Furlough of Directors

If an executive director of a company is a contracted permanent employee of a company on or before 19^th March 2020, they will qualify for furlough under the Government’s Coronavirus Job Retention Scheme (the Scheme).

This template form of letter can be used to furlough a director in line with the Scheme. This letter requires the relevant director to formally agree to being furloughed and the relevant template response letter, also in this subfolder, 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 template has been updated to reflect the extension of the Scheme in its current form until 31st July 2020. Note that employers will however be able to bring back furloughed employees on a part-time basis from 1 July 2020. In addition, from 1 August 2020, the Government will start paying less towards those employees on furlough. The Government will provide full details in relation to both these points in due course. The Scheme will close in its entirety on 31st October 2020.

New enntrants (that have previously not been furloughed) must be on furlough by 10 June 2020 to ensure eligibility for the scheme after 1 July 2020.

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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