COVID-19: Directors’ duties and furlough leave

The Government provided a welcomed clarification in the update of 4 April to the Coronavirus Job Retention Scheme guide in relation to company directors. The updated guide explains that a company director on furlough leave may still do a modicum of work to comply with the statutory duties if this work is not linked to generating profit:

‘Where furloughed directors need to carry out particular duties to fulfil the statutory obligations they owe to their company, they may do so provided they do no more than would reasonably be judged necessary for that purpose, for instance, they should not do work of a kind they would carry out in normal circumstances to generate commercial revenue or provides services to or on behalf of their company.’

The guide further suggests that the company’s decision to put a director on furlough leave should be formally adopted and noted in the company’s records. The director placed on furlough leave should be informed in writing of the company’s decision. 

 

Authors: Kiril Moskovchuk

Published: 07 Apr 2020

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