Will a period of unpaid leave break the employee's continuity of service?
Generally, during pre-arranged unpaid leave the employee remains under a contract of employment and continuity of service will therefore not be broken. Even where there is no contract of employment covering the period, s.212(3)(c) of the Employment Rights Act 1996 provides that continuity of employment can be preserved by arrangement between the employer and employee, or by custom and practice. Short-term unpaid leave that is approved by the employer is likely to be seen as counting towards continuous employment, either by continuation of the contract or by arrangement, unless it is expressly stated otherwise.
Employers should have a clear policy on the status of long-term unpaid leave, stating whether or not it will break continuity of service. Before agreeing to a career break or sabbatical, both parties should be clear about whether or not the employment contract will continue during the period of leave, and if not, whether or not there is a guarantee that the employer will re-employ the employee after the break. To avoid uncertainty, there should be an express agreement between the parties on whether or not continuity of employment is to be preserved.