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Time for a Move – ‘Relocation, relocation, relocation’

An office move or an individual relocation of an employee can often be a legal headache for employers. We can help you avoid this by providing below a timely overview as to the legal position and cases dealing with this issue.

Issues to consider

Contractual issues:

  1. Is the place of work defined in the contract of employment?
  2. Does the contract provide for any flexibility in respect of relocation?
  3. Is there any possibility to vary the contract?

The employment contract

Although the contract is an important factor, it is not necessarily determinative of the employer/employee rights. Even if a contract expressly provides for relocation, that does not mean that relocation could never result in a breach of contract. Conversely, where a contract does not expressly provide for relocation, that does not mean that employees cannot be ‘required’ (in one form or another) to relocate.

Express clause

If the place of work is expressly stated in the contract, it will be a contractual term. It is fairly common for employers to include flexibility in such clauses (often known as a mobility clause). For example:

‘Your usual place of work is [location] or such other place within [reasonable area] which the company may reasonably require.’

Where there is such a clause, the employer is, in principle, entitled to insist on relocation. That being said, an express mobility clause may be interpreted restrictively.

In Smith and anor v Westside Day Nursery Ltd, the tribunal held that ‘may be required to work at other locations’ did not cover a permanent transfer. Therefore the employer requiring the employees to relocate on a permanent basis amounted to a breach of contract.

In Tapere v South Lindon and Maudsley NHS Trust an employee was found to have been constructively dismissed when her employment was transferred under TUPE to a new employer who required her to work in a different location. The employee’s mobility clause stated that she may be required to provide services at ‘other locations within the Trust’. The EAT held that ‘within the Trust’ were vital words of definition which limited the scope of the mobility clause. Therefore, there was no contractual right to move the employee to any place of work operated by those outside the Trust.

Given the above, care should be taken when drafting mobility clauses and when relying upon them in relation to an office move or relocation.

Where there is no express provision

If the proposed relocation is not covered by the contract, one option available is to dismiss and re-engage the employees on a new contract that includes the new place of work.

There are both advantages and disadvantages to this approach and careful consideration should be given before taking this course of action.

The main advantage is that the employer will have achieved its goal of relocation as the new location will be clearly set out in the new contract. So long as sufficient notice is provided, it is unlikely that there will be a breach of contract.

The main disadvantage is that the employer will need to make sure it has a fair reason for the dismissal and it has followed a fair procedure, including consultation with its employees. Failure to do so could result in a finding of unfair dismissal. Consideration should be given as to whether the fair reason is redundancy (in cases where there are 20 or more affected employees, collective consultation will need to take place), or some other substantial reason.

Employer actions

When considering a move, an employer should ensure that it acts reasonably and with due care and consideration to its employees. In United Bank Ltd v Akhtar the tribunal found that, even with an express mobility clause, there had been a fundamental breach of three implied terms of the employment contract. The employee was provided with very little notice and was not provided with any relocation expenses.

Employers should therefore ensure that they:

  1. exercise discretion under an employment contract rationally and practically;
  2. give reasonable notice;
  3. exercise discretion (where appropriate) to provide relocation expenses; and
  4. do not undermine the implied term of mutual trust and confidence.

Further considerations

  • After an office move, employees may seek flexibility in their working arrangements in order to cope with issues such as increased travel time. This may result in an increase in flexible working requests. Employers are required to consider any flexible working requests in a reasonable manner. Before planning a move, consideration should be given as to whether the business could cope with flexible or homeworking requests and if so, this may be an alternative to relocation.
  • Many large companies have relocation policies – if you do have one, it will need to be considered before the move to ensure the company has an accurate overview of the likely employee expense of the move.
  • If you intend to dismiss, make sure you:
    • Undertake a consultation process (particularly in a redundancy situation);
    • Consider whether relocation expenses have been offered and/or compensation for increased travel;
    • Consider whether homeworking/flexible working has been considered in order to mitigate the impact on those affected; and
    • Consider whether alternatives to relocation have been considered.
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Legal news, views, trends and tools for HR Professionals. Stay ahead. Go further