Businesses sometimes need to relocate due a variety of reasons such as the expiry of a lease, change in client base, a business reorganisation, or reduction in work. 

The impact of Covid-19 on businesses is still playing out and will continue to do so for some time – some businesses have already taken the plunge and moved to smaller premises with a heavier reliance on working from home or in some cases decided to get rid of their premises all together. Other business are still weighing up their options. Regardless of the underlying reason, when looking to move and operate from another location or having no set premises at all, an important question arises: what happens to the employees?

Redundancy 

When an employee’s place of work closes, regardless of whether that work is being moved elsewhere, a potential redundancy situation is likely to arise. If the work is moving to a site close by or the employee works from various sites then this position might be different, but it will be fact specific.

If an employee has a mobility clause in their contracts then the employer could potentially rely on the clause to relocate the employee instead of making the employee redundant. If possible, an employer should decide at the outset if this applies or if it must instead follow a redundancy procedure and potentially dismiss. Although, case law tells us it is acceptable for an employer to weigh up options at the outset and then decide to invoke a mobility clause. NB: even where there are mobility clauses, if they have never been used, then it might be the case that they are ineffective and cannot be relied on.

Whichever route you decide to go down we advise that a consultation process should generally be followed. If you are contemplating a redundancy process you should take advice and a great starting point is the helpful article which can be found here. 

Mobility Clauses

A mobility clause is a contractual provision that on the face of it allows an employer to require an employee to move their place of work to a different location on either a temporary or permanent basis.

However, even if an employer has included a mobility clause in employees’ contracts, that clause needs to be exercised reasonably. Reasonableness will always be fact specific and consideration would need to be given to not only the facts relating to the location change but also how this impacts upon each employee. The following factors may need to be considered when determining whether it is reasonable to exercise the clause:

  • notice given of the proposed move – the longer the better;
  • how widely drafted the clause is – if it is unjustifiably wide e.g. the employee could be required to work anywhere in the UK, then that could render the whole clause unreasonable whereas a tightly drafted relevant clause will be easier to rely on;
  • any offer of relocation costs, particularly for those employers with a contractual discretion to meet such costs;
  • whether there is a compensation scheme to allow for any increased costs incurred;
  • any change in the length of an employee’s commute;
  • whether reduced hours are offered, for a set period of time, to counteract any increased commute;
  • the employee’s role e.g.- it may be more reasonable to move a highly specialised employee who was worked across different offices, over a longer distance than it might be to move an employee in administrative support who has only worked in one location;
  • any increase in costs to the employee, such as toll charges, fuel and parking charges;
  • the employee’s personal circumstances, e.g. that a particular employee has caring responsibilities may make the exercise of the clause unreasonable; and
  • any other impact of the change of location on the employee’s life.

If, like many employers following the Covid-19 pandemic, you are considering requiring employees to work from home you should consider the legal and practical implications of homeworking which are set out in the article which can be found here.

What if the employee will not move?

If an employee unreasonably refuses to work from the new premises and if there are no alternative locations, then you may be able to dismiss them for misconduct, not redundancy, on the grounds that they failed to obey a reasonable instruction. The employee might not then be entitled to a redundancy payment as the main reason for their dismissal would have been misconduct and not redundancy. But, the employee may try to bring a claim for unfair dismissal. The employee would need to show that the mobility clause was exercised unreasonably to be able to succeed in their claim.

What if there is no mobility clause?

If there is no mobility clause in the contract and the employee did not want to move, but the employer insisted, then there would be a risk of the employee claiming their contract had been fundamentally breached and, if they resigned, subsequently claiming constructive unfair dismissal. The matter of whether or not the dismissal was fair would depend on the circumstances, including the reason for the relocation and how much consultation had taken place. 

It is important to remember that, there is nothing to stop an employer inviting an employee to agree to move where there isn’t a mobility clause or if the employer is concerned a mobility clause is unenforceable. Many variations to a contract can be agreed, and progressed without dispute. This is usually a matter of negotiation and in some cases offering some form of compensatory payment for additional inconvenience. 

In the absence of a mobility clause, an employer may however, need to follow a redundancy process. As part of this process they would be expected to offer the employees work at the new premises by way of alternative employment. If the employer can show that work at the new location is “suitable” alternative employment and the employee has unreasonably refused the position, the employer may be able to dismiss on grounds of redundancy, but the employee would lose their entitlement to a statutory redundancy payment.

When determining whether the alternative employment is “suitable”, many of the same considerations as listed above will be looked at. Again, the employee’s personal circumstances will again come into play when deciding whether their refusal of the offer was reasonable.

Is it worth having a mobility clause?

A well drafted mobility clause that takes into account likely business needs and the employee’s role and which is ultimately exercised reasonably would have a good chance of being enforceable. It would give an employer more certainty and control over its workforce and where it can require them to work. It would also give an employer, subject to the employee’s circumstances, a strong starting point to defend a claim for unfair dismissal, if an employee refused to move and brought such a claim.

We regularly advise organisations on these issues and if you are contemplating requiring an employee to move locations or going through a redundancy process, we would strongly recommend that you take professional advice.