What rights do employees have if their workplace relocates?
Updated: Feb 16
Whilst employers often prefer to stay in one location for a number of eminently sensible reasons, there may come a time when they find themselves making plans to relocate the business. If that happens, what are the prospects for employees?
A lot depends on whether the employee’s contract of employment has what is known as a mobility clause. This is a section of the contract that obliges an employee to move with their employer unless it can be shown that the request is unreasonable.
If the employee refuses to comply with the terms of a mobility clause, the employer is within their rights to dismiss the employee for breach of contract and no redundancy payment need be made.
If the employer operates the mobility clause in a way that can be shown to be unreasonable, the employee may be able to make a claim for unfair dismissal, wrongful dismissal (breach of contract) and in some cases discrimination.
If there is no mobility clause in the contract, then it is up to the employee whether or not they choose to move with their employer.
Why might an employee choose not to move?
Many employees, although happy in their jobs, have other commitments which are often tied to geographical location. Their children may attend the local schools, they may have friends and family in the area and may have emotional ties to a particular area. These may influence the employee’s decision on whether to make the move. Other factors that may play a part include:
The amount of travelling time and the costs involved in that
Having to sell the family home
Being unable to afford to buy or rent a property in the new location (this is particularly relevant if there is a big disparity in property prices between the old and new locations)
If they don’t want to make the move then a redundancy may happen because:
the job that they were carrying out at the current premises no longer exists;
the employer has offered them an alternative job but they have declined it as unsuitable.
If the employee is employed in England and has at least two years’ service, they will be entitled to a statutory redundancy payment. If their employer fails to follow a fair procedure, they will also be entitled to compensation for unfair dismissal.
Part of a fair redundancy dismissal is the employer’s obligation to warn the employee about potential redundancies. They should also undertake a reasonable search for alternative employment within the company and advise the employee about any vacancies that can be found.
If a position can be found and has terms that are different from the existing terms that the employee enjoys, they are entitled to a trial period in the new position. Once the trial period has finished, they can decline the job without jeopardising their statutory redundancy payment.
Unreasonably refusing a suitable alternative job offered can cause the employee to lose their statutory redundancy payment.
Unless there is a provision in the employment contract, an employer does not have to give any compensation for the relocation process. Financial help for legal fees, excess fares, moving expenses and temporary accommodation can be offered.
Employees on maternity leave who are made redundant must be offered any suitable alternative vacancy if the employer has one available. They do not have to apply for it. If the workplace is one where a trade union has been recognised, the employer should bring them into the consultation process at an early stage so that an agreement is more likely.
The refusal of any offer of alternative work must be ‘reasonable’. This depends on a number of things related to the offer, including how far away it is, the accessibility and personal issues for the employee. The more factors that affect the employee’s decision, the more reasonable their refusal may be, although each case will most likely be judged on its merits.
Because redundancy is a kind of dismissal, the employer needs to take into account the possibility of unfair dismissal claims from employees who feel that they have been badly treated in the redundancy process. In order to avoid this, or at least to reduce the chances of it happening, the employer needs to consider:
the individual circumstances of each employee;
giving a full explanation of the situation, including reasons why the move is being made;
undertaking consultation with the workforce before a final decision is made.
If the number of employees affected is more than twenty, the company must elect staff representatives to carry out a process of collective consultation.
If, in addition to the number of affected employees exceeding twenty, the process occurs within a period of ninety days or less, the employer must carry out a detailed consultation process and procedure and notify the Secretary of State.
If the employer does not comply with their obligations, employees may be able to claim a protective award of up to 90 days’ pay.
What should the employer bear in mind?
When relocation is first considered, the employer needs to look at the employment contracts of their workforce.
If the employer has not included a mobility clause in the contract of employment, then a relocation will mean that the contract has changed. All changes in employment contracts must be agreed by the employee. This usually means that the employer will have to enter into negotiations with the employee.
If the contract contains a mobility clause, it needs to be assessed to ensure that it is adequate in light of the proposed move.
Relocation packages are often used to facilitate the move for key employees; an employer needs to balance the cost of these against the cost of hiring employees at the new location
For some employees who may be uncertain about whether to commit to a relocation, a trial period before a permanent move is made may be the ideal opportunity for an employer to discover which of their workforce will fully commit.
Relocation and Discrimination
Discrimination is not the first thing that springs to mind when an employer is considering a relocation, but failing to address this issue can lead to claims being made against them, so it is important to keep discrimination and equality in mind when considering the practicalities of any move.
The employer should take steps to ensure that the relocation does not adversely affect an individual or a particular group of employees (for the purposes of the Equality Act 2010, the employee(s) need to have a protected characteristic that is affected by the move).
An employee belonging to a particular group may be able to make a good argument that selecting them to move without making special allowances for their protected characteristic is indirectly discriminatory. This is when the effect of the move on a particular person or group of people is disproportionately negative compared to the effect on other colleagues. An example could be women employees who have caring responsibilities.
If the relocation is due to the fact that an employer has been bought out or taken over by another company, employees’ rights are protected by regulations known as TUPE – Transfer of Undertakings (Protection of Employment). All existing employee rights, including those in the contract of employment and protection in the event of redundancy will not change and the new owners must honour those terms and conditions.
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