Continuity of Employment
The Fair Work Act 2009 (Cth) (Act) protects employees from unfair dismissal. However, employees can only apply to the Fair Work Commission (FWC) for unfair dismissal if they have worked the minimum employment period. For employees in a small business (15 employees or less), the minimum employment period means is at least 12 months of continuous employment. In a business with more than 15 employees, the period is at least 6 months continuous employment.
A failure to provide evidence of continuous employment will lead to an unsuccessful claim for unfair dismissal.
Continuous Service
When bringing a claim for unfair dismissal, it is important to recognise that a period of continuous employment must represent continuous service.1
Continuous service is a period of unbroken service with an employer by an employee.2 As continuous service was not clearly defined in the Act, the FWC has decided that the term should be given its ordinary meaning.3
The Act deems that in some circumstances, non-continuous service can be considered continuous depending on the reasons for the periods of absence.4 Periods of absence that can lead to service being continuous are called excluded periods. While an excluded period does not count towards the length of the employee’s continuous service, it also does not break an employee’s continuous service with their employer. Examples of excluded periods include periods of unauthorised absence, certain types of unpaid leave and certain types of unpaid authorised absence.
Resignation, dismissal, or transfers of employment which do fall within the Act are not excluded periods and will break an employee’s continuous service with their employer which may result in a new period of employment for re-engaged employees.
For example, an employee who resigned her employment and then later returned to work was found to have broken her continuous service through her resignation and subsequently commenced a new period of employment on her return.5
Termination of employment will also break continuous service. This means that service before the termination will not count towards continuous service if they are re-employed by the same employer.
Exceptions
An award, agreement or contract of employment may include terms that require an employer to recognise varying degrees of continuity of service.
Additionally, since casual employment does not require continuous and ongoing employment to the same extent as full and part-time employment, the threshold for continuous service slightly varies.
Th Court has found that each occasion a casual employee is engaged constitutes a separate contract of employment.6 These contracts may be week to week, shift to shift, hour to hour or for any other agreed short period.7 In this sense no casual employee has a continuous period of employment beyond any single engagement.
Therefore, for the purpose of unfair dismissal, the distinction between service and employment is crucial, with service being the definitive element.8 Once continuous service is established, the employer or employee may only break continuous service by making it clear to the other party that there will be no further engagements.9 For example, absence for illness or injury does not break a period of continuous service.10
Furthermore, the Court has observed that ‘the “engagement” must be regular and systematic; not the hours worked pursuant to such engagement.’11 A regular basis may be constituted by frequent though unpredictable engagements as long as the basis of engagement exhibited something that could fairly be called a system, method, or plan.12
Summary
The right to apply for unfair dismissal is an important protection for employees. However, it is important to note that not all employees can make an application and there are certain requirements that must first be satisfied. One of these requirements is continuous service, which may prove a stumbling block for any employee who may have been with an employer for a certain period of time without being continuously in service.
If you would like to better understand how you or your business can be affected by the requirement of continuous service, feel free to reach out to Daniel (daniel@morganenglish.com.au) and the experienced Workplace team at M+E today.