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Mobility clauses and redundancy

A client recently asked for advice in relation to relocating an employee. Moving an employee’s place of work can often be a complex problem for employers to deal with in light of issues around redundancy and constructive/unfair dismissal.  

redundancy/relocation

The first question to ask is whether the employee’s contract of employment contains a flexibility or mobility clause which allows the employer to change the employee’s place of work.

The Court of Appeal in Home Office v Evans confirmed that an employer is legally entitled to invoke a mobility clause, however, employers should be aware that the courts do interpret these clauses very restrictively, with any ambiguity in the interpretation of a clause being decided in the employee’s favour. The more detrimental the clause is to the employee, the more difficult it will be for the employer to rely on it.

 

 

General flexibility clauses are unlikely to be held to be enforceable by the courts but a more specific mobility clause, for example one which allows the employer to change the employee’s place of work to “anywhere within reasonable travelling distance” could well be enforceable.

However, the courts will imply additional terms into a contract such as an obligation on the employer to give reasonable notice of any move and not to act in such a way as to damage the relationship of trust and confidence between employer and employee. This relationship of mutual trust and confidence could be destroyed if, for example, there is a substantial reduction in pay.

Therefore, an employer must act reasonably in seeking to rely on a mobility clause. As a minimum an employer should explain to the employee the reasons for the change in workplace and give reasonable notice of when the change will take effect. The employer should also consider offering the employee assistance with the transition, whether that be financial support or otherwise. Acting reasonably will help to avoid the employee resigning and bringing a claim of constructive unfair dismissal on the basis that the employer has rendered the employee’s performance under the contract of employment impossible. If there is no mobility clause in the employee’s contract of employment then the employer should ask the employee if they will agree to move locations in order to avoid a possible redundancy situation. The employer could also take this approach if there is a mobility clause but they are unsure of its enforceability.

If the employee’s contract does not contain a mobility clause and they decline to move then the employer would need to consider whether to dismiss the employee and offer re-engagement at the new location. Alternatively, if the requirement for the work undertaken by the employee at the specific location has ceased or diminished the employer will have to deal with the situation as one of redundancy

It is important for an employer to make their intention to invoke a mobility clause clear from an early stage as a delay may be perceived as the employer choosing not to rely on the mobility clause, or choosing to waive their contractual rights to invoke it. If an employer is seen by the courts to be “dodging” between redundancy or the decision to use a mobility clause, they may decide that the employer’s right to rely on the mobility clause no longer stands.

Other blogs of interest:

Temporary closure of a business – how do you deal with your staff?

Woolworths Appeal Questions to be Referred to CJEU

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Legal news, views, trends and tools for HR Professionals. Stay ahead. Go further