Yes, only in limited circumstances would the time out and a new visa not break the continuity of residence.
She cannot work and if her employer does the HO employee status check, they will very likely get a negative response.
She will have to wait to see if her visa is granted before she can work again.
Char (CR001 not Casa)
In life you cannot press the Backspace button!!
Please DO NOT send me a PM for immigration advice. I reserve the right to ignore the PM and not respond.