Continuity of Employment
Continuity of employment is a statutory provision relating to how long an employee has been employed. Generally, this is quite simple to calculate as it will be from the date someone joined the organisation to the date that they left. However, continuous employment may not always be straightforward, as various situations can break continuity or maintain continuity. The summary below provides an overview.
Why is continuous employment important?
The length of an employee’s continuous employment determines what employment rights the employee may have. This can be an essential question when making calculations (e.g., notice periods or redundancy payments), or considering applications for flexible working or family friendly rights. It is especially important in terms of unfair dismissal as, generally, an employee will need to have been employed for 2 full years (the qualifying period), before they can claim unfair dismissal (but there are exceptions to this – see disciplinary).
Continuous employment can include time worked for more than one employee where there has been a transfer of undertaking, or where the previous employer was an associated employer (see below).
Rights affected by continuous services:
- Unfair dismissal – an employee must be continuously employed for a period of not less than two years, ending with the effective date of termination (S108 ERA)
- Statutory redundancy pay – an employee must be continuously employed for a period of not less than two years ending with the relevant date (S.155 ERA)
- The right to make an application for flexible working - continuously employed for a period of at least 26 weeks (Flexible Working Regulations)
The right to Statutory Maternity Pay from the Company (see family friendly)
- Statutory notice periods – after 1 month an employee must be paid a minimum of one weeks’ notice for each full year of employment up to the maximum of 12 weeks.
- Contractual benefits – you may have benefits set out in your contract that are subject to a qualifying period / a period of continuous services. e.g., notice periods may increase with length of services, benefits may only be applicable after a certain period e.g. the probationary period.
Breaking continuity of employment
Continuity will usually be broken by a break of one clear week (measured from Sunday to Saturday) between two contracts of employment, unless certain exceptions apply (see below).
Note: In the Good Work Plan (Taylor Report), it has been proposed that this period is increased from one week to one month. It is expected that this will be put into law in 2021 or 2022.
Events that do NOT break continuity
The following will NOT break continuity of employment (even though there is a period of absence of more than on clear week).
- Sickness absence
- Maternity, adoption, paternity, shared parental leave etc.
- Temporary cessations of work (see below), including lay-off.
- By arrangement or custom (see below)
- Time between unfair dismissal and an employee being reinstated.
- Time between dismissal and reinstatement following an internal appeal.
- When an employee is dismissed on the grounds of ill health, but they are re-employed within a 26-week period.
- Where employment is transferred under a transfer of undertaking (TUPE)
- Where an employee has been made redundancy and accepts an offer of suitable alternative employment within 4 weeds of termination of the original contract, their continuity will be preserved (but they will not have the right to a second statutory redundancy payment in the future for the period prior to the alternative employment if they have already been paid statutory redundancy).
Calculating continuous employment
An employee’s period of continuous employment begins with the day on which they start work (even if the employee is not at work that day), i.e., when their employment begins under their employment contract.
The end of the period of continuous employment is determined depends on the particular statutory right:
- In unfair dismissal cases, it is the “effective date of termination” (EDT), which is normally the last day of employment.
- In resignation situations it is the effective date of termination i.e., the last day of employment.
- With Statutory Redundancy pay, employment is treated as terminating on the “relevant date”. That is normally identical to the effective date of termination.
Both the start date and end date of continuous employment count in the calculation. So, an employee starting employment on 14 January 2020 will have two years continuous employment on 13th January 2022.
Important note re notice period: Where dismissal is without notice, the period of statutory notice must be added on. This can result in a gap between the employee stopping working and the effective date of termination. For example, if an employee is dismissed without notice, 3 days before the anniversary of their 2 years’ service, a week’s statutory notice must be added which will take their continuous employment over the 2-year qualifying period for unfair dismissal.
Time not counted for continuity
In some situations, while continuity is not broken, there may be periods of time that are NOT counted towards continuity of employment. In these situations, the start date of employment is postponed by the relevant number of days / weeks.
Periods not counted:
- Volunteer reserve forces plus to not break continuity, they must recommence employment within six months of the end of their active service.
Difficulties that can arise - Temporary Cessation of Work
A gap due to a temporary cessation of work counts towards continuity. For this to apply, the employee must be absent from work due to the temporary cessation, e.g., there is a lack of work and, as a result, you’re unable to provide work either for the whole workforce or for the employee. The employee is permitted to work elsewhere until the cessation has ended without breaking their continuity (see short-time working and lay-off).
If the employee has been offered by the same employer (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. For example, if you offer a contract to a seasonal worker for the following year.
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.
By Arrangement or custom
There may be an arrangement between the employee and employer that continuity will continue. This may apply to a sabbatical or career break, or where the employee has a break between two fixed term contracts. However, an agreement to re-engage is not generally in itself sufficient to preserve continuity.
An Associated company is a company where one company has, directly or indirectly, control over another or where both are companies of which a third person (directly or indirectly) has control;