Where an employee is made redundant or job ends and then is taken back on furlough, what happens to their continuity of employment?
On 10th November 2020 the Government provided further guidance notes on the extended CJRS (coronavirus job retention scheme) which took effect on 1st November 2020. Under the redundancy section it states that, “If you made employees redundant, or they stopped working for you on or after 23 September 2020 you can re-employ them and put them on furlough.”
If employees are to be re-employed at the employer’s discretion, how does that affect their continuity of employment?
The employment rights act
Under Section 212 Employment Rights Act (ERA), continuity of employment is broken by a period of more than one week where the relationship is not governed by the employment contract but there are certain exceptions to this provision in particular under section 212(3)b ERA where continuity of employment is preserved if the break in service is perceived as being a temporary cessation of work.
Temporary cessation of work is likely to be a fact based assessment but the case of Hussain v Acorn Independent College (2010) gives some indication how matters could be interpreted by an Employment Tribunal. The Employment Appeal Tribunal (EAT) suggested that one needs to look at why the contract had come to an end as in this case, the employee’s contract had ended due to the summer break and had started again because of the new academic year. Therefore, although the gap was several weeks, the employee’s employment was deemed to be continuous.
Redundancy Termination
With redundancy termination and then the employee’s subsequent re-employment there appears to some case argument to suggest that continuity of employment maybe preserved like in the case Fitzgerald v Hall Russell House of Lords 1970 where there was a 8 week break in service following initial termination and re-employment by the same employer. However in this case there was some expectation of the employee being re-employed again following initial termination employment which then happened. But the writer is not absolutely convinced that such a case could be relied upon in a furlough situation where there is no work for the employee to do but taken back on furlough as this is what the government has suggested an employer can do at their discretion – see Hussain case as above.
Ultimately the issue of continuity of employment following redundancy termination and re-employment for furlough purposes will be up to the Government to give further guidance or otherwise have to be decided by a court of law. However what is clear is that if an employee is made redundant and returns back to work to go onto furlough then although the employee is not required to repay their redundancy pay back, under s.214 of the Employment Rights Act 1996, the earlier payment of redundancy pay will break the employee's continuity of employment for the purposes of the statutory redundancy pay scheme only, i.e. if the employee is made redundant again they will need a further 2 years’ service to claim statutory redundancy pay.
Considering Hussain case, where an employee has resigned willingly with no issues behind the resignation then maybe continuity of employment is not preserved unless by agreement where the employee is then placed on furlough.
Employers are reminded that if they do take back an ex-employee on furlough then the employee will accrue statutory holidays, employers pay the additional cost of employer NICs/pension contributions and any subsequent dismissal must be seen to be fair to avoid unfair dismissal claim where continuity of employment applies. There may be the option to consider placing an employee on zero hours contract and incorporating lay -off /short time working clauses as part of the arrangement of taking the employee back and agreed with in the furlough agreement together with the amended employment contract as the Government guidance do not appear to impose such restrictions.
The article is intended for general information purposes and should you require further assistance and guidance, please to do hesitate to contact our HR/Legal Advisory team on 01455 852028.
