Legal Q & A: The pros and cons of career breaks

Many employers are introducing career break schemes to
provide greater flexibility to allow staff to juggle work and home
responsibilities. Sue Ashtiany considers the main issues that need to be
considered to run a successful scheme

Q We are thinking of introducing a career break scheme for our staff.
What are the main points we should bear in mind?

A There are basically two types of scheme: those that guarantee the
employee a right to return within a set period to the same or similar grade and
those which do not, but simply offer preferential consideration for return. You
must be clear on which type of scheme you are introducing. You also need to be
clear on whether the employment relationship continues during the break and
what the rights and obligations of both parties are. You should make sure that
your documentation clearly reflects these two points.

Q Is there a ‘usual approach’ to career breaks?

A Most schemes provide for minimum and maximum breaks. A standard
approach is to require the break to be for at least six months and to last for
a maximum of five years. In addition, employers usually ask employees to keep
in touch in some way during the break, for example by doing a couple of weeks
work each year. And they often make arrangements for the individual to receive
company news in various ways and to be invited to work functions, such as
Christmas parties.

It is common for employees to be required to resign in order to go on a
career break. The other important point is to ensure you are clear about what
notice you require from the employee if they want to end the break – either to
return to work or to terminate the arrangement altogether.

Similarly, employers usually reserve the right to give three months’ notice
if circumstances change, such that they are unable to reabsorb the individual.

Q Is the person on a career break still an employee? What happens about
service accrual for, say, redundancy and pension rights?

A This can be quite a tricky issue and it is especially important for
employers to be clear about what they intend. Even where the contract has come
to an end, there may be arrangements in place whereby the employment
relationship is continuing. This was the point at issue in the recent case of
Marks & Spencer v Curr, Court of Appeal, 2002, EWCA Civ 1852.

Marks & Spencer had just introduced a career break scheme for managerial
staff and Mrs Curr, who was a manager with about 15 years service, applied to
go on the scheme immediately after the end of her maternity leave.

Although she was asked to resign before going on her break, under the scheme
she had to go back to work for M&S for two weeks every year and to obtain
her manager’s approval before she took any paid employment during the break.
She was away for three years and was then made redundant a couple of years
after returning to work.

Curr claimed that the ‘arrangements’ meant that her employment had continued
during the break so her redundancy should reflect her entire service.

The Employment Appeals Tribunal agreed with her, pointing out that
employment continues ‘by arrangement’ precisely when there is no contract of
employment in place (see section 212(3)(c) of the Employment Rights Act 1996).

Although the Court of Appeal reversed this decision, it was critical of
M&S’ failure to make the situation clear, and commented that there was a
moral responsibility to Curr, which it hoped the company would recognise.

Where there is an occupational pension, the rules will determine what
happens to employees’ service during a break and, in many cases, there will be
bridging provisions which can be utilised.

By Sue Ashtiany, a partner and head of employment at Nabarro Nathanson

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