What is continuous employment?
Continuous employment is a statutory concept. It is a term used to describe the length of unbroken time that an employee has worked. It can consist of the time that an employee worked for a single employer or (in some cases) can include work done for a previous employer. The period of continuous employment generally commences when an employee’s contract starts (even if the employee is not at work that day) and ends when it terminates.
Why is continuous employment important?
Employees may need a specified period of continuous employment in order to exercise key statutory rights in relation to unfair dismissal or the entitlement to a redundancy payment.
Events that break continuity
The following three situations result in a break in the continuity of employment:
• A week that does not count. An employee’s continuous employment will be severed if the employee takes a break of a complete week ending with a Saturday that does not contribute towards continuity.
• Illegality. Only work under a legal employment contract counts towards continuous employment. Accordingly, employees cannot include any period of time during which they were working under an illegal contract.
• Statutory redundancy payment. Receipt of a statutory redundancy payment will sever continuity for the purposes of future redundancy pay entitlement.
Events that do not break continuity
There are a number of situations in which continuity of employment will not be broken even though there has been a complete week in which there is no employment contract. Some of these arise by virtue of statute, and some have developed as a result of case law.
• The employee’s illness or injury.
• A temporary cessation of work.
• There is an arrangement or custom to regard employment as continuing.
Problems
Particular care must be taken in a situation where an employer wishes to break continuity and re-employ an employee, for example if the employee wishes to access their pension and there must be a 7 day break in service.
If the employee has been offered (and has accepted) another role prior to the break, it is highly likely that a contract of employment (express or implied) will be in existence. This means that continuity of employment will be preserved and the break will not be effective.
Even if there is no offer or acceptance of another role, if the employee returns to work for the same employer after a relatively short period, this is highly likely to be a ‘temporary cessation of work’. Once again continuity of employment will be preserved.
In either situation all previous service would count for the purposes of unfair dismissal rights and redundancy pay.
Solution
If you are faced with this situation then the only solution is to enter into a Settlement Agreement with the employee prior to them starting in the new role. No settlement payment is necessary.
