Break in service: Overview, definition, and example
What is a break in service?
A break in service refers to a period during which an employee is not actively working for an employer, often due to resignation, termination, leave, or other interruptions. Depending on company policies or legal regulations, a break in service can affect benefits, seniority, or re-employment rights.
For example, if an employee leaves a company and returns after a year, their previous tenure may not count toward benefits like paid leave or retirement contributions.
Why is a break in service important?
A break in service is important because it impacts employment rights, benefits, and continuity. Employers use break in service policies to determine how long an employee has been continuously employed and whether they are eligible for reinstatement of benefits, seniority, or other entitlements.
For employees, understanding break in service rules helps them navigate job transitions, leaves of absence, or rehire situations without unexpected losses in benefits. Some contracts or policies allow previous service to count toward benefits if the break is within a certain period.
Understanding break in service through an example
Imagine an employee works at a company for five years and then leaves for a new job. After six months, they decide to return to their previous employer. The company's policy states that breaks in service shorter than one year do not reset seniority. This means the employee resumes work with their previous tenure intact, maintaining benefits like vacation accrual and retirement contributions.
In another example, a worker takes an extended unpaid leave for personal reasons. If the leave exceeds the company's defined break in service threshold, the employee may be considered a new hire upon returning, losing prior benefits and needing to meet eligibility requirements again.
An example of a break in service clause
Here’s how a clause related to break in service might appear in an employment agreement:
“A break in service occurs when an employee is absent from employment for more than [X] consecutive days, except in cases of approved leave. Upon re-employment, prior service shall [be counted/not be counted] towards seniority, benefits, and other entitlements, subject to company policy.”
Conclusion
A break in service determines how employment interruptions affect an employee’s tenure, benefits, and seniority. Understanding these rules helps both employers and employees manage job transitions fairly and transparently.
By clearly defining break in service policies in employment agreements, businesses can maintain consistency in benefit calculations and rehire policies, ensuring fairness and compliance with labor regulations.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.