What is Continuous Employment?

Understanding the concept of continuous employment may sound complicated as an employer. However, it is crucial for managing your workforce effectively and complying with requirements should instances such as redundancy or determining employment rights arise. Continuous employment refers to the length of unbroken service an employee has with an employer. The duration of continuous service is significant because it influences employees’ rights to certain benefits and protections under employment law. This article will provide a clear and concise guide as to what continuous employment is and why it matters for your business. 

What is Continuous Employment? 

Continuous employment is the period that your employee has worked for you without a break, such as by working consistent shifts every week. It plays a pivotal role in determining eligibility for various benefits and protections entitled to employees. Continuous employment generally commences when an employee’s contract of employment begins and ends upon termination. 

What is the Importance of Continuous Employment?

Employees must have a specified period of continuous employment to enjoy certain legal rights and protections. Generally, employees acquire several rights once they have surpassed two years of continuous employment. 

For example, an employee will need two years of continuous employment to bring a claim for ordinary unfair dismissal or enforce their right to a statutory redundancy payment. 

Some further examples whereby an employee’s continuous employment affects their entitlement to benefits and protections include the right to: 

• bring a claim for constructive unfair dismissal, which requires two years of continuous service;
• a statutory redundancy payment, which is only available to employees who have at least two years of continuous service; and 
• claim statutory maternity or paternity pay, where employees need a period of 26 weeks of continuous employment before the qualifying week. 

Additionally, some employers will provide enhanced contractual rights once employees have reached a certain amount of continuous employment. These rights may include company sick pay, enhanced holiday leave and the entitlement to other company benefits.  

Case Study: Practical Application

Consider a pool of employees who have been made redundant following a company’s downturn in business, which has led to reduced levels of work within the business. Jane has been with the company for 14 months, and Peter has been with the company for four years. Statutory redundancy pay is only provided to employees who have over two years of service, which means that Jane would not receive any redundancy pay. However, Peter has been with the company for four years and, as such, is entitled to statutory redundancy pay. 

Additionally, the company also has a policy for bonus payments for members of staff who have served the company for over two years. This means that Peter would also be entitled to a bonus payment in addition to his statutory redundancy pay. 

What are Exceptions and Breaks in Continuous Employment

Some breaks count as interruptions, potentially resetting the continuity clock. For example: 

• Joining a new company: Generally, when employees move to different jobs with other companies, the continuity of employment is broken. This is because continuity of service does not continue to a new job, and as such, the clock will restart. 
• Dismissal and re-employment: If you dismiss and subsequently reemploy an employee, and there is no contract of employment in place for a complete week ending with a Saturday, then the continuity of employment is generally broken. This applies unless it has been outlined otherwise in the employee’s contract of employment. 

How Does TUPE Affect Business Transfers?

Additionally, there may be instances whereby continuous employment is carried over or continued from one company to another. The most common example of this is under the Transfer of Undertakings Protection of Employment Regulations (TUPE). 

This typically occurs when a business or part of a business is transferred to another owner, where the new owner employs the existing staff. In these instances, generally, an employee’s continuity of employment will be preserved. This means that their continuity of employment is transferred with them, maintaining their continuous employment status with the new employer. 

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Key Takeaways 

Understanding continuous employment is fundamental for managing your workforce and understanding your legal obligations in the employment law sphere. By recognising the length of your employees’ continuous employment, you can better understand your legal position and avoid potential disputes. Continuous employment is an important determiner of the rights and entitlements of your employees that you must legally provide. 

If you need help calculating continuous employment, our experienced employment lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page.