Whilst the first thought for directors when the government announced the furlough scheme, may have been for their employees (or, at least, the potential business-saving benefits associated with the furlough of employees), as the length of the lockdown period extends, salaried directors may now be turning their minds to whether they themselves should be furloughed.
The rules with regards to furlough are strict: an employee "cannot undertake work for, or on behalf of, the organisation". However, when it comes to directors matters are not quite so clear. HMRC guidance indicates that a director can do what is necessary to comply with their statutory duties, but no more than this. HMRC states that there should be no acts carried out for the purposes of improving the financial performance of the business.
There is a conflict here then between HMRC guidance (which does not permit the improvement of the financial performance of the business) and the Companies Act 2006 which (under s172) requires the director to promote the success of the company.
Directors will therefore have to tread the line between managing their statutory duties and complying with HMRC guidance very carefully. I would suggest that further guidance specific to the expectations the government has with regards to the role of directors would be welcomed. In the meantime, arguably saving the business salary payments by relying on the government furlough scheme to fund salaries where the directors are not working, should count towards the directors' efforts to promote the future success of the company, even if they cannot promote the business itself in the meantime.
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, i.e. 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.