Court ruling risks Debenhams jobs

Thousands of jobs at department store chain Debenhams may be at risk after the High Court ruled its administrators could be liable for furloughed staff ’s full wages.

The company appointed administrators from the FRP Advisory last week as it entered administration for the second time in the past 12 months.

Debenhams’ 142 UK stores remain closed in line with Government guidance. The company has said it will work to “re-open and trade as many stores as possible” when restrictions are lifted.

Around 13,000 of its employees in the UK are being paid under the Government’s job retention scheme (JRS), which covers 80 per cent of the salaries of furloughed staff up to £2,500 a month.

FRP says “it is necessary to ‘mothball’ the business during the Covid-19 pandemic to seek to rescue it in the months to come”, and that it wants to continue paying furloughed staff under the JRS.

However, lawyers representingfrpsaiditmaybeforcedto make “a large part of the significant number of employees of Debenhams” redundant if it is responsible for staff wage liabilities.

The administrators applied to the High Court for a declaration that the contracts of staff who had been furloughed prior to their appointment would not be “adopted” by FRP if they continued to pay 80 per cent of furloughed employees’ wages.

Following a remote hearing yesterday Mr Justice Trower said: “I think it is likely that the participation by companies in administration in the JRS and the payment of equivalent amounts to furloughed employees … means that the contracts of employment … will have been adopted by the administrators.”

Debenhams chief executive Stefaan Vansteenkiste said earlier this week: “In these unprecedented circumstances, the appointment of the administrators will protect our business, our employees, and other important stakeholders, so that we are in a position to resume trading from our stores when Government restrictions are lifted.”