Irwin Mitchell | Employment Law Update | Myth busting: We can rely on contractual mobility clauses in our employees’ contracts of employment to avoid making redundancy payments

Employment laws generate a lot of comment. Hardly a day goes by without the media reporting scare stories about the employment rights of UK employees, which are depicted as being anti-competitive, unduly restrictive and in many cases overly generous.

We are exposing some of the most common employment law myths and explaining the reality behind them. We are not pretending that employment law is easy – it isn’t, but generally it should not be difficult to get the basics right.

This month we look at the issue of mobility clauses in contracts of employment.

Myth:

We can rely on contractual mobility clauses in our employees’ contracts of employment to avoid making redundancy payments

Reality:

Including a mobility clause in a contract of employment may give you some flexibility to make unilateral changes to an employee’s place of work rather than making them redundant. It is not, however, a “get out of jail card” giving you an unfettered right to move employees around and avoid redundancy payments. You will only be able to rely on it if the wording is clear and unambiguous, not overly detrimental to the employee, and the clause is exercised reasonably.

Let’s look at each of these aspects in turn:

Any clause that is ambiguous in the sense that it could have more than one meaning will be interpreted in favour of the employee, rather than the employer. So, for example, if your contract says that the employee may be transferred to any “suitable” place of work, the court or tribunal will ask what is suitable from the employee’s perspective as well as from yours.
A court or tribunal will expect you to act reasonably. What is reasonable will depend on all of the circumstances but may include considering how much notice you give the employee of the change, whether any financial support is available to support the move, the nature of the employee’s role and their seniority. For example, an employer who gave a long standing employee 6 days’ notice to move from Leeds to Birmingham was found to have acted unfairly and had to pay him compensation after he resigned in protest.
Changes that are particularly detrimental to an employee will be subjected to close scrutiny. For example, in another case, increasing the commuting time of an individual who was approaching retiring age from 18 minutes each way to 47 miles each way was found to be outside the ambit of the mobility clause included in the contract of employment. As a result, the employer could not rely on it to force the employee to change his place of work.

When trying to make changes to employees’ places of work, you must in addition not act in way that will destroy what is known as the implied duty to maintain trust and confidence between you and your staff. So, even if you believe that your contractual term is clear and will allow you to move an employee from one location to another, if the scope of the change is unreasonable or the way in which you manage the process is unreasonable, the employee may be able to resign and claim constructive unfair dismissal (provided s/he has a minimum of 2 years’ service).

If you are considering closing down your business or part of it in a particular location you must decide at an early stage whether you are going to invoke your employees’ mobility clauses and require them to relocate, or go through a redundancy procedure, which will include consideration of alternative employment. You are only required to go through a redundancy procedure if you envisage making redundancies and you would not do so if you can move all of the staff to a new location under the terms of their existing contracts of employment.

If you can relocate staff under the existing terms of their contracts of employment there will be no dismissal for redundancy and so no right to receive redundancy payments. If an employee refuses to move, you may be able to dismiss him/her on the grounds of misconduct. Before doing so, we recommend that you take legal advice to ensure that you can rely on the mobility clause otherwise you may expose your business to unfair dismissal, breach of contract and other claims.

Published: 5 May 2017

Employment Law Update - May 2017

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Myth busting: We can rely on contractual mobility clauses in our employees’ contracts of employment to avoid making redundancy payments

Reality:

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Myth busting: We can rely on contractual mobility clauses in our employees’ contracts of employment to avoid making redundancy payments

Reality:

For general enquiries

About Irwin Mitchell

Contact Us

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