What is Continuous Employment?
25th May, 2021
As we all know, continuous employment is the unbroken length of time that an employee has worked for an employer.
Normally, it starts when an employee begins working for the employer in line with their contract, and it ends upon termination of an employee’s employment.
However, there are ways in which continuous employment can be broken or preserved which are rarely considered.
Continuous employment is important as it impacts whether an employee can bring certain employment claims, such as unfair dismissal, as these claims require a requisite length of service. It is also used to calculate amounts such as a statutory redundancy payment.
Determining a period of continuous employment is governed by the Employment Rights Act 1996 and not contract law. As such, an employee and employer generally cannot decide and agree by contract that the period of continuous employment has ended or shall be extended. It is a matter governed by law and employers need to be alert to the rules detailed below.
- An employee’s continuous employment will cease if the employee takes a break of a complete week, ending with a Saturday (therefore including two weekends), which does not contribute towards continuity.
- A period of leave, absence due to sickness or injury, or a temporary cessation of work does not count as a ‘break’. The Government is planning to extend the length of this ‘break’, from one week to four weeks, as part of its ‘Good Work Plan’, although it is not currently known when this change might take place. An employee and an employer can agree to preserve continuous employment under two separate contracts with an intervening gap so that it counts as one long period of continuous employment. This can only be where there was an “arrangement or custom” to regard continuity as being preserved during the gap. However, it must have existed (or come into existence) at the end of the first contract – the arrangement cannot be made retrospectively.
- An employee’s continuous employment is also preserved during a TUPE transfer of a business or if an employee stops working for one employer and is immediately employed by an “associated employer” (where both employers are under the same control, for example, if they have the same majority shareholders, even if the two businesses are entirely different).
It is our experience that employers frequently agree to alter the continuity of employment in contracts without knowledge or appreciation of these specific rules. Consequently, this may inadvertently give employees the right to bring claims for unfair dismissal or redundancy pay. As such, it is important going forward for HR teams to consider continuity of employment when drafting contracts and identifying any possible risk on exit.
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