The statutory rules on continuity of service

Not all gaps in employment break service continuity. Sections 210 to 219 of ERA 96 set out the statutory rules relating to continuity of service. Although these rules are complicated and difficult, they can sometimes be used to bridge gaps in continuity of service for the purpose of a claim.

The first place to start is section 210(5) ERA 96. This says that employment is presumed to be continuous unless the contrary is shown. In other words, a tribunal will assume the employment is continuous unless the employer can show that continuity has been broken.

Under section 212(1) ERA 96, if an employee works under a contract of employment for any part of a week (even for just one hour), that week will count in their continuous service.

Example: J has worked for his employer for three years when he hands in his notice and leaves. A couple of days later he realises he has made a mistake and asks his employer for his job back. The employer agrees and he returns to work immediately. Six months later he is dismissed. J can bring a claim for unfair dismissal because his continuity was not broken.

In Vernon v Event Management Catering Ltd UKEAT/0161/07, the EAT ruled that a “casual worker” who had worked two or three days a week every week for three years except for two weeks when he took a holiday had enough continuous service to bring a claim for unfair dismissal. He had worked a part of every week and his holiday was an “arrangement or custom” (see below), since it had been agreed with HR in advance.

Section 212 ERA 96 sets out other gaps in employment that do not break service continuity. These are:

• incapacity through sickness or injury of 26 weeks or less;

• a “temporary cessation of work”; or

• absence that “by arrangement or custom” is regarded as continuing the employment.

An employer and employee cannot agree that weeks will not count toward continuous service if they meet the statutory criteria under the ERA. For example:

Continuity of service can be preserved, covering periods when there is no employment contract in place, as long as there is an “arrangement or custom” in place (section 212 ERA 96). Special care is needed in the context of career break or secondment schemes, as this case shows:

By contrast, in Unwin v Barclays Bank EAT/0273/02, the EAT found evidence that Ms Unwin, who was on a career break from Barclays, had reached an arrangement with the bank before going on her break, so that her service prior to her career break was included when she was made redundant a year after returning to work.

It is not possible to agree “after-the-event” that a gap in employment was based on an “arrangement”. Instead, the arrangement must be in place before the temporary break (Welton v Deluxe Retail Limited t/a Madhouse (in administration) [2012] UKEAT/0266/12/ZT).

It is important to remember that these statutory rules on service continuity are only relevant where no employment contract is in place. Where there is a contract of employment in place, no question of continuity being broken ever arises. For example, an employee who has been on long-term sick leave for many months or even years will still have continuous service even if all sick pay rights have been exhausted, because the contract of employment is still in place.

Continuity is also preserved following a business transfer under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE), as amended (see Chapter 12).

An employee who is reinstated or re-engaged following a dismissal, either through Acas conciliation, a compromise agreement or as a result of an employment tribunal claim, will have their continuity of service from the date they originally started working for the employer (see page 314: Reinstatement).

If an employee is on strike, continuity of service is not broken, but the weeks do not count in calculating continuous length of service.

Employees on maternity leave preserve their continuity of employment, and the period of the leave counts as continuous service. The same applies to all other forms of leave associated with child rearing, such as adoption leave, paternity leave, parental leave and shared parental leave.