Is relocation worth it? The risks for employers explained

The COVID-19 pandemic saw many changes to businesses and the way that people work. As a result of these changes and the economic slowdown, employers across the country are downsizing or moving to new premises and asking staff to relocate with them. 

It’s important that employers consider the impact a relocation will have on employees even if the distance is short or its not a permanent move. Any plan to move needs to be planned out well and include consultation time with employees. Employers should be ready for loss of staff and the potential risk of unfair dismissal claims. 

It could also be necessary for employers to budget for redundancy costs as often the closure of a place of work is categorised as a redundancy situation.

Mobility Clause in contract of employment

A mobility clause in an employees’ contract allows the employer to change the workplace location, however it does not give the employer unconditional authority. Firstly, the wording of the clause should be checked carefully to understand the scope of the right as, for example, it may only allow relocation within a reasonable commutable distance. 

Secondly, the implied term of trust and confidence may hinder the employer’s right to insist upon the relocation. This stops the employer from acting in a way that damages the relationship between themselves and the employee without a good reason. This can be breached during a relocation by:

• The employee having to move house
• The employee’s child(ren) needing to change schools
• The employee’s partner having to change their job
• If it wasn’t necessary for the employee to relocate and instead the impact could have been reduced through hybrid working

A breach could allow the employee to resign and claim constructive dismissal if they have two years’ service. 

Thirdly, the mobility clause needs to be enforced by an employer in a reasonable manner. This is often achieved by giving plenty of notice and having discussions with the individuals affected. For example, if the employee will have to commute for longer, an employer could discuss and consider offering flexibility with working hours so that they can travel at good times and potentially work from home on some days. 

Lastly, using the mobility clause to enforce an employee relocating must be carried out in good faith and not done in an arbitrary, capricious or irrational way.

What if there is a mobility clause but the employee refuses?

If the employee resists the move despite there being a clause in their contract, the employer may have to dismiss them for failure to comply with their contract of employment terms.  If the instruction was not in breach of contract, the employer may be able to dismiss the employee fairly for misconduct and the employee would not be entitled to a redundancy payment.

What if the workplace is still in operation and there is no mobility clause?

If the existing workplace is continuing to run but employees are required to relocate for other reasons, without a mobility clause the employer cannot enforce this. The employee needs to agree to the move through a consultation process. 

We can help you to ensure that this process covers all the necessary elements including ways of mitigating the impact on the employee. Going through this process with expert legal advice will help to improve the chances of successfully defending an unfair dismissal claim should one arise. 

When the process is completed, if the employee is still resisting the move, then employers can use what’s known as a ‘fire and rehire’ technique. This is where the employee is dismissed from their current contract and offered a new contract of employment immediately after. The Government is currently reviewing this practice but it is unknown when a new code will come into place. 

Read more about it here.

The workplace is closing but there is no mobility clause in the employment contract

If the reason for the relocation is that the business is stopping all operations from its current premises, then it’s likely that it will fall into the statutory definition of redundancy. If this is the case and there is no mobility clause, the employer should follow a fair redundancy process. The same job at a new location could be offered to an employee if suitable, if the employee refuses this offer unreasonably, then they would not be entitled to redundancy pay.

How Hegarty Solicitors can help

A relocation for any business can be tricky to navigate and disruptive to the workforce. This can result in employment tribunal claims, loss of staff, and potential discrimination issues. We can help to ensure that this time is well-planned, in accordance with government guidance, and that the risks are mitigated as far as possible. With our assistance, we can help to minimise the negative impact on your business from start to finish.