As an employer, you need to be familiar with the term ‘continuous service’ when calculating the entitlements of your employees. Some instances where you will need this term include determining an employee’s:
- notice of termination;
- redundancy; and
- long service leave.
It is also applicable in cases where an employee has access to an unfair dismissal claim. This article will take you through the impact that continuous service can have on an employee’s entitlements.
What is Continuous Service?
An employee’s continuous service refers to any period where you have employed them, but does not include any ‘excluded period’. An excluded period is any period of:
- unauthorised absence;
- unpaid leave; or
- unpaid authorised absence.
Additional areas which may count as an ‘excluded period’ are included in the Fair Work Regulations. If you believe these may apply to your business, you should seek legal assistance.
An excluded period does not break an employee’s ongoing service with your business. However, you should discount it from their length of service.
If an employee resigns or you dismiss them, their period of continuous service will end.
For example, if an employee resigns and then rejoins the company a year later, they will have broken the period of ongoing service.
However, there may be exceptions to this if they are under a:
- modern award;
- enterprise agreement; or
- employment agreement.
These agreements may contain terms that require you to recognise the employee’s continuity of service.
Continuous Service for Casual and Seasonal Employees
Calculating service periods can be more complex for casual and seasonal employees. Due to the nature of their employment, they will usually work intermittently or with irregular hours. Moreover, breaks between shifts or seasons do not typically break the continuous service employment period for that employee.
Similarly, employees with ‘fly-in, fly-out’ working arrangements will often go weeks without work. The same principles for casual and seasonal employees will apply in this case. If breaks occur between work as part of the employee’s natural work cycle, it does not mean that the employee has been absent from work. Therefore, the entire period, including breaks between work, is considered a period of continuous employment.
Continue reading this article below the formHow Will Continuous Service Affect Employee Entitlements?
Continuous service periods affect many different employee entitlements. You can find some of these entitlements in further detail below.
Notice of Termination
The minimum notice period you provide to an employee must comply with the table below, based on their period of continuous service.
| Period of Continuous Service | Minimum Notice Period |
| One year or less | One week |
| One year – three years | Two weeks |
| Three years – five years | Three weeks |
| More than five years | Four weeks |
Additionally, you must provide an additional week of notice to employees who:
- are over 45 years old; and
- have completed at least two years of service.
Redundancy Entitlements
Similarly, redundancy entitlements vary depending on continuous employment. You can refer to the table below:
| Period of Continuous Service | Redundancy Pay |
| One year – two years | Four weeks |
| Two years – three years | Six weeks |
| Three years – four years | Seven weeks |
| Four years – five years | Eight weeks |
You will need to increase the period of an employee’s redundancy pay based on their continuous service until an employee has worked more than 10 years. At this point, you must provide them with 12 weeks of redundancy pay.
Additionally, you might have some workers who start as casual employees and later convert to permanent employment. In this case, their period of casual work will count towards their continuous service. If they worked on a regular and systematic basis, you may label their period of casual work as a ‘regular and systematic casual’.
If you have engaged a worker on a casual basis for their entire employment, they are not entitled to redundancy pay.
Long Service Leave
Both casual and permanent employees may be entitled to long service leave. Each state and territory has their own laws regarding long service leave. These will differ as to:
- when an employee is entitled to long service leave;
- the amount of this entitlement; and
- when the employee has broken their service.
Unpaid Parental Leave
If an employee takes unpaid parental leave, it does not break their period of service. However, it does not count towards its length. For example, if your employee works for three years and then takes one year of parental leave, they have not broken the period of continuous service. Instead, the length of service remains at three years.
You are only required to provide an employee with unpaid parental leave once they have completed 12 months of continuous service at your business. This extends to casual employees, given that they:
- were employed regularly throughout that period; and
- expected to continue working regularly for your business.
How Does Continuous Service Apply to Unfair Dismissal Rights?
An employee can only bring a claim of unfair dismissal if they have completed a minimum service period. If your business has less than 15 employees, the employee must have performed 12 months of continuous service before they can bring a claim. However, if you have more employees, a worker may bring a claim after six months of service.
For casual employees, a period of ongoing service generally does not count towards the minimum employment period. However, exceptions include if they:
- were employed on a regular and systematic basis; and
- expected ongoing employment.
As an employer, understand your essential employment obligations with this free LegalVision factsheet.
Will Continuous Employment Be Affected by a Transfer of Business?
When a transfer of business occurs, employees’ continuous service is generally preserved. This means there will be no disruption to their entitlements, such as leave accruals and redundancy benefits.
However, where the businesses are not associated entities, the new employer can choose not to recognise employees’ continuous service for specific purposes. In this instance, you must pay the employee’s:
- accrued annual leave;
- notice of termination; and
- long service leave entitlements where they are entitled to it.
Key Takeaways
As an employer, you need to be able to understand the meaning of the term ‘continuous service’ to correctly calculate employee entitlements, including:
- notice to termination;
- redundancy;
- long service leave; and
- parental leave.
Calculating continuous service will differ depending on the type of employee and their conditions of work. If you need assistance calculating your employee’s continuous service or entitlements, our experienced employment lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.
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