Technical Guidance
COVID-19 Contingency Arrangements

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High Court Judgment, Carluccio’s Limited – in Administration
High Court Judgment, Carluccio’s Limited – in Administration

Brief summary of judgment - 

1. Adoption of employment contracts requires an action by an administrator;

2. Administrators are at liberty to adopt employment contracts of furloughed employees when they make payments to employees, or make an application for payments under the Coronavirus Job Retention Scheme; but not before then;

3. The employment contracts of furloughed employees have not been adopted by administrators merely by virtue of not terminating the contract of employment of that employee within the first 14 days of appointment;

4. The Administrators are not under any duty to apply for a grant under the Scheme in respect of any employee other than a consenting employee or a non-responding employee whose contract has been varied;

5. The variation letter to employees at paragraph 24 is good guidance for other IPs, whilst noting the comment at paragraph 93.

Final point, before considering whether to use the Job Retention Scheme there needs to be a reasonable likelihood of achieving a sale of the business. Comprehensive notes should be kept on any decisions.

I would encourage IPs and members of staff to read the judgment for expansion on the above points. 

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