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The term ‘continuous service’ is one that affects most parts of employment law. This includes calculating entitlements like:

  • notice of termination;
  • redundancy;
  • long service leave;
  • parental leave; and
  • whether the employee has access to the unfair dismissal jurisdiction.

Employers need to understand the term so they can correctly apply it when calculating entitlements for employees and understand whether their employee may have access to unfair dismissal.

What is Continuous Service?

The Fair Work Act 2009 (Cth) defines continuous service. It refers to a period the employer employ the employee, but does not include any ‘excluded period’.

An excluded period is any period:

  • of unauthorised absence; or
  • of unpaid leave or unpaid authorised absence; or
  • as set out in the FairWork Regulations.

An excluded period does not break an employee’s continuous service with their employer. However, it does not count towards the length of the employee’s continuous service.

For example, an employee had worked for 10 months, then had six months of unpaid leave, then returned to work for two months. Here, the length of the service would be 12 months.

Resignation or dismissal of an employee will break the period of continuous service.

For example, an employee resigned and then re-joined the company a year later. Here, the employee has broken the period of continuous service.

Continuous Service and Employee Entitlements

Understanding continuous service periods is important as it affects many different employee entitlements.

Notice of Termination

Many entitlements under the Fair Work Act are based on how long an employee has been with the employer. The minimum notice period for termination must comply with this table provided by FairWork.

Period of Continuous Service Minimum Notice Period
1 year or less 1 week
More than 1 year – 3 years 2 weeks
More than 3 years – 5 years 3 weeks
More than 5 years 4 weeks

Employees over 45 years old who have completed at least two years of service when they receive notice are given an additional week of notice.

Redundancy Entitlements

Similarly, the redundancy entitlement depends on the length of service as per the table below:

Period of Continuous Service Redundancy Pay
At least 1 year but less than 2 years 4 weeks
At least 2 years but less than 3 years 6 weeks
At least 3 years but less than 4 years 7 weeks
At least 4 years but less than 5 years 8 weeks
At least 5 years but less than 6 years 10 weeks
At least 6 years but less than 7 years 11 weeks
At least 7 years but less than 8 years 13 weeks
At least 8 years but less than 9 years 14 weeks
At least 9 years but less than 10 years 16 weeks
At least 10 years 12 weeks

 

You will need to be able to calculate the length of continuous service of your employees. This way, you can calculate the relevant notice period for termination or redundancy pay in the case of redundancy.

Casual Employment to Permanent Employment 

A recent case held that a permanent employee’s initial regular and systematic casual employment will now be included in their service period for redundancy calculations. This does not mean that casuals at the time of termination are entitled to redundancy pay. This situation is confined to where an employee was initially employed as a casual, then moved to a permanent role before being made redundant.

Therefore, employers ought to be aware that:

  • if you have casual employees who have moved to a permanent role; and 
  • if the casual employee worked on a regular and systematic basis;
  • you may need to include this period of service as a regular and systematic casual when calculating the length of continuous service for a redundancy payout.

Long Service Leave

Both casual and permanent employees may be entitled to Long Service Leave. The federal government does not legislate long Service leave under the Fair Work Act 2009 (Cth) like most types of leave. Each state and territory has its own long service leave legislation. Therefore each state and territory has different criteria as to:

  • when an employee is entitled to long service leave; 
  • the amount of this entitlement; and
  • when the employee has broken their service.

In NSW, QLD, VIC and ACT where employees are entitled to long service leave based on their length of continuous service, it includes service as a casual employee.

Unpaid Parental Leave 

If an employee takes unpaid parental leave, it does not break the period of continuous service, but it does not count towards the length of continuous service.

For example, if your employee worked for three years and then took one year of parental leave, they have not broken the period of continuous service, but the length of continuous service is three years.

Unfair Dismissal Rights

One factor on whether an employee can bring an unfair dismissal claim is if the employee has completed a minimum period of service. For a small business with less than 15 employees, the employee is required to have 12 months’ continuous service before they can bring a claim. For a business with more than 15 employees, the employee can bring a claim after six months of continuous service.

A period of service as a casual employee generally does not count towards the minimum employment period to bring an unfair dismissal claim. This is unless the casual employee:

  • was employed on a regular and systematic basis, and
  • had a reasonable expectation of ongoing employment.

Key Takeaways

An employer needs to be able to understand the meaning of continuous service of an employee in order to correctly calculate employee entitlements, such as:

  • notice to termination;
  • redundancy;
  • long service leave; and
  • parental leave.

It is also essential to understand whether the employee has completed the minimum service required to access unfair dismissal. Please get in touch today to speak with our experienced team of employment lawyers in order to understand your employee’s entitlements. Contact LegalVision’s employment lawyers on 1300 544 755 or fill out the form on this page.

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