Continuity of employment

Produced by Tolley in association with Hannah Freeman at Old Square Chambers
Continuity of employment

The following Employment Tax guidance note Produced by Tolley in association with Hannah Freeman at Old Square Chambers provides comprehensive and up to date tax information covering:

  • Continuity of employment
  • When does the continuous period start?
  • When does the continuous period end?
  • How to calculate the number of weeks that count toward continuous employment
  • Employment governed by contract
  • Employment not governed by contract ― general
  • Employment not governed by contract ― sickness or injury
  • Employment not governed by contract ― temporary cessation of work
  • Employment not governed by contract ― arrangement or custom
  • Weeks that count toward continuous employment in unusual cases
  • More...

The length of time for which someone has been continuously employed is important because it affects a persons statutory rights:

  1. there are many rights which a person only acquires after a particular period of continuous employment

  2. the scope of those rights changes with the length of continuous employment

ERA 1996, ss 211–219

In order to calculate continuity of employment for the purpose of allocating the appropriate statutory rights to an employee, a statutory formula must be used. This statutory formula will override any other method of calculation in the contract of employment to the extent that the alternative method relates to statutory rights.

Continuity of employment will often also be important when assessing an employees contractual benefits. Many contracts will give greater benefits to employees the longer they work. For example, some employees become entitled to more sick pay once they have been working for a certain number of years. The statutory continuity of employment formula is often used to calculate the continuity of employment period for this purpose. However, in relation to contractual rights and benefits, the parties are free to deviate from the statutory continuity of employment formula.

When does the continuous period start?

The start of the continuous period of employment will usually be the employee’s first day of work. However, strictly, the period starts when the relationship between the parties begins to be governed by a contract of employment. This is the start date of the contract rather than the first day that the employee attends work. If a contract starts on 1 June, but the employee is off sick and does not in fact attend until 8 June, the period still starts from 1 June.

When does the continuous period end?

This depends on the particular right that the employee is trying to enforce. For example, for unfair dismissal and redundancy the continuous period ends on the effective date of termination.

How to calculate the number of weeks that count toward continuous employment

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