Furlough Advice - Directors of small businesses with one or two directors

A common question we are being asked is whether a director of a small business can be furloughed.

Guidance is still to be finalised, but in theory directors (provided that they are PAYE employees of the company) can be furloughed in the same way as other employees. A condition of furloughing is that you must not undertake work of any kind for the company during the time you are on furlough. This will be harder for a director to demonstrate if he or she is intending to continue to do some work for the company or be available during the downtime. For a sole director, they may need to tell suppliers/customers if asked that the business has been suspended pending the end of the COVID-19 crisis. This might be impractical/undesirable because the directors may wish to use this time working on improving the business, so that when trading starts again, the business is performing well as soon as possible. If a director does intend to do any work, furloughing is not permitted.

Important: that this only relates to PAYE income, not dividends, which do often form part of a director‘s remuneration package. You should speak to your accountant on this aspect.

If you would like to speak to someone within our Employment and HR team, please contact our offices on 01228 552222 or email hello@burnetts.co.uk . Please note that both telephone and video appointments can be arranged during this period of self-isolation.