Both employees and employers may not have heard of the term “continuous service“, or understand what it has to do with working in or running a business. And yet, there it is – tucked into the pages of the Fair Work Act 2009 (Cth) (the Act). For new starters or employers, it may not be a primary consideration however, it can arise when work is disrupted one way or another. This article will describe the term continuous service and the effects on employment rights if employment is not considered “continuous service”.

What is Continuous Service?

Section 22 of the Act defines continuous service as: 

  • The term at which a worker is employed by an organisation to provide services; and
  • The term does not include an “excluded period”.

An excluded period is defined as:

  • Unauthorised absences (including unpaid absences);
  • Unpaid leave; and
  • Periods as otherwise set out in the Fair Work Regulations.

An “excluded period” does not break an employee’s continuous service, however it cannot be counted towards the length of time of an employee’s continuous service. For example, if you had used up all of your annual leave for a year, and therefore took unpaid annual leave – this will not break your period of “continuous employment”.

When Will Continuous Service be Relevant?

Continuous service is relevant as it is a factor to be considered when determining:

  • Employee entitlements;
  • The period of employment; and
  • Unfair dismissal rights.

Example 1 – Employee Entitlements

Employee entitlements may vary if your employment arrangements with an employer have changed. For example, you may have previously been employed as a casual employee and were later employed by the same employer as a permanent employee. Likewise, an employer may have employed you for a particular job and you changed teams and were given a new employment agreement with the same employer.

The period of continuous service will be used to calculate your employee entitlements such as redundancy. In the recent matter of Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v Forgas Engineering Pty Ltd t/a Forgas [2016] FWC 638, the Fair Work Commission decided that a period of prior casual employment would not count towards a period of employment when the employees were subsequently employed under an enterprise bargaining agreement. Here the Fair Work Commission said, “casual employees are paid a loading to compensate them for the loss of benefits and rights afforded to permanent employees”.

Example 2 – Unfair Dismissal

In order for an employee to be able to make an unfair dismissal claim, they need to be employed for the minimum employment period. This differs depending on whether the employer is a small business or not.

What About Long Service Leave?

In addition to the Act, each state will apply its long service leave legislation. The long service leave legislation should also include a definition of “continuous service”. As an example, in NSW, the Long Service Leave Act 1995 (NSW) states that a period of service is continuous despite any breaks in the period if the employee is re-employed within 2 months of the date when the break commenced.

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Continuous service is important to determine employment rights and should be kept in mind when it comes to determining entitlements such as redundancy and long service leave. If you have any questions about your obligations as an employer, get in touch with our employment lawyers on 1300 544 755. 

Kristine Biason

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