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Furlough – Company Directors

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Furlough – Company Directors

Can a Company Director be Furloughed?

Yes, however only to the extent a director is remunerated via PAYE.  The position will be the same as for other employees who are eligible to be furloughed (please see our previous guidance on this), however this will not include any payments to directors outside the PAYE system (for example dividends paid to a director shareholder will not be eligible).

Can a Furloughed Director Still Work for the Company?

A furloughed director cannot carry out any work which they would usually carry out which is a service provided to the company which generates revenue.  They can, however, undertake volunteer work or training.

Directors also must continue to comply with their duties under company law and this includes directors who have been furloughed.

Can I Still Carry Out My Director’s Duties if I Have Been Furloughed?

Any director must continue with their director’s duties set out under company law.  For example, directors have a duty to ensure accounts are filed on time.  Where furloughed directors need to carry out such duties, they may do so provided they do no more than would reasonably be judged necessary for that purpose so as not to be classed as work.

How Is the Decision Recorded?

The decision as to whether to furlough a director is made by the company through the directors.  The board of directors will make their decision which will be documented by either the minutes of a board meeting or written resolution of directors (depending on what is set out in the company’s articles of association).

The decision then needs to be noted in the company’s records and communicated in writing to any furloughed directors.

If you would like to speak to a member of our employment & HR team, please call 0330 088 2275.

 

The team at FTA Law provides advice to clients across the commercial and healthcare sectors with many of our instructions coming from referrals from long standing clients and industry contacts.

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