Can directors, partners or those working under umbrella companies be furloughed?
Yes. The updated government guidance has confirmed that office holders (including company directors), salaried members of Limited Liability Partnerships (LLPs) individuals working under umbrella companies (including agency workers) and individuals who are classified as ‘workers’ rather than employees can be furloughed but only to the extent that they are paid via PAYE. Therefore director’s fees can be claimed (subject to the cap) but dividends are excluded, as are bonuses and commission payments.
Those who are paid annual are now eligible to make a claim, subject to meeting the remaining requirements. This includes being notified to HMRC on an RTI submission on or before 19 March 2020 which relates to a payment of earnings in the 19/20 tax year.
The decision to furlough a director or office holder should be adopted as a formal decision of the company or LLP which should be minuted and notified in writing.
Company directors can only undertake work to fulfil a duty or other obligation arising from an Act of Parliament relating to the filing of company accounts or provision of other information relating to the administration of the director’s company while furloughed and they cannot carry out work that would generate revenue or perform services to or on behalf of their company. This also applies to salaried individuals who are directors of their own personal service company (PSC).
Related FAQs
Yes. The Town and Country Planning (General Permitted Development) (Coronavirus) (England) (Amendment) Order 2020 came into force on 9 April 2020 giving permitted development rights for emergency development. The permitted development right is available to local authorities and health service bodies (as defined) on land owned, leased, occupied or maintained by it for the purposes of:
- Preventing an emergency
- Reducing, controlling or mitigating the effects of an emergency
- Taking other action in connection with an emergency
It could cover, for example, the temporary change of use of buildings into a Nightingale Hospital or the establishment of a testing centre.
The permitted development right is not permitted in certain instances and is subject to a number of conditions including the notification of the local planning authority and the cessation of the use before 31 December 2020.
Further detail of the permitted development right is available at the link below.
Given the impact the Coronavirus is going to have upon the commercial property market, landlords will undoubtedly, as a matter of good commercial sense, will have to seriously entertain approaches from tenants seeking a rent suspension – notwithstanding there is no entitlement to the same under their lease.
Some landlords may decide it is better to waive or suspend rental payments over the short term rather than face their tenants going out of business and leaving them with an empty building in a flat or dead market.
A measure falling short of a rent suspension would be for the tenants to negotiate with their landlord’s monthly payments of rent rather than quarterly and for those monthly payments to be in payments arrears, rather than in advance.
On 2 April 2020, the Government issued guidance relating to Private Finance Initiatives and PF2 Projects. The guidance, which is to be enforced with immediate effect (currently due to stay in place until 30 June 2020), is one of several guidance notes issued to date.
A link to the guidance is set out below:
Key messages to contracting authorities
- PFI contractors should very much consider themselves as being part of the public sector response to the current pandemic
- Covid-19 is not regarded as, and is not to be classified as a force majeure event
- PFI contractors must ensure that contingency plans are up to date and have been reviewed and discussed with contracting authorities to enable the continuity of full services to respond to the pandemic and maintain vital public services
- Contracting authorities should work closely with PFI contractors to use all available options to maintain public services during the emergency period
- Local arrangements should be made where PFI contractors can’t deliver the agreed requirements and performance standards
- “Best efforts” should be made by all parties for the continuation of service provision
Many charities have money that are considered restricted funds which are given to the charity or raised for a specific purpose. The Charity Commission gives guidance on this, please see the link below. Depending on the circumstances in which these monies have been given to a charity or raised you may or may not be able to use them.
Monies raised in an appeal or specific fund raising campaign are unlikely to be available as it is likely to be impossible to get the permission of the donor to change the use. If however you have had monies donated for a specific purpose and you can identify the donor you can use these funds for general overheads and to pay wages etc. if you receive the donor’s specific permission to do so.
Hopefully, further guidance will provide additional clarification on this, but it is difficult to see how a charity whose operations have been significantly curtailed because of the Covid-19 restrictions, cannot furlough employees and access the scheme, in particular where they have several different income streams. For example if a charity’s retail or fundraising operations have been significantly curtailed due to the restrictions, then it would appear unfair for it not to able to rely on the furlough scheme to assist in the funding of the employment costs associated with this part of the charity.
However, it might be prudent, where there are services that are publicly funded and employees working within those services cannot undertake their normal work, to consider if they can do different roles to work on Covid-19 activities. If there is no such work available then the guidance does appear to allow the furloughing of employees and such organisations to access the scheme.
In our experience, the funding streams and work undertaken by the organisations that could fall into the third category identified above can be exceptionally diverse and we would strongly recommend that you take advice before making such decisions about furloughing employees.