Carluccio's Ltd, Re Insolvency Act 1986 [2020] EWHC 886 (Ch) (13 April 2020)

Carluccio's Ltd, Re Insolvency Act 1986 [2020] EWHC 886 (Ch) (13 April 2020)

Administrators may lawfully furlough consenting employees under varied contracts, limiting liability to the grant received under the Scheme. Non-responding employees' contracts are not adopted absent express or implied consent. Payments to furloughed employees are justified under Paragraph 99 of Schedule B1, with super-priority for wages or salary arising from adopted contracts. The Scheme can be implemented in administration consistent with insolvency law, supporting the rescue culture.

Citation
[2020] EWHC 886 (Ch)
Parties
Joint Administrators: Geoff Rowley and Philip Reynolds of FRP Advisory; Company: Carluccio's Limited; Intervener: Unite the Union
Jurisdiction
England and Wales
Judgment Date
13 April 2020
Procedural Posture
Insolvency Application / Judgment on Directions for Administrators
Outcome
Declarations and directions granted to administrators.
Legal Topics
Coronavirus Job Retention Scheme, Furlough, Adoption of Employment Contracts, Priority of Payments in Administration
Insolvency Employment Coronavirus Job Retention Scheme Furlough Adoption of Employment Contracts Priority of Payments in Administration

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Parties

Geoff Rowley and Philip Reynolds of FRP Advisory

Joint Administrators

Carluccio's Limited

Company

Unite the Union

Intervener

Procedural Posture

Insolvency Application / Judgment on Directions for Administrators

Legal Issues

  1. 1 Whether administrators can lawfully furlough employees under the Coronavirus Job Retention Scheme
  2. 2 Whether administrators adopt employment contracts of non-responding employees after 14 days
  3. 3 Priority of payment for furloughed employees in administration

Ratio Decidendi

Administrators may lawfully furlough consenting employees under varied contracts, limiting liability to the grant received under the Scheme. Non-responding employees' contracts are not adopted absent express or implied consent. Payments to furloughed employees are justified under Paragraph 99 of Schedule B1, with super-priority for wages or salary arising from adopted contracts. The Scheme can be implemented in administration consistent with insolvency law, supporting the rescue culture.

Court Disposition

Declarations and directions granted to administrators.

Orders

  • Administrators may furlough consenting employees under varied contracts and claim under the Scheme.
  • Administrators are not obliged to adopt contracts of non-responding employees absent consent.