- 8 minute read
- Last updated: 25th October 2019
Whether organisations are moving to bigger premises, for financial reasons or to be nearer to customers, the relocation process is invariably complex, carrying a number of risks and challenges for human resource teams. The priority should be retaining key personnel and maintaining a positive and productive workforce through the relocation process, while reducing legal risk exposure and ensuring cost control. This demands an approach that complies with employees’ relocation rights and is supportive and understanding of the concerns and hesitation you may face from affected employees.
This article covers:
- Understanding employees’ relocation rights
- Can you dismiss an employee for refusing to relocate?
- Reasonable use of mobility clauses
- Employees’ relocation rights: what are the alternatives?
- Employee relocation packages
- Managing HR issues during employee relocation
Relocation rights are generally specified in the employment contract, under what is known as a ‘mobility clause’. Employees who have a mobility clause in their contracts are generally required to relocate, providing the employer acts on the clause in a ‘reasonable’ manner.
In determining what is reasonable, employers should consider factors such as the distance the employee has to travel to the new location, the time it takes for the employee to travel, the notice given to the employee, and the seniority and position of that individual. Essentially, any relocation which results in a decline in the employee’s quality of life could be deemed unreasonable.
Attempting to exercise a mobility clause in an unreasonable manner may result in the employee taking legal action against you at an employment tribunal. The employee may be able to claim constructive dismissal on the grounds that you have unfairly altered the terms of their contract in a way which led them to resign (i.e. by failing to act on the mobility clause in a reasonable way). Alternatively, they may seek to claim wrongful dismissal if you have dismissed them based on their refusal to relocate.
Discrimination is another important risk factor with relocations. Specifically, an employee or particular group of employees should not be adversely affected by a relocation. Employers are required to consider the reasonable requirements of any disabled employee and must resolve disabled access issues in respect of the new location’s building and facilities.
Refusal to relocate could be considered misconduct if the employee’s contract includes a mobility clause. While misconduct would be grounds for dismissal, you should be extremely wary about dismissing any employee who may be able to claim that your actions were unreasonable. Remember that “reasonable” and “unreasonable” are open to subjective interpretation. Employers should only consider dismissal when an employee refuses to move, if they are certain that the employee has no good reason for doing so.
Employees who do not have a mobility clause in their employment contract, or if the request for relocation could be deemed unreasonable, can choose if they wish to relocate.
As discussed above, an employee’s relocation rights include the right to be given reasonable terms – mobility clause or no mobility clause. For your guidance, here are some examples of situations which would almost certainly be considered unreasonable:
- The employee is given 24 hours’ notice to relocate from Cardiff to Edinburgh.
- The employee is asked to relocate abroad despite having young children in school in the UK.
- The employee is asked to relocate to an area with substantially higher living costs.
It is important to understand that what is reasonable to one employee may be completely unreasonable to another. For example, asking a young, single person to move a substantial distance may be acceptable, whereas a working parent supporting a family is likely to find the same proposal completely unacceptable.
When putting together a reasonable relocation proposal for an employee, you must consider every way in which their life may be negatively affected and suggest ways to mitigate these effects. This may include thinking about:
- Notice – you must give the employee fair warning to prepare for the move.
- Costs incurred by relocation – you may want to offer the employee assistance with moving costs.
- Any effect on the employee’s income – if the new post will involve less hours, you may wish to offset this loss by increasing their hourly rate.
- The employee’s commute – if it will be longer, you may wish to shorten their working day.
Where specific relocation problems cannot be remedied by changes to the employee’s contract, the employer might consider some form of financial compensation to make the idea of relocation more attractive. For instance, an employer may offer to rent a property for a fixed time in the new location, to allow the employee more time and money to find a suitable home. Offering this type of compensation is not a legal requirement, nor is it necessary in all circumstances, however, it can be worth considering when seeking to relocate especially valuable employees.
If the reason for relocation is that work is no longer being carried out at the original business location, and the employee refuses to relocate, redundancy could be considered as an appropriate way forward. This may be a suitable option if there is no work left for the employee in their current location (because a department or the entire premises is being closed) and one of the following two points apply:
- There is no mobility clause in the employee’s contract (therefore they are not obliged to move).
- There is a mobility clause, but you are unable to exercise it in a reasonable manner.
Any employee who has been working for your organisation for two years or more would be entitled to statutory redundancy pay, providing they have not refused a reasonable offer for alternative employment. The minimum amount of redundancy pay an employee is entitled to will depend on their salary, the number of years they have been working for you and their age during each year of their employment.
Statutory redundancy pay is calculated as follows:
- For each year that the employee was under 22 years old: half a week’s salary.
- For each year that the employee was 22 to 40 years old: a week’s salary.
- For each year that the employee was over 41 years old: a week and a half’s salary.
Keep in mind that this is the statutory minimum rate; your employee’s contract may specify that they are entitled to a higher rate. Be sure to check this out before proposing redundancy as an option. Employees who refuse a reasonable offer for alternate employment may not be eligible for redundancy pay, no matter how long they have worked for you. Being asked to relocate to a nearby office that does not require a home move, re-training, a reduction in earnings or additional expenses is likely to be considered ‘reasonable.’
Remember that every employee’s personal situation is unique and that as their employer, you have a duty of care. Discussing the prospect of relocation with your employees and giving them the opportunity to raise objections is the only way to ensure you have handled the situation fairly.
Employers should, however, proceed with caution with any decision to make an employee redundant. Redundancy is a form of dismissal and the employee must be treated fairly throughout the process. Where the employee believes the employer did not follow a fair and lawful process in making them redundant, they may be able to bring a claim for unfair dismissal.
To manage the risk of tribunal claims, employers should consider each employee’s circumstances in relation to the relocation. They should be clear with employees about the reasons for the move. Employers have to consult with employees before they make a final decision on redundancy. Consult with employees before reaching a final decision.
When seeking to relocate personnel, you may wish to incentivise the move through a relocation package, particularly in respect of senior or key employees. Employee relocation packages are usually designed to offer the employee:
- a promotion or better career prospects, or
- a higher rate of pay, or
- both these opportunities
You should also consider any costs or inconveniences to your employee associated with the relocation and propose terms which would mitigate them. This may include handling moving company costs or providing employment support to your employee’s spouse, should they need to find work in the new area.
Employee relocations demand consideration of more than just employment law risks.
When planning any relocation process affecting personnel, employers must recognise the importance of engaging in thought-out consultation with their employees and employee representatives. Employees may be resistant to the idea of relocation due to the impact it will have on their family, personal time, travel costs and living environment, and potential upheaval of having to re-settle in a new area if the relocation demands a home move. Where relocation involves a notable distance, it may be appropriate to offer a relocation assistance scheme to support employees through the change and to help minimise operational disruption and impact on performance and morale.
Best practice requires employers to notify affected employees in writing about the proposed changes and the reasons for the relocation. Initiating a dialogue and consultation with affected employees can be extremely beneficial in understanding and responding to their concerns, gaining the necessary buy-in and maintaining positive working relations. This includes being open about the business reasons for the relocation, setting out the implications of not relocating and how remaining in the current location is either not possible or would be detrimental to the organisation.
The way you manage an employee relocation should be determined by the reason for relocating, and how many employees are affected. It may be that an entire office is being closed in favour of larger premises elsewhere, effecting several hundred employees. At the other end of the scale, you may find yourself in the position where you wish to relocate one senior employee to oversee development in a new office.
In both situations, your goal should be to retain your employees and maximise productivity, by presenting a proposal which makes them feel comfortable and incentivises their decision to accept the new position. Losing employees as a result of relocation can be costly and disruptive. Hiring and training new staff to replace the employees you have lost is both time-consuming and expensive. You may also be required to pay statutory redundancy pay to the employees who opted not to move, if you cannot offer them a reasonable alternative job offer. Though every business’ aim is to retain staff, redundancy is sometimes the only suitable option when an employee refuses to relocate. This issue is discussed in greater detail towards the end of this guide.
How your organisation approaches employees’ relocation rights can be hugely influential in retaining key personnel.
DavidsonMorris’ experienced HR consultants and employment law specialists offer guidance and support to employers in relation to employees’ relocation rights. We have extensive experience in helping employers identify and manage the HR and legal risks, providing advice that protects your best interests while supporting the commercial drivers behind the process.
We have particular expertise where the move is overseas and can support with all aspects of the international relocation process, from planning and compliance through to cost control, employee engagement and the physical and logistical demands of relocating to a different country, affecting both the employee and their family.
Where an employee elects not to relocate, take advice to ensure your legal interests are protected and that any steps you take comply with the employee’s relocation rights, which may include the right to refuse. We can advise on your options to avoid a potential impasse, such as whether redundancy is an option or some form of settlement and a negotiated exit.
If you have a question or need guidance on employees’ relocation rights or the HR and employment law aspects of any kind of organisational restructure or workforce change, contact us.