Relocation: navigating the risks for employers
2 August 2023
Due to changes in ways of working since the Covid-19 pandemic or in response to economic slowdown, some employers are downsizing their premises and asking employees to relocate to new premises or hubs.
Employers need to consider the probable impact of any proposed relocation on each individual employee, even if only a relatively short distance is involved. Any relocation programme needs to be well planned and to include plenty of time to consult with staff. Employers may need to prepare for the loss of some staff and the risk of unfair dismissal claims. Since the closure of a place of work counts as a redundancy situation, in some circumstances, employers may also need to budget for redundancy costs.
In this article, we highlight the key considerations involved in relocation, including contractual, redundancy and discrimination issues.
Scenario 1: Contractual mobility clause
Employees’ contracts of employment may contain a mobility clause that allows the employer to change their place of work. Occasionally, this may be implied into the contract. Either way, this does not give the employer carte blanche. Firstly, the wording needs to be carefully checked to understand the scope of the right. For example, it may only allow relocation within a reasonable commuting distance. If the wording is not clear, it may not be possible to rely on it.
Secondly, the employer’s right to insist on relocation may be curbed by the implied term of trust and confidence, which stops an employer acting in a way that seriously damages or could seriously damage the relationship with their employee without having a good reason. Whether this term is breached will depend on the circumstances.
For example, there may be a breach if the change of location requires:
the employee to move house;
the employee’s children to change school;
the employee’s partner to change their job; and
it was not strictly necessary for the employee to change work location, or the impact could have been lessened by hybrid working.
A breach of the implied term of trust and confidence could allow the employee to resign and claim constructive dismissal if they have two years’ service.
Thirdly, an employer needs to enforce any relocation clause in a reasonable way. Usually, this involves discussion with the affected individual. For example, if the employee will have a longer commute after relocation, it may be helpful to offer flexible working hours to allow for travel at optimal times, or to allow home-working on some days. A relocation clause will also only be reasonably enforced if the employee is given sufficient notice to make any necessary preparations for the change. What constitutes reasonable notice will depend on the degree of relocation involved, but may also vary between employees; as discussed below, employers should always bear possible discrimination claims in mind.
Finally, insisting on an employee relocating under a mobility clause must be done in good faith and not in an ‘arbitrary, capricious or irrational’ way. Provided there is a business reason for relocation (such as being unable to extend a lease of existing premises), this hurdle should be cleared.
Scenario 2: Mobility clause and employee refusal
If an employee resists a move even though their contract allows the employer to require them to relocate, the employer may have to dismiss for failure to obey a lawful instruction. If the instruction was not in breach of contract, the dismissal for misconduct should be fair, and the employee would not be entitled to a redundancy payment.
Scenario 3: No mobility clause and workplace still operating
If the existing workplace is not being closed but some employees are being asked to relocate, without a contractual mobility clause the employer cannot unilaterally impose a relocation on an employee. Instead, the employer needs to secure the employee’s agreement to the change through a consultation process. We can help you ensure that a consultation includes all the necessary elements, including considering ways of mitigating the impact of the relocation on the employee. This will improve your chances of successfully defending any unfair dismissal claim should you have to dismiss an employee who does not agree to relocate at the end of the consultation. We can also advise you on whether or not the circumstances trigger the requirement to consult collectively, as well as individually.
At the end of the consultation, if the employee still resists relocation, they should be dismissed from their existing contract and offered a new contract with the new work location. This practice is commonly referred to as ‘fire and rehire’. The Government is currently considering responses to its consultation on a draft code of practice that would apply in these circumstances. It is not known yet when this code will come into force. If and when it does, employers will need to comply with its requirements or risk any compensation being increased by up to 25 per cent.
Scenario 4: No mobility clause and workplace closing
If the trigger for the relocation is that the business will stop operating from the current premises, this is likely to fall within the statutory definition of redundancy. In some circumstances, there may be uncertainty around the employee’s deemed place of work, for instance if they work at two bases. We can discuss this with you and advise on whether a redundancy situation has arisen.
If the circumstances fall within the definition of redundancy and there is no suitably worded mobility clause, the employer should follow a fair redundancy process. The same job at a new workplace could be offered to an employee as a suitable alternative. If the employer makes a suitable offer in accordance with the statutory requirements and the employee unreasonably refuses this offer (whether this is deemed to have taken place will depend on their circumstances) the employee would not be entitled to a redundancy payment.
Discrimination issues
A relocation consultation exercise should address any individual circumstances that could create a discrimination risk. This could include, for example, making reasonable adjustments for a disabled employee or mitigating the impact of a move on childcare arrangements for a female employee. Employers need to address these issues in advance of any relocation to best mitigate the risk of a discrimination claim. We can advise further on possible discrimination issues.
How we can help
A relocation programme can be disruptive and may create a risk of employment tribunal claims or loss of staff. We can help you ensure that it is well planned and that any risks are mitigated as far as possible to minimize the impact on your business. For further information, please contact the team at Synchrony Law.
This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.