HCR Law Events

14 April 2020

Significant updates for IPs taking administration appointments and dealing with employees

We have had some useful clarification for insolvency practitioners from both employment and the restructuring and insolvency perspectives, coming from two fronts.

First, HMRC published its third iteration of the Coronavirus Job Retention Scheme (CJRS) guidance for employers with confirmation that:

  • Employers are free to switch employees from sick pay to furlough and vice versa
  • Those working with certain work visas will not be regarded as breaking their visa conditions if they receive funds under the furlough scheme
  • Significant for all insolvency practitioners, newly TUPE’d employees can be put on furlough. This means that purchasers of companies through administration (or other restructuring) can “claim under the CJRS in respect of the employees of a previous business transferred after the 28/2/2020 if either the TUPE or PAYE business succession rules apply to the change in ownership”.

Secondly, FRP released news (confirming formal judgment to follow) that Geoff Rowley and Phil Reynolds, as joint administrators of Carluccio’s Ltd, had obtained an order from Honourable Mr Justice Richard Snowden confirming that 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 CJRS, but not before then.

This is important as it means that adoption of furloughed employees’ employment contracts has not taken place simply through the absence of terminating the same in the 14 days post appointment and consequently affords more time for insolvency practitioners to make key decisions.

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About the Author
Sam Payne, Partner, Head of Restructuring and Insolvency Team

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Sam Payne is a solicitor specialising in restructuring and insolvency.

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