# Directors, Redundancies and Social Welfare



## Mechman (16 Jul 2008)

Just a quick question:

I'm a 10% shareholding director of a company, was an ordinary employee until around 2 years ago.

My questions are as follows:

1. If the company folds, would I be entitled to redundancy, and if so, on what basis? Same as if I was an ordinary employee? Statutory 2 weeks per year plus one. 

2. Would I be entitled to social welfare payments if the worst happened?

3. Finally, if I am not entitled to the above as it stands, if I resigned as a Director and / or handed back the shareholding, would it restore my entitlements? 

Thanks in advance for replies .


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## Welfarite (16 Jul 2008)

Re 2. above.

As a director, you are presumably paying Class S rate of PRSI. This does not entitle you to "normal" SW benefits, but you may apply for means-tested allowances, such as Jobseeker's.


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## Clarkey (16 Jul 2008)

Welfarite said:


> Re 2. above.
> 
> As a director, you are presumably paying Class S rate of PRSI. This does not entitle you to "normal" SW benefits, but you may apply for means-tested allowances, such as Jobseeker's.


 
As he has less than 15% shareholding would he not be classed a non-proprietary director and therefore paying Class A PRSI?


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## Mechman (16 Jul 2008)

Welfarite said:


> Re 2. above.
> 
> As a director, you are presumably paying Class S rate of PRSI. This does not entitle you to "normal" SW benefits, but you may apply for means-tested allowances, such as Jobseeker's.


 
Thats very much for the reply


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## Welfarite (16 Jul 2008)

Clarkey said:


> As he has less than 15% shareholding would he not be classed a non-proprietary director and therefore paying Class A PRSI?


 

Possibly. I said "presumably" on the basis that he is no longer an "ordinary employee" paying Class A and his rate changed two years ago. What's that saying, "one should never presume anything"?!?

In any event OP should check what rate of PRSI applies to his circumstances and then check waht that rate of PRSI entitles him to.


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## WaterSprite (16 Jul 2008)

Mechman said:


> Just a quick question:
> 
> 3. Finally, if I am not entitled to the above as it stands, if I resigned as a Director and / or handed back the shareholding, would it restore my entitlements?
> 
> Thanks in advance for replies .



Just on the above point - handing back your shares and resigning as Director won't turn you back into an employee.  Right now, you are either an employee (and director) or not (and just a director).  Your director status doesn't affect your employee status.  Are you working for the company at the moment?  If so, what are the contract/working arrangements?

Sprite


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## Welfarite (16 Jul 2008)

WaterSprite said:


> Just on the above point - handing back your shares and resigning as Director won't turn you back into an employee. Right now, you are either an employee (and director) or not (and just a director). Your director status doesn't affect your employee status. Are you working for the company at the moment? If so, what are the contract/working arrangements?
> 
> Sprite


 

Thge answers to these questions are crucial to deciding what class of PRSI you are liable to pay (being a "non proprietary director" does not automatically mean you pay Class A rate ...("propietary and non-propietary director" are Revenue terms and relate to tax status rather than SW status)


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## Mechman (17 Jul 2008)

I don't actually have a contract of employment, so how do I know exactly whether I'm an employee or not? 

Who actually determines that?

Can I be a Director with a 10% shareholding and still be an employee? 

<-----------Confused............


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## Mechman (17 Jul 2008)

Ok, I'm paying Class S1 PRSI - so that gives me lower entitlements - but I'm still confused as to when is a Director not an Employee?


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## WaterSprite (17 Jul 2008)

Whether or not you are an employee depends on how much "control" your company exerts over your day-to-day operations.  If you haven't really changed what you do for the company from when you were "an ordinary employee" to now, you probably would still be deemed to be an employee.  Bear in mind we know nothing at all about your day-to-day working for the company at the moment so I'm using huge generalisations and making assumptions all 'round here.

What makes you think that you aren't an employee?  Did you resign from employment?  Did you get a P45?  How are you distinguishing between being an "ordinary employee" and what you are now?  Do you work full time for the company?  Do you work at their premises?  Do you invoice for work done or are you paid via the PAYE system?  Does someone at the company direct your day-to-day activities? (sorry for the interrogation, but all Qs are relevant)

I know nothing about directors' PRSI etc so am not commenting on any of the other points - am just commenting on the "employee/non-employee" question

You can absolutely be a 10% director and an employee at the same time.

Sprite


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## Tattouna (5 Jan 2010)

I worked for a company, which I founded with two other partners, for 8 years. Due to bullying by one partner to gain 51% control and his attitude, I ended up leaving the company in Nov '08 having not been payed my monthly salary for some months (I was paying PRSI/PAYE contributions). 

I now have a case against the company, as an employee, running through the Payment Of Wages Act 1991 - seeking region €23,000 in unpaid salaries, prior to me formally resigning from the company on 31st Jan 2009.

My former companies solicitor argument is that as 'proprietary director' (32% stake), I am not an employee. The rights commissioner has asked both sides to submit their arguments on both sides.

We had a head office, held weekly meeting chaired by the MD, worked full weeks (I averaged 66.5 hours per week for the company in '08), was paid mileage & general expenses by the company etc. I was clearly employed and paid monthly by the company for six years... 

What is my formal status? My understanding that regardless of directorship or shareholder status, the formal working structure I was clearly under would class me as an "employee". Can anyone clarify?

Secondly, I believe that "propietary and non-propietary director" are Revenue terms and relate to tax status only. Therefore, surely my civil rights under any Payment Of Wages Acts or other Acts cannot be compromised?

Thanks a lot in advance for your advise...


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