Carluccio's Ltd, Re Insolvency Act 1986

Carluccio's Ltd, Re Insolvency Act 1986

Administrators may place consenting employees on furlough and pay them only grant monies received under the Scheme, adopting their varied contracts only upon payment or application under the Scheme; non-responding employees’ contracts are not adopted by mere non-termination, and administrators are not obliged to apply under the Scheme for them.

Parties
Joint Administrators: Geoff Rowley and Philip Reynolds of FRP Advisory; Company: Carluccio’s Limited; Interested Party: Unite the Union
Jurisdiction
England and Wales
Judgment Date
13 April 2020
Procedural Posture
Insolvency Application / Judgment With Directions
Outcome
Declarations and directions issued clarifying legal basis for furloughing employees and adoption of contracts under administration.
Legal Topics
Coronavirus Job Retention Scheme, Furlough, Contract Variation, Priority of Claims, Administration
Insolvency Employment Coronavirus Job Retention Scheme Furlough Contract Variation Priority of Claims Administration

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Parties

Geoff Rowley and Philip Reynolds of FRP Advisory

Joint Administrators

Carluccio’s Limited

Company

Unite the Union

Interested Party

Procedural Posture

Insolvency Application / Judgment With Directions

Legal Issues

  1. 1 Legal basis for placing employees on furlough under the Coronavirus Job Retention Scheme during administration
  2. 2 Whether administrators adopt employment contracts by not terminating them within 14 days
  3. 3 Priority of payment for furloughed employees under insolvency legislation

Ratio Decidendi

Administrators may place consenting employees on furlough and pay them only grant monies received under the Scheme, adopting their varied contracts only upon payment or application under the Scheme; non-responding employees’ contracts are not adopted by mere non-termination, and administrators are not obliged to apply under the Scheme for them.

Court Disposition

Declarations and directions issued clarifying legal basis for furloughing employees and adoption of contracts under administration.

Orders

  • Employment contracts of consenting employees are varied upon written acceptance; adoption occurs upon payment or application under the Scheme.
  • Objecting employees’ contracts are not varied or adopted; they are to be made redundant.