When a company is placed into administration, can the administrator access the job retention scheme?

When a company is placed into administration, can the administrator access the job retention scheme?

Produced in partnership with Emma Horner of 4 Stone Buildings

It appears from the government guidance published on 26 March 2020 (the Guidance) that the administrator of a company which has been placed into administration will be able to access the coronavirus (COVID-19) (CJRS). The guidance explicitly states: ‘Where a company is being taken under the management of an administrator, the administrator will be able to access the CJRS. See Claim for your employee’s wages through the coronavirus job retention scheme.

In order to apply for the CJRS, the company in administration will need to have had their operations ‘severely affected by coronavirus (COVID-19)’. Provided that the company had created and started a pay as you earn payroll scheme by 28 February 2020, the administrator would be able to backdate claims to 1 March 2020.

The guidance has been updated to state that the government would expect an administrator would only access the scheme if there is a reasonable likelihood of rehiring the workers. The example given in the guidance is where the administrators are pursuing a sale of the business.

Any employee will need to be furloughed for a minimum of three weeks, in accordance with the guidance, to allow the administrator to make a claim under the CJRS. The CJRS will also cover any employee who had been made redundant since 28 February 2020, if they are rehired and then furloughed.

For further reading on the employee CJRS, see Practice Notes: Coronavirus job retention scheme and Coronavirus job retention scheme—FAQs.

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