Law guide: Employment

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Continuous employment

Continuous employment

Period of employment required

Unfair dismissal

An employee that has been continuously employed for at least 2 years (or 1 year for employees in Northern Ireland) is entitled to bring a claim for unfair dismissal. This period is calculated from the date work started and ends on the day work ends.

Note that in practice, an employee who has 103 weeks' continuous service (or 51 weeks for employees in Northern Ireland) will - if they are dismissed - obtain the required period of service (and therefore be able to make a claim of unfair dismissal in an employment tribunal). This is because they are entitled by law to receive at least one week's notice. For more information, see 'Extension of effective date of termination' below.

It is advisable for you to review the employment of new employees well before the expiry of the two-year period (1 year for employees in Northern Ireland). It will give you the opportunity to dismiss an employee who has, for example, performed unsatisfactorily, with proper notice, before that employee becomes entitled to a claim for unfair dismissal.

However, note that a claim of unfair dismissal can still be made against you regardless of the amount of time that the employee has been employed if you dismiss the employee for any of the following reasons:

  • Pregnancy and all reasons relating to maternity
  • Taking time off for parental leave, shared parental leave, paternity leave (birth and adoption), adoption leave or time off for dependants
  • For acting as an employee representative
  • Trade union membership grounds and union recognition
  • Taking time off for jury service
  • For making a protected disclosure (generally known as 'whistleblowing')
  • Due to any of six circumstances relating to health and safety specified in the EC Health & Safety Directive 89/391 (e.g. whistleblowing on health and safety breaches)
  • Rights under the Working Time Regulations and the National Minimum Wage
  • Claiming certain specific statutory rights
  • Exercising rights under part-time or fixed-term employee regulations

If any of the above applies then the dismissal will be treated as being automatically unfair.

In England, Wales and Scotland, an employee can claim unfair dismissal if they were dismissed because of their political opinions or affiliations. They do not need to be continuously employed for the qualifying period in order to make this claim. However, the dismissal will not be treated as being automatically unfair.

In addition, the employee may be able to claim discrimination on grounds of age, disability, gender reassignment, marriage or civil partnership, pregnancy or maternity, sex, race, sexual orientation and/or religion or belief, (England, Wales and Scotland) or religious belief or political opinion (Northern Ireland) regardless of the amount of time that the employee has been employed by you.

Redundancy payment

In order for your employee to be entitled to claim for a redundancy payment, they must have been employed for a period of at least two continuous years from the date they started work and ending on the effective date of termination.

Effective date of termination

The effective date of termination is defined as one of the following:

  • Where the contract is terminated by notice (including where the employee is given notice but is not required to work their notice period), sometimes referred to as 'garden leave'), whether this notice is given by you or by your employee - the date on which that notice expires
  • Where the contract is terminated without notice (including where a payment in lieu of notice is paid) - the date on which termination takes effect
  • If there is a fixed-term contract that expires without renewal - the date on which the term expires

Usually there is no difficulty in calculating the effective date of termination and, in most cases, it is the last day on which your employee worked for you.

If you dismiss an employee without notice but instead you give wages, the effective date of termination is still the date of your employee's last day of work. In the case of constructive dismissal, the effective date of termination is the date of your employee's departure.

Extension of effective date of termination

In certain circumstances the effective date of termination can be extended. The purpose of this rule is to ensure that an employee is not deprived of their statutory rights by wrongfully dismissing them without notice just before they reach the qualifying period to present a claim.

A typical example of an extension of the effective date of termination is where an employee is employed in England, Wales or Scotland continuously for more than one month but less than two years, and is then wrongfully dismissed without notice, a couple of days before completion of their two-year period of employment. The employee would be entitled to one week's statutory minimum notice.

In this particular case the effective date of termination can be extended by one week which gives the employee the necessary two years' continuous employment to present an unfair dismissal claim to an employment tribunal.

An extension of the effective date of termination can similarly be utilised to ensure that an employee will have the necessary two years' continuous service to claim a statutory redundancy payment.

Continuity of employment

The period of employment must be continuous. If the employment period is broken so that it is not continuous with a later period, a new period of employment will commence after the break, starting again at week one. The old period cannot be added to the new.

Generally, weeks during which an employee is not employed under a contract of employment do not count as part of their continuous employment. However, such weeks should count in the following circumstances:

  • If absence is due to sickness or injury up to a maximum of 26 weeks
  • If there is a temporary stoppage of work
  • If the employee is absent in circumstances where, by arrangement or custom, the employee is regarded as continuously in employment

If there is a contract of employment, the question of continuity of employment is not an issue as there is a continuing contract and continuity of employment will be preserved, even though the employee may not work as a result of sickness, holiday or because they are on maternity leave.

Industrial action does not break continuity of employment, but days during which an employee may be on strike or locked out by the employer do not count in computing the length of employment.

If an employee is made redundant and is due to start another job (under a new employment contract) with the same employer then continuity of employment will be preserved so long as they start their new job within four weeks of the effective date of termination of their previous employment contract.

Change of employer

For employment to be continuous, the employee must be with the same employer. If there is a change in employer, continuity will be broken. Although a change of employer breaks continuity, a change in job with the same employer will not break it.

There are circumstances, however, where continuity of employment will be preserved despite a change of employer. For example, where an employer has died, their personal representatives (e.g. executors) will take control of the deceased employer's estate including the business. If the personal representatives agree to continue to employ the employee then continuity of employment is preserved. Another example would be where there is a change of partners - again there is no break in continuity.

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