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Why is the length of employment relevant to my Business?

An employee’s rights are a function of their length of service, known as the employee’s ‘continuous period of employment’. This is the period of unbroken employment.

Why is it important?

Employees have a legal right not to be unfairly dismissed. However, this right is generally only available if the employee has two or more years’ of continuous employment. If an employee has not attained the minimum period of 2 years continuous employment, they will not normally be entitled to bring a claim for unfair dismissal against their employer. There are, however, some special cases where employees with less than 2 years’ of continuous employment are protected from an unfair dismissal.

Other entitlements affected by the duration of the continuous employment period include the right to and size of redundancy payments, along with: statutory maternity pay, statutory paternity pay, statutory adoption pay and statutory shared parental pay.

In order to understand which particular rights an employee is entitled to, it is first necessary to calculate the period of continuous employment.

Within two months of starting work, the employee should be provided with a written statement of particulars of employment. This can either be via an employment contract or a statement of terms of employment. The contents should state the date on which the contract began, and also from which date the continuous employment begins. This will clarify in no uncertain terms the date on which the continuous employment should be calculated from. Normally, this is the day on which the employee starts work.

Notably, it is possible for an employer to agree to periods of employment being carried forward into an employee’s new job. One such example is where an employee has previously worked for a subsidiary company before obtaining a new role with the parent company. In more complicated situations, it may be necessary to include a continuous employment contract clause within the written particulars of employment. Another example is where the employee has transferred to a new employer under TUPE.

The end date of the period of continuous employment is the effective date of termination. That is the date an employee’s notice period expires unless the employer has the right to exercise a pay in lieu of notice clause under the contract of employment (this is often referred to as PILON clause).

Employers should be careful to ascertain the true period of continuous employment.  Only work in accordance with a legal contract of employment will count towards the period of continuous employment. Further, any period worked under an illegal contract cannot be included and will constitute a break in the period of continuous employment.

If the employee receives a statutory redundancy payment this will severe the continuity. This severance is a break in continuity. In situations where an employee’s contract is renewed, or they are re-engaged, within four weeks the continuity will not be broken.

Understanding how to calculate the period of continuous employment will help an employer understand the employee’s rights and help them to avoid disputes and tribunal claims.

Employers often don’t realise how few rights an employee has before they have attained 2 years of continuous employment.

Recommendations

An employment contract should clarify the date on which the employee starts work, and from what date their period of continuous employment is recognised. Before deciding on any dismissals of redundancies, the employer should first calculate the continued service for each relevant employee. Before allowing an employee to reach two years’ continuous service, including notice period, an employer should ask themselves whether they wish to retain the employee before it becomes more difficult to dismiss them.

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Harry Taylor was a J B Montagu Scholar at Middle Temple. He was called to the Bar as a non-practicing barrister in 2014. Before joining Helix Law Harry gained commercial experience at a Tax advisory firm. Harry is currently studying for a Masters degree in Employment Law.

This article is written to raise awareness of the issues it discusses and it may not be updated after it is first written, even if the law changes. It is not intended to be legal advice and cannot be relied on as such. Helix Law is not responsible or liable for any action taken or not taken as a result of  this article. If you think the matters set out affect you and you wish to apply them to your particular circumstances then we are happy to give you free initial telephone advice. 

Contact Helix Law on 01273 761 990 or email: [email protected]