High Court extends time limit for Carluccio’s administrators to furlough employees

A High Court judge has extended the time limit for the administrators of Carluccio’s restaurant group to furlough its employees.

The “overwhelming majority” of Carluccio’s approximately 2,000 employees have consented to being furloughed, with 80% of their salaries, up to £2,500, to be passed on when received through the government’s Cronavirus Job Retention Scheme (CJRS). However, no response has been received from 77 people.

Administrators FRP Advisory and union Unite had sought clarity around the possible impact of the Insolvency Act, which requires administrators to dismiss employees within 14 days or accept contractual liability in relation to these employees.

Under these guidelines the 77 employees who have yet to consent would have faced dismissal, however Mr Justice Snowden issued a ruling that it would be in the interests of both the company and employees to extend this 14-day period to give the remaining employees more time to consent.

The judge also confirmed that in his view the administrators were eligible to access the scheme on behalf of the casual dining chain’s employees.

The details of the CJRS published so far state: “We would expect an administrator would only access the scheme if there is a reasonable likelihood of rehiring the workers. For instance, this could be as a result of an administration and pursuit of a sale of the business."

Carluccio’s fell into administration at the end of March following the forced closure of the restaurants due to the Covid-19 outbreak. The High Court judge heard that the administrators plan to “mothball” the business while seeking a buyer.

Mr Justice Snowden said: “I have evidence from the administrators that there have been several expressions of interest in respect of some or all of the company's business, and that accordingly they take the view that there is a reasonable likelihood of achieving a sale of the business.

“In that event, the relevant employees would be transferred to the buyer and, after the restrictions on restaurants are lifted when the Covid-19 pandemic eases, they will be able to resume work in the business. The administrators think, and I agree, that this is what is meant by the expression "rehired" in the scheme guidance. As such, the administrators believe, and I accept, that in principle, the scheme ought to be available to the company in respect of furloughed employees."

Howard Beckett, Unite’s assistant general secretary for political and legal affairs, said: “Time was running out for some of our members in Carluccio’s. They faced the prospect of being dumped out of work this weekend.

“In taking this action, Unite has secured them some wage security. It is now essential that all those Carluccio's workers who have either not received a letter or not responded to the letter from the administrator get in touch with their union, Unite, or the administrator immediately to ensure they are not dismissed and lose out on the opportunity that this court judgement has ensured."

He added: “This important decision ensures that no one is left behind in a hospitality sector reeling from the effects of the shutdown."

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