Nowadays, closing one workplace and transferring the operations to new premises or another existing site is quite common for employers. Additionally, employers ask their existing workforce to relocate and work at the new premises. However, the place where an employee works is an important aspect of the contract of employment. Therefore, if the employer decides to change this, it may amount to a contract breach, possibly for a constructive dismissal.
Furthermore, if the employer fails to behave reasonably, it may also qualify as an unfair dismissal. With this, the case of a disappearing workplace also meets the statutory definitions of redundancy.
Therefore, employees can also claim for redundancy and a redundancy payment. To assess whether the workplace relocation can be construed as one of redundancy, before making a claim, there are some points to consider.
The Role of Employers in Deciding For Workplace Relocation
In general, employers have two choices when dealing with workplace relocation. They can either treat this as a redundancy situation or choose to rely on the contractual mobility clause. In the former case, employers can make the decision based on their requirements for employees. In general, the particular kind of work that the employee was doing in the previous workplace ceases to exist once the company decides to shift bases.
As a result, the employee would be offered an alternative employment at the new site. If that offer is accepted, there is no redundancy pay and their employment continues. Otherwise, their employment will terminate due to redundancy and the employee will be entitled to redundancy pay, unless the alternative job offer was a suitable one and the employee’s decision to refuse it was unreasonable.
The other option for the employers is to rely on a contractual mobility clause. According to this, employees would be required to work at the new site and the employer could insist that the workforce relocates. In this case, there is no question of redundancy, and if the employees refuse to relocate, they can be potentially dismissed for gross misconduct – refusing to follow a lawful instruction.
Both of these approaches will be valid, however, the employers must be clear from the outset about the approach they are going to adopt.
The fallibility of contractual mobility clause
In the case of Kellogg Brown & Root (UK) Ltd v Fitton & Anor, the Employment Appeal Tribunal (EAT) reminded the employers that the latter approach described above, has certain limitations and that it cannot be used as a solution every time.
The employer, in that case, terminated operations at their Greenford premises and proposed to relocate the workforce to its current premises in Leatherhead. The employer took to adopt the contractual mobility clause and issued an instruction for the employees to shift to Leatherhead. Furthermore, the company also offered a certain amount of assistance with the additional travelling costs and was also willing to be flexible with the shift timings, to help its employees avoid peak traffic times.
Two employees declined to relocate as they would have to travel for an extra 20 to 30 hours per week. As a result, both were dismissed for gross misconduct – refusing to follow a legal and reasonable order.
The EAT upheld the tribunal’s decision that the employees had suffered unfair dismissal. Overall, there were three main aspects to consider, and the tribunal found that:
- The contractual mobility clause itself was not sufficiently clear. The contract stated that the mobility clause would not apply in exceptional circumstances. However, it did not clarify what these were, or who would decide if the scenario was “exceptional”;
- The relocation order to Leatherhead was not reasonable, as it had a significant impact on the personal lives of both the employees;
- The refusal to follow the order was not unreasonable in any case, given the personal circumstances of the employees;
Subsequently, it was ruled that the employees were not guilty of misconduct and the employers were not reasonable in concluding that they were. Therefore, the employees did suffer unfair dismissal.
The aforementioned case is a useful reminder that the mobility clauses and other such contractual terms have their limitations. Because a term does seemingly give a particular power to the employer, it does not mean it will always be reasonable to rely on it (for the employer) or unreasonable to refuse to comply (for the employee).
Therefore, if a situation occurs whereby your employer decides to relocate operations to a new facility, you should carefully weigh up your options. If the need arises you can seek legal help from an experienced employment law solicitor.