When planning departure of a proprietary director - is redundancy an option?

[mandelbrot]

Straightforward enough question, but I can't find anything definitive either way from my initial searching... as the title says I'm wondering whether Proprietary Directors are entitled to:

1. Statutory redundancy?
2. Exemption (and increased basic exemption, SCSB, and Top Slicing Relief!) for tax purposes, on the ex gratia element of a payment.

All of the information I can see simply says there must be an insurable employment - so I suppose a relevant question is whether a Class S directorship is an insurable employment?

I'm looking at a situation where a 50% shareholder in a husband / wife company (which has shrunk substantially in size in the recession, and now employing a fraction of the staff it used to), wants to leave the business. They would resign as a director, transfer their shares to the other spouse (not that it is necessarily relevant), and no longer receive any remuneration from the company, nor would their role be filled...

I'm dubious about it as it would potentially be open to all sorts of mischief, the above being a prime example really, since the amount drawn by the other spouse will probably just be increased...

Has anyone any direct experience of this?

 

[M K Brazil]

It is a straightforward question, but that doesn't mean its a straightforward answer.

If you want a short answer - no redundancy for Class S Directors, it you want the long answer, add 'but...'

The tax-free ex-gratia option is very much available however.

Don't forget that there must always be two directors.

 

[DB74]

As already stated, Class S directors are not entitled to statutory redundancy. This was confirmed to me, verbally of course, a couple of years ago in a phone call to Dept Enterprise

There should be no problem with an ex gratia payment though with all the exemptions as you stated. Bear in mind that an increased basic exemption requires prior Revenue approval so ...