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Where a Company entered administration on 16 March and the employees were TUPE’d across to NewCo on the same day

Confused Director

  1. The key issue in the scenario posed by Lorraine is that the employees had not been furloughed prior to any transfer, which took place after 28th February, and NewCo did not have a PAYE scheme in place as at 28 February.

  2. On a literal reading of the Scheme, where NewCo did not exist and / or did have a payroll on 28th February, Newco will not be eligible to claim back the salary paid. According to the Coronavirus Job Retention Scheme (CJRS), the position is as below

"Who can claim

You must have:

  • created and started a PAYE payroll scheme on or before 28 February 2020”
  1. A possible argument might be there has been a transfer of an undertaking, namely OldCo, to NewCo, pursuant to TUPE, so NewCo might be able to rely on the fact that Old Co had a PAYE scheme in place in respect of the very employee that NewCo now wants to furlough. 
  2. This argument appears to fall foul of the wording of the CJRS quoted above. However, I suspect that the effect of TUPE is an issue which the Government may not have not considered or considered fully (and may yet issue further guidance dealing with the specific issue or making the position clearer).
  3. However, at best, the position is uncertain. This means that if NewCo now sought to furlough employees it could become liable for the wages of the furloughed employees from the date of the furlough without being able to claim the sums back under the Scheme.
  4. Hope this assists although I appreciate that it may not be the hoped for answer

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