1/ The 1st (I presume) furlough/job retention scheme case has been handed down today featuring one of #ukemplaw Twitter's newest recruits, @StuartBrittend1. It's about whether Carluccio's administrators can furlough the employees & it is here: thompsonstradeunion.law/media/3949/cal…
2/ The case is concerned principally with administrator's duties & what mechanism can be used by the administrator to give furloughed employees super-priority rather than placing them alongside other unsecured creditors, however there is plenty for the pure employment lawyer.
3/ 1st, it's the 1st judicial mention (as far as I know) of the scheme, which I guess of some interest itself. The Judge appears to share #ukemplaw Twitter's longing for clarificatory legislation. 
4/ Carluccio's administrators hoped to retain the company's employees as part of the business for sale. They proposed advantage be taken of the job retention scheme through furlough alongside a variation of contract to reduce wages to the scheme level & scheme payment timings.
5/ Most of the employees readily accepted. 4 preferred to take redundancy & retire. Another 77 hadn't responded to the letter as at the date of the hearing.
6/ The 1st question of interest to the pure employment lawyer was whether it could be implied that the contracts of non-respondees had been varied (which might make priority solutions easier). That required consideration of the principles in Abrahall.
7/ Rightly, the Judge wasn't satisfied non-respondees' contracts were varied. There hadn't been long since the letter was sent, some may not have received it, there'd been no positive acts from which to draw an inference & a few had rejected the variation.
8/ That meant that unless they subsequently agreed to the variations, non-respondees were still employed under their ordinary contract. That would have a consequence in respect of creditor priorities.
9/ The Judge noted whilst the Job Retention Scheme expressly applies to companies in administration, it is silent about how administrators are to pay furloughed employees wages under the scheme. Absent the Scheme setting up a Quistclose trust, another route needed to be found.
10/ The route around that problem came via para 99 of Sch B1 of the Insolvency Act 1986. Put simply, the effect is to prioritise payments of wage/salary under a contract of employment adopted by the administrator. Nothing done within 14 days after appointment = adoption.
11/ As the variation was within 14 days of appointment for consenting employees, that act couldn't count as adoption. Nor could the mere failure to terminate the contracts of non-consenting employees (a passage that an insolvency specialist might want to expand upon).
12/ In respect of consenting employees, the Judge held adoption occurred at the point of application for the grant under the Scheme. That act then placed those employees in a super-priority position under para 99.
13/ As regards non-responders, if they consented outside the 14 days since employment, that would not amount to adoption as the act was by the employee & not the administrator. If they didn't respond, the administrator would also have done nothing amounting to adoption.
14/ Once non-responders get into gear and respond positively, they are thus placed in the same position as those who've already consented, with adoption taking place on the administrator applying under the scheme, thereby placing the former non-responders in a priority position.
15/ For those who never respond, then save through some other positive act, given the administrator won't be taken to adopt their contracts by simple non-termination, any claim they have for monies would be placed alongside other unsecured creditor.
16/ An interesting side question was whether the administrator had a duty to apply under the job retention scheme for those who failed to respond. That argument centred on the implied term of mutual trust & confidence & the principles set out in Aspden.
17/ As you'll know, Aspden concerned the fairness of dismissing an employee on long-term sickness absence when benefiting from PHI. It'll interest my @42BR_Employment roommate (post-lockdown) @RadBarrister, who was scuppered by Aspden in ICTS v Awan. Here the argument failed.
18/ So there we have it, our 1st Coronavirus Job Retention Scheme judgment & some #ukemplaw to punctuate this unusual Bank Holiday weekend. If you've got to the end of the thread, well done. Let me know you read all the way by liking it! Happy Easter/Chag Sameach/Happy Vaisakhi!
