Continuity decision highlights the "special" status of employment relationship, says expert

In his judgment, EAT President Mr Justice Langstaff said that a shop worker had the necessary continuity of employment to bring a claim for unfair dismissal against his former employer, despite a break in employment of over one week between contracts to work at two different shops within the chain. Although a break of this length would normally have broken continuity, the fact that the worker, Mr Welton, had accepted an offer to work in the second shop during that week was enough to allow his claim to succeed.

"[O]nce a contract such as that in the present case was made, it was one of employment," he said. "Though not requiring performance of actual work until the week beginning 7th March, it governed the relations between [Welton] and Deluxe [the employer] from its inception. Accordingly, the week in which the contract of employment was made is a week which counts [towards continuity of employment] ... There were no week during the whole of which his relations with his employer were not governed by a contract of employment."

Welton had been working at a shop in Sheffield which was closed down in February 2010, with his employment terminated as a result. During what would have been the next working week, he accepted an offer of employment at another shop owned by the same company in Blackpool. He started work later that week, and was dismissed a few months later.

At the time that Welton was employed by the chain, an employee had to have worked with a company for one year before being entitled to bring a claim for unfair dismissal. For this to have been the case, Welton's employment with the two stores would have had to have been continuous. The Employment Rights Act provides that if the employment relationship is "governed by a contract of employment" for any part of a working week, that week counts towards employment continuity.

Employment law expert Selwyn Blyth of Pinsent Masons, the law firm behind Out-Law.com, said that the case recognised the "special" status granted by law to employment relationships. Although the terms of an employment law contract are "very relevant" to this relationship, the law tends to view the contract as part of a wider analysis of the relationship between the employer and employee, he said.

"Statute overlays certain provisions over the strict interpretation of employment law contracts to protect the employee, in recognition of the fact that they don't have the same 'bargaining power' as parties in arms-length commercial transactions do," he said. "A strictly contractual analysis of this case would have broken Mr Welton's continuity of employment. However, employers cannot assume that a tribunal will equate the existence of an employment relationship with the dates when a particular job starts and finishes."

He added that continuity of employment had become "something of a political hot potato" in recent years as it governs certain rights, most notably whether an employee qualifies for statutory redundancy payments and protection against unfair dismissal. The length of time a worker has to be an employee before becoming entitled to bring a claim for unfair dismissal was doubled to two years from April this year.

In his judgment, Mr Justice Langstaff also provided additional guidance on the definitions of 'temporary cessation of work' and in what circumstances an employee could be said to be "absent from work in circumstances that, by arrangement or custom, they are regarded as continuing in the employment of the employer". These provisions allow weeks in which there is no contract of employment to count towards an employee's continuous service.

The judge said that, even if he had not found that a contract of employment had been in place, Welton's absence would have been covered as a temporary cessation of work. However, Welton's argument that his absence was due to an "arrangement" that continuity would be preserved would have failed as such an arrangement could not be made retrospectively. In order for the absence to be covered under this provision, any arrangement must be made before or at the same time as the absence.