General Guidance on 'Continuous Employment'

[basa48]

Just a general question for Eloise really.

I have been a full time permanent employee of the same company for over 20 years.

Recently I became eligible for early retirement from the company pension scheme. The company operate a policy that employees who qualify can take their company pension but still continue to work for the company in the same capacity as before.

I took advantage of this scheme. The only thing is that to qualify for a pension, one has to officially 'retire' (i.e. resign my job) but restart on a new contract of employment the very next day.

This is what I did.

Now I accept that any benefits of longevity of employment offered by the company (e.g. long service awards, enhanced holiday entitlement etc.) are reset to the new contract date. But I maintain that statutory benefits (mainly statutory redundancy) are still calculated from my original start date with the company (i.e. 20 years +) in that there was no break in 'continuity of employment'.

Am I correct ??ray:

[Eloise01]

Re: General Guidance on 'Continuous Employment'

Hmm - I will have to get back to you on this because it's actuallly very, very complex. And I may not be able to answer because of the involvement of the pension scheme, which is the main difficulty here. Normally continuity is only broken by a gap of one week including two Saturdays (please don't ask me who decided Saturdays were important!). However, equally, retirement in law has a specific meaning which is a termination of contract that is "final" - otherwise you have not retired! On this point the law is clear - you cannot be forced to retire at any specific age now, and conversely, if you retire then that is what you have done, so you cannot retire and carry on working for the same employer because you cannot have retired if you do!!!

My immediate response, and I think you will see this one coming like a hurtling truck, is that your employers are idiots! Because, from their point of view the answer was obvious - ensure a break of one week including two Saturdays. But they didn't. And I am fairly sure, but will need to check on this, that there is no relevant case law to clarify this point. You may have to make it - if you last that long of course!

Can you clarify - what exactly do you mean when you say that you resigned your employment? Did you formally serve notice and work that notice? And do you by any chance have the specific pension rules around this process to hand? If so, sight of them would be useful.

[basa48]

Re: General Guidance on 'Continuous Employment'

Semantics maybe, but I never formally resigned as such, nor served any notice, I simply agreed a 'retirement' date with my employers. This I was told was because my pension providers obviously would not release my pension until I had formally retired.

Below is my email to our HR:

06/07/11(by email)
xxxxx

I am in receipt of your letter of 04 July 2011 for which I thank you.
I can now advise you that I do wish to consider ‘Option 3’ (i.e.retire 31 August 2011, re-commence employment 01 Sept 2011).
Can you please forward a new contract and terms & conditions of employment to run from the new employment date of 01 Sept 2011 for my consideration.
I should however point out that I would wish to continue working the same hours as at present, not reduced as quoted in your letter.
I have discussed this provisionally with my line manager xxxxxxxxxxxx and she has indicated she would be happy with this arrangement.

Regards
xxxxxxxxxxxxxx


My employer prepared a new contract starting the day after my retirement date.

I show below the relevant clause in our T & Cs that describes the process. It is somewhat vague !!

4.3 Flexible Retirement

From age 50 (55 from 1 April 2010) you may elect to start drawing part of your pension whilst continuing to work at MAG. There are some restrictions and special rules around this arrangement, dependant upon your scheme. If you wish to consider this option you should contact HR Shared Services for details.
You may also be able to join another pension scheme. Again, contact HR Shared Services for details.

As for relevant case law, I found the following of interest:

Carrington v Harwich Dock Co Ltd [1998] IRLR 567 (EAT)

In a recently reported case further guidance has been given over when an apparent break in service will be treated as such when the issue of continuity of employment is considered. In Carrington V Harwich Dock Co Ltd the Employment Appeal Tribunal considered the application of section 212(1) of the Employment Rights Act 1996 to a break in service.
That section provides: "any week during the whole or part of which an employee's relations are governed by a contract of employment counts in computing the employee's period of employment."
Mr Carrington was employed by the company and had been for many years. To ensure that his pension would be calculated to take advantage of his highest earnings level, in agreement with the company, he tendered his resignation.
Thereafter he was able to draw his pension. The company undertook to re-engage him, though that re-engagement was said to be on the basis that he had no continuity of employment. In line with that undertaking Mr Carrington resigned on the Friday and started back to work the following Monday. Four months later the company dismissed him.
When his unfair dismissal claim was lodged the company took the view that he could not pursue the claim because he had less than 2 years' service. The Employment Tribunal took the view that the company's argument was right, he had broken his service and could not now claim unfair dismissal.
The tribunal considered themselves bound by the earlier decision in Roach V CSB (Moulds) Ltd[1991] IRLR 76 though that case is easily distinguished by the fact that there the employee, after leaving, worked for another employer for 11 days.
In Carrington, the EAT found that the wording of section 212 (1) was clear and that the employment obligations continued and there had been no break in service. The fact that new terms of employment had been signed by Mr Carrington which specifically stated that he was to regard himself as having no continuity of service was in the EAT's view of no effect, it being impossible for an individual to contract out of his/her rights as regards unfair dismissal. This must be right.



Incidentally my 'retirement' occured nearly two years ago now.

[Eloise01]

Re: General Guidance on 'Continuous Employment'

I have had a look, and yes, I agree that this is the case and there is no break for the purposes of statutory benefits. However, more telling is the actual term - this is a flexible "retirement" scheme and therefore not in fact "retirement" at all. In effect, you might really consider is an age related savings scheme that releases a set income after saving a certain amount / over a certain period, but with no intent to break continuity of service at all. I am therefore not convinced that it legally enables the employer to break the contractual conditions either - it could be argued that this is age related discrimination. Unfortunately, since the "act" was nearly two years ago it would be impossible to now challenge this, although if there were an enhanced redundancy scheme which you no longer qualified for under this arrangement, and you were made compulsarily redundant then it may be possible to mount a legal chanllenge to that action. It would not, however, apply to voluntary redundancy because that isn't redundancy at all - but that is a whole other story.

[basa48]

Re: General Guidance on 'Continuous Employment'

I suppose the scheme could have been described as a savings scheme, but was named a 'pension' so as to benefit from tax relief.

My employer has often employed 'enhanced' redundancy schemes in past 're-organisations' to induce staff to leave voluntarily and many have taken advantage of this, only to re-appear in a different role 6 months later !! Because of this and natural wastage our employer has rarely taken to compulsory redundancy.


Do I understand you correctly that if I were involved an a round of redundancies in future I could still argue that length of service enhancements (if generally offered) should still apply to me ?

[Eloise01]

Re: General Guidance on 'Continuous Employment'

If it were compulsory, I definitely think there's a case in there. Not saying you'd win, but it'd be an interesting case and I suspect you'd find someone who wanted to argue it - the age discrimination thing is still young and there's case law to be made in it. Voluntary, possibly but less certain. The thing is that voluntary redundancy does not exist, it's actually a mutually agreed termination of employment. On this basis, technically each one is independently agreed between employer and employee. It's possible for everyone to have different agreements. So that would need legal opinion on the exact circumstances.

[basa48]

Re: General Guidance on 'Continuous Employment'

If it were compulsory, I definitely think there's a case in there. Not saying you'd win, but it'd be an interesting case and I suspect you'd find someone who wanted to argue it - the age discrimination thing is still young and there's case law to be made in it. Voluntary, possibly but less certain. The thing is that voluntary redundancy does not exist, it's actually a mutually agreed termination of employment. On this basis, technically each one is independently agreed between employer and employee. It's possible for everyone to have different agreements. So that would need legal opinion on the exact circumstances.

Understood and many thanks for your time and thoughts on this.

The job I am currently in has very little chance of redundancies at the moment as I am part of a small team providing a key security role my employers are legally bound to comply with.

But things can change !!!

[labman]

Re: General Guidance on 'Continuous Employment'

Normally continuity is only broken by a gap of one week including two Saturdays (please don't ask me who decided Saturdays were important!).

I assume because a week starts on a Sunday (not Monday as many think!) - two Saturdays therefore guarantee the week.

[Eloise01]

Re: General Guidance on 'Continuous Employment'

I assume because a week starts on a Sunday (not Monday as many think!) - two Saturdays therefore guarantee the week.

Well yes, but so does two Tuesdays! But of course any "week" that includes two of any particular day is actually not a week - it is eight days.

[basa48]

Re: General Guidance on 'Continuous Employment'

Well yes, but so does two Tuesdays! But of course any "week" that includes two of any particular day is actually not a week - it is eight days.

I don't know where the 'Saturdays' bit comes from.

The ERA says:

212
Weeks counting in computing period.


(1)
Any week during the whole or part of which an employee’s relations with his employer are governed by a contract of employment counts in computing the employee’s period of employment.

So in theory if I am in work under contract on a Monday - leave on the Tuesday - restart Friday the following week, I would still preserve continuity, being that I was contracted in work part of both weeks.

[labman]

Re: General Guidance on 'Continuous Employment'

That's what I said, just not as poshly!

[Eloise01]

Re: General Guidance on 'Continuous Employment'

It's case law, but still the prevailing definition. I'll look up the case for you, as I can't recall it off the top of my head right now - I'm retired and it's sunny, and I try to get the benefit of both whenever I can Although it isn't relevant to what you described anyway, since you were re-engaged the next day.

[Eloise01]

Re: General Guidance on 'Continuous Employment'

Sorry, haven't had time to look up the case, although I did recall that the claimant was Kirkpatrick - having a bit of a stressful weekend as my dog is sick (attacked by two huge dogs on Thursday). I will get around to it, but I have recalled the ruling in enough detail. The reason for requiring this clarification is because there is no legal definition of a week - the legislators assumed a "British week" but were not specific on that fact, and given that we have 7 working days in any week (whoever is counting the week).... The notion that everyone works Monday to Friday is far from accurate, and weeks may be counted under different calendars or as working weeks, so there needed to be clarification. So what you have said is actually the same thing - since there were not two Saturdays within your hypothetical example, there would be no break. Not that it is entirely relevant since you didn't have any break at all.

[basa48]

Re: General Guidance on 'Continuous Employment'

Sorry about your dog Eloise and I hope he/she is better soon. I am a lifelong dog companion (I don't agree we can 'own' another life, be it dog, cat, hamster or human). I know how close you can get to them - just like children.

I know I am reasonably covered by the legislation in my own case, I was just interested where the Saturday to Saturday etc comes from. Please don't go out of your way to search for that case, there is no urgency for me to know.

My HR are a bit dim. I argued when I took the retirement that my employment was by law continuous, but they insisted it wasn't as I'd signed a new contract. However the year following my retirememnt, when they re-organised my whole department (basically to get rid of 3 out of 17 staff) they paid us all a 'buy down' (to compensate for a reduction in salary). This was based on years served and initially they based my 'buy down' on the 2 years since my retirement. I argued again and they relented and paid me based on my 20 years!! Result worth an additional c£15k !!

[Eloise01]

Re: General Guidance on 'Continuous Employment'

With apologies to the two HR people I know and respect, in my experience HR are usually a bit dim! But I can't complain because it was a decent little earner having dim HR!