COVID-19 and Directors

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As we mostly work with owner managed businesses, we wanted to quickly send out this blog to clarify the help available to directors of Private Limited Companies.

As directors and company officers are employed by their Limited company, they are employee director or an officer of the company rather than being self employed.

Summary of COVID-19 Support for small businesses

COVID-19 support for directors

In summary, there are 2 options available to owner managed businesses;

  1. Furloughing directors via the job retention scheme, or
  2. Insolvency.

Furloughing directors

A director who was on the payroll and engaged under an employment contract on 28th February 2020 may be furloughed under the job retention scheme.

The guidance from HMRC is that the board will decide to furlough a director and this decision, like other board decisions should be recorded and communicated in writing to the director being furloughed who must then agree to the new conditions of employment. 

Companies with more than one Director

If the company has 2 or more directors, one or more directors can be furloughed, leaving one to be in charge of statutory duties such as administration, bookkeeping, banking and tax filings.

Companies with one director

A company cannot function without a director as directors have statutory duties to the company. Therefore, a sole director may only be furloughed with regards to its employee’s duties. The director can then carry out their statutory duties to keep the company running (employment duties are furloughed whilst statutory duties aren’t).

Further Guidance

  • The amount claimed under the Employee Job Retention scheme in 2019/20 will be the PAYE earnings divided by 12 and adjusted for the number of days worked plus any employer’s pensions contribution. If the salary element of a director’s remuneration is above the threshold for employers’ NI, employers’ NI element can be added.
  • To be eligible for the grant, when on furlough, an employee cannot undertake work for, or on behalf, of the organisation. This includes providing services or generating revenue.
  • If an employee is working, but on reduced hours, or for a reduced pay, they will not be eligible for this scheme.
  • 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.


Directors should be mindful of their company’s prospects and take appropriate action where needed. The government has announced that it will temporarily suspend the wrongful trading rules, backdated to 1 March 2020.


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