On Monday 13 April 2020, the High Court released its judgment in the United Kingdom’s first case relating to the government’s recently announced Coronavirus Job Retention Scheme (“CJRS”).

The case considered the use of the CJRS by the Administrators of Carluccio’s Limited (“Carluccio’s”). Due to Carluccio’s being in administration, it was heard by the High Court as a matter of urgency.

The case raised several important points because the government had only outlined the CJRS in broad terms, nor has it detailed the way the CJRS interacts with existing insolvency legislation.

This blog deals with the administration and insolvency issues as well as the employment law implications regarding employees impliedly consenting to changes to their terms of employment.

Facts

  • Carluccio’s entered administration subsequent to the imposition of the government’s ‘lockdown’ measures aimed at reducing the spread of COVID-19.
  • The Administrators’ current strategy is to “mothball” Carluccio’s whilst it seeks a buyer. As part of this strategy the Administrators wish to retain its employees and claim for their wages through the CJRS.
  • Carluccio’s has no money with which to pay the continuing wages of its employees. If Carluccio’s cannot take advantage of the CJRS and in turn limit its liability for wages to the amount it would be able to obtain under the scheme, the Administrators would be forced to make the workforce redundant.
  • The Administrators made an offer to place the employees on furlough under the CJRS. The “overwhelming majority of employees” accepted the offer, a “handful” indicated that