We Were on a Break!
There’s nothing like the possibility of making redundancies in your business to make people pay attention to their length of service.
For the first time since they signed their employment contract many years previously, employees will be dusting off their employment documentation and double-checking the start date that has been used for calculating their severance payment.
It is at this stage that we often find the continuous service debate raises its head.
1. Was the employment a single period of continuous service?
For employees who were on a straightforward employment contract that began the day they started and has continued unaltered for several years, this is rarely a problem. However, we find when working with redundancies (as often as we do!), that there is at least one person whose employment record has not been that neat and tidy, and continuous service issues need to be unravelled and agreed before the severance payment can be properly calculated.
Common situations that cause confusion include where employment started on a fixed term, temporary, casual or training basis before transitioning into a permanent contract . At this stage, only the permanent contract start date might be recorded and the earlier period of service can be lost, or the employer believes mistakenly that there was a genuine break in service. Alternatively, the employee may have had a short break in contract for some reason and this has been recorded incorrectly as a termination and restart of employment. It is rare that we find that statutory leave such as sickness, maternity or adoption leave has constituted an apparent break in continuous service, but this would clearly be very questionable!
External contractors that have later been offered permanent roles may also cause confusion by claiming that their contracted period of service was the beginning of continuous employment service.
2. What to do if continuous service is disputed
In the event of a dispute regarding continuous service, the best place to start is to look in the HR file and the contracts that are within. Check for documentation that supports the employee’s claim and read the terms of the contracts carefully.
Remember that just because the paperwork isn’t there it doesn’t mean some kind of contract didn’t exist. If the paperwork isn’t clear, then payroll records can be useful to see if there is a break in salary or PAYE that might constitute a genuine break in employment.
3. How long is a break to make it a formal break in service?
Where employees have had some kind of break in employment, we are often asked how long the break needs to be to create a formal break in continuous service. There is no clear answer here, but we would look for some elements to test if there has been a break. Such things might be:
- the length of the break – anything over a week might constitute a continuous service break;
- what the intention was in breaking the employment contract by the employee;
- whether the employee worked anywhere else during the break period;
- what the intention was in breaking the employee’s service by the employer and whether this was a reasonable intention (i.e. an intention to break the continuous service to avoid employment or other statutory rights, for example, would not be reasonable).
Manager’s Guide to Redundancies
Read our comprehensive guide to redundancies providing overview of redundancy requirements for UK employers and detailed insights into key activities and decisions.