What is continuous employment?
In these FAQ’s Nicola Paton (Partner and Solicitor at Parker Arrenberg Solicitors) explains the concept “continuous employment”.
It is important to note from the outset that continuous employment determines which claims an employee can bring and is further used to determine the entitled reward in such a claim.
What is continuous employment?
A term used to describe the length of constant time that an employee has worked for an employer.
How is the period of continuous employment calculated?
Generally, it commences on the date of the employees start date detailed in their employment contract or offer letter (even if they don’t actually work on that date). It ends when the employment contract terminates. The termination date will be determined by a number of factors set out below.
What law governs continuous employment?
Why is continuous employment important?
When bringing a claim against an employer the employee will need to satisfy a specified period of continuous employment in order to be entitled to some statutory rights. For example, an employee is only entitled to a statutory redundancy pay if they have continually worked for 2 years. To advance an unfair dismissal claim at least 2 years continuous employment are necessary.
Will an employee’s length of service be taken into consideration when an Employment Tribunal makes an award?
Yes – An employee’s period of continuous employment is used to calculate monetary awards awarded by the court. Generally, the longer you have worked the greater the award.
Can employees and employers’ contract into, or out of, continuity of employment?
An employer and employee cannot decide that the period of continuous employment has ended by detailing it in a contract. This is because statue governs continuity of employment not a contract. An employee length of service can be greater that what is written in their contract. For example, when an employee on a fix term contract has a termination date that has passed, but continues to be employed by their employer, the continuity of employment continues to increase.
What is the employee start date?
Surprisingly this isn’t always a point that employers and employees agree on when pursing, or defending, a claim in an employment tribunal.
In General of the Salvation Army v Dewsbury  ICR 498, the Employment Tribunal held that the reference to the day on which the employee starts work: “is intended to refer to the beginning of the employee’s employment under the relevant contract of employment. … it is not intended to be interpreted literally as referring to when the employee first undertook the duties of the employment.” In this case the employee, Dewsbury, argued this meant that a teacher’s employment started on 1 May 1982 when she came under contract, although she did not actually start teaching until 4 May.
In O’Sullivan v DSM Demolition Ltd UKEAT/0257/19 the Employment Tribunal noted that “Cases in which there is a dispute about when … the employee started work under a contract of employment … may come in many and various guises. The EAT (and higher Courts) can give guidance in relation to particular scenarios which may commonly occur, but not every case will necessarily or exactly fit a particular scenario. The watchword that the starting point is the words of the statute is never wrong; and the authorities need to be approached with this in mind.”
Can there be a break to continual employment?
There are three exceptions to the principle that an employee’s period of continuous employment “begins with the day on which the employee starts work”. These are when the employee:
- Serves in the volunteer reserve force.
- A period during which the employee is on strike.
- Works outside Great Britain
However, it should be observed that continuity of employment is preserved, it does not terminate and restart the length of service. Rather any period of time that falls into the exceptions above will simply be deducted from the continuity of employment duration.
How is the end date of the period of continuous employment determined?
This depends on the right on which the employee seeks to rely or is claiming, but generally when the claim is unfair dismissal – the period of employment terminates the effective date of termination, normally the last day of employment. This should include the any statutory notice period. When the claim is in relation to redundancy payments – Employment is treated as terminating on the “relevant date”. The relevant date is identical to the EDT except when the employee requests to have the employment terminated early. This normally arises when an employee wants to commence employment with another employer and needs releasing from their correct contact/notice period.
Does the employees first and last day count towards continuous employment?
Put simply – yes!
What events break continuity?
The following three situations result in a break in the continuity of employment:
- Employees cannot include any time period when they were working under an illegal contract.
- Receiving a statutory redundancy payment will stop continuity for the purposes of future redundancy entitlement.
Does continuity of employment break if an employee is sick?
No – if an employee suffers illness or an injury, they still benefit from continuity of employment.
The statuary wording makes it clear that the employee must be incapable of work because of illness or injury, not merely absent from work. Continuity will not be preserved if the incapability lasts for more than 26 weeks (section 212(4), ERA 1996).
Are employees Continuity of Employment preserved if the business is sold?
Yes – the employee will remain employed by the same business entity so continuity is preserved.
What if an employer transfers the business to another business entity?
This would commonly occur when a business is transferring its assets to another business entity. There are 2 pieces of legalisation that protect employees in when a business transfer is taking place: The
Employees of the transferor (current employer) become employees of the transferee (new employer) and continuity is maintained.
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