims are more likely to be challenged or rejected
3. Common pitfalls that can lead to director redundancy claims being rejected
Elaine’s experience mirrors what we have seen in recent cases and tribunal decisions. She points out that a significant number of director redundancy claims are rejected due to technical issues rather than eligibility
Director redundancy claims are often rejected because of:
- no clear employment contract or terms
- salary taken mainly as dividends rather than PAYE
- salary below the National Minimum Wage at the relevant time*
- irregular or undocumented salary payments
- limited evidence of day‑to‑day operational work
- incomplete documentation
- errors in completing RPS claim forms
(*Elaine points out that one of the most important factors right now is that “Directors should be paid at least the National Minimum Wage.”)
These issues do not automatically mean a director is not an employee, but they increase the likelihood of the RPS rejecting the claim. In addition, because directors often wear multiple hats in a business, the employee status test can be more complex than for standard employees.
4. Why preparation before insolvency matters
The RPS assesses evidence retrospectively. If documentation is unclear, incomplete, or inconsistent, the claim may be delayed or refused.
Preparing accurate records in advance can:
- reduce delays
- improve the clarity of the claim
- avoid unnecessary queries from the RPS
- reduce the risk of rejection
This is particularly important given the increased scrutiny highlighted in our February 2026 update.
5. What Directors may be able to claim
If a director is found to be an employee, statutory payments may include:
- statutory redundancy pay
- unpaid wages
- holiday pay
- statutory notice pay
These payments are subject to statutory caps and are paid from the National Insurance Fund via the RPS.
As always, eligibility depends entirely on the director’s employment status, which must be established on the facts. For many directors, total claims can be worth several thousands of £s depending on salary and length of service.
6. The role of specialist support to improve claim success
Director redundancy claims are more complex than standard employee claims because a director must demonstrate a genuine contract of employment and employee duties.
Elaine’s firm, Ekemp Redundancy Claims Ltd, assists directors by:
- reviewing eligibility
- identifying potential issues with employment status
- preparing supporting documentation
- completing the claim
- responding to RPS queries
We work with specialist advisers such as Ekemp where appropriate, but the decision on eligibility always rests with the RPS or, if appealed, the Employment Tribunal. However, the above can help reduce the risk of rejection and ensure directors receive the payments they may be entitled to.
How this article fits with our February 2026 update
Our February 2026 article focused on:
- recent tribunal decisions
- our own case where director claims were rejected
- the legal tests applied by the RPS and tribunals
- the increasing scrutiny of director claims
This companion article with input from Elaine Camm focuses on:
- the evidence the RPS looks for
- common pitfalls
- the importance of preparation
- practical insights from a specialist adviser
Together, they give directors a clearer understanding of both the legal framework and the practical realities of making a redundancy claim.
Part of the service our Insolvency Practitioners offer to businesses in financial difficulties is to guide directors through the whole process of Redundancy Pay, with the help od experts likes Elaine, and ensure that accurate and timely professional advice is given, as well as practical help.
Please contact us at any of our offices for an initial, FREE of charge, discussion:
