Staff eligible for job retention scheme if organisation faces liquidation

Employees whose organisation faces administration during the Covid-19 (Coronavirus) pandemic could still be eligible for the government’s job retention scheme.

According to government guidelines updated on 9 April 2020, an administrator will now be able to pursue the job retention scheme for the organisation’s employees if there is a likelihood of rehiring the workers. For instance, this could be as a result of an administration and pursuit of a sale of the business.

Under the job retention scheme, all UK employers with a pay as you earn scheme that started on or before 28 February 2020 will be able to access support to continue paying up to 80% of employees’ salary, up to £2,500 a month, for those staff that would lose their jobs entirely during the Coronavirus pandemic, this scheme was implemented to avoid mass redundancies. This will be effective up to three months but can be extended if necessary.

Trade union Unite had highlighted its concern that employees could face financial difficulties if their organisation collapsed under the financial strain of the Coronavirus outbreak, when the restaurant chain Carluccio’s went into administration on 30 March 2020.

The union confirmed that while administrators usually have to dismiss employees within 14 days of their appointment, to avoid liability for their employment and wages, the new direction means that it will give more time for employees to respond to any financial offers received from the administrator.

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Howard Beckett, assistant general secretary for political and legal affairs at Unite, said: “The new job retention scheme was put together in record time and its interaction with other areas of law, in this case insolvency law, needed to be looked at by the High Court.

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