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Legal lowdown: The pitfalls of employee relocation

With Brexit talk particularly in banking, of moving staff, employers need to realise that relocating employees is not straightforward legally

The place where an employee works is an important term of the employment contract. If the employer changes this it could amount to a breach of contract serious enough for constructive dismissal. The dismissal may be unfair if the employer has not behaved reasonably. And because a disappearing workplace meets one of the statutory definitions of redundancy, a redundancy payment may also be due.

Employers often seek to mitigate these risks by including mobility clauses in the employment contract entitling them to change the employees' place of work.

But a recent case illustrates that there may be pitfalls even when there is such a clause. In Kellogg, Brown and Root (UK) v Fitton and Ewer the claimants worked for Kellogg Brown at its Greenford office. A widely drafted mobility clause in the employment contracts provided that Kellogg Brown could require them to work at any new office location in the UK or overseas. The staff were bound to comply with this requirement unless there were 'exceptional circumstances'. Kellogg Brown took the decision to close its Greenford office and informed employees that they would have to transfer to Leatherhead, around 30 miles away.

Fitton and Ewer declined to transfer on the grounds that the increased travel was too much for them. But Kellogg Brown would not accept there were exceptional circumstances justifying their objection. Both employees were dismissed for refusing to follow a reasonable instruction. They brought a claim for unfair dismissal and statutory redundancy payment.

An employment tribunal criticised the mobility clause. It lacked certainty and was not clear when an employee's circumstances would be considered 'exceptional'. The tribunal found that the instruction to transfer offices was unreasonable given the increased travel time (in one case entailing a two-hour commute). The tribunal also noted Ewer's approaching retirement, his long service, and his long-term connection to the place were he lived (and worked). The tribunal found that the dismissals were by reason of redundancy and that they were unfair.

The EAT disagreed that the reason for dismissal was redundancy. As the employees were contractually mobile no 'disappearing workplace' redundancy arose. The real reason for the dismissal was the alleged misconduct in refusing to obey a reasonable instruction to comply with the mobility clause.

But that was not the end of it. The EAT agreed that the dismissals were unfair. Notwithstanding the contractual power the employer enjoyed, the instruction to move offices was simply not justified in the circumstances.

So an employer may think it has a watertight case for relocating employees if it has a contractual mobility clause. But even then courts and tribunals can sometimes restrain its use. However, employers are still advised to include a mobility clause in the employment contract. As was seen in this case, this can avoid the need to make a redundancy payment when an employee declines to move. But employers should ensure that the mobility clause is properly drafted, meets the employer's real needs, and is not unreasonably wide.

Employers should also ensure that any reliance on such a mobility clause is reasonable in the circumstances. And they must take steps to ensure that the exercise of contractual rights does not breach the implied duty to maintain trust and confidence in the employment relationship.

John McMullen is a partner at Wrigleys Solicitors