Coronavirus Job Retention Scheme, Furloughing Directors

M+A Partners are focused on supporting all of our clients through this period of National Emergency, including the many clients that operate their own Limited Companies.

This page details the current Government information on furloughing Directors, and other eligible individuals who are not employees, through the Coronavirus Job Retention Scheme (CJRS).

Eligible individuals who are not employees

As well as employees, the CJRS grant can be claimed for any of the following groups, if they are paid via PAYE:

  • Office holders (including company directors);
  • Salaried members of Limited Liability Partnerships (LLPs); and
  • Agency workers (including those employed by umbrella companies).

The guidance below sets out specific considerations for those individuals who are paid via PAYE, but who are not necessarily employees in employment law. Unless explicitly detailed below, all other CJRS guidance is applicable to these cases, and should be followed.

Company directors

As office holders, salaried company directors are eligible to be furloughed and receive support through this scheme.

Company directors owe duties to their company which are set out in the Companies Act 2006. The board of directors can decide whether a director should be furloughed. Where one or more individual directors’ furlough is decided by the board, this should be formally adopted as a decision of the company, noted in the company records and communicated in writing to the director(s) concerned.

At M+A Partners we can supply you with the necessary Board Minutes to formally adopt a decision to furlough a director. Ask your usual contact for these minutes if you decide to furlough a director of your company.

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

This also applies to salaried individuals who are directors of their own personal service company (PSC). Additional provisions are available for contractors working under the Off Payroll Working Rules for Public Sector Employers. If this applies to you contact us for more information.

Office holders

Office holders (such as company secretaries) can be furloughed and receive support through this scheme. The furlough, and any ongoing payment during furlough, will need to be agreed between the office holder and the party who operates PAYE on the income they receive for holding their office.

Where the office holder is a company director or member of a Limited Liability Partnership (LLP), the furlough arrangements should be adopted formally as a decision of the company or LLP.

Salaried Members of Limited Liability Partnerships (LLPs)

Members of LLPs who are designated as employees for tax purposes (‘salaried members’) under the Income Tax (Trading and Other Income) Act (ITTOIA) 2005 are eligible to be furloughed and receive support through this scheme.

The rights and duties of a member of an LLP are set out in an LLP agreement and, in the absence of an agreement, default provisions in the LLP Act 2000, based upon company and partnership law. Such an agreement may include separate agreement between the LLP and an individual member setting out the terms applicable to that member’s relationship with the LLP.

To furlough a member, the terms of the LLP agreement (or any such agreement between the LLP and the member) may need to be varied by a formal decision of the LLP, for example to reflect the fact that the member will perform no work in the LLP for the period of furlough, and the effect of this on their remuneration from the LLP.

For an LLP member who is treated as being employed by the LLP (in accordance with s863A of ITTOIA 2005), the reference salary for this scheme is the LLP member’s profit allocation, excluding any amounts which are determined by the LLP member’s performance, or the overall performance of the LLP.

We are here to help and support you when you need us most, please get in touch with your usual M+A Partners contact or email