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Furlough of Directors

Director’s Coronavirus Job Retention Furlough Letter


The Government has extended the Coronavirus (COVID-19) Job Retention Scheme until 30 September 2021. The Coronavirus Job Retention Scheme Furlough Leave Agreement ( available here ) and the Flexible Furlough Agreement Letter ( available here ) templates have been updated and are now available to use for the new extended Coronavirus Job Retention (Furlough) Scheme announced by the Chancellor on 3rd March 2021. 

If an executive director of a company is a contracted permanent employee of a company on or before 2 March 2021, they will qualify for furlough under the latest extension to the Scheme.

This template form of letter can be used to furlough a director in line with the extension to the Scheme. This letter requires the relevant director to formally agree to being furloughed and the template response letter (see above) should be attached so that the director can return it to the company in a timely manner.

Once a director is furloughed, they must not continue to provide any further “commercial” service to their employer (the company). However, unlike other employees, directors have Companies Act 2006 duties to maintain and this letter refers to the reasonable necessity to fulfil these duties. This will be particularly important for sole directors, because a company cannot operate without its directors and all directors have ongoing fiduciary duties to their companies. This form of “part” furlough will be different for each company and must be given serious consideration before the decision to furlough is made. This template letter refers to a director’s Companies Act 2006 obligations and the “part” furlough involved.

This document is duplicated in the Coronavirus Job Retention Scheme (Furlough Leave) subfolder, which is in the Employment Folder. There are also information pages regarding coronavirus and private limited companies.

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