Employers can decide to move business location for many reasons, including the need to reduce costs, find bigger premises or as a result of a merger with another business.
If you are considering moving your business, you will need to understand the legal implications relating to staff relocation.
You will also need to know whether you are legally entitled to ask individual employees to relocate to a different location, office or branch, either in the UK or abroad, perhaps to deal with a lack of resources or to fill a particular skills gap on a short-term basis, or even by way of official secondment or a permanent move.
It is crucial that you proceed with care with any relocation process to protect the business against potential tribunal or breach of contract claims.
A mobility clause is a provision within a contract of employment that seeks to permit the employer to move the employee’s place of work either permanently or temporarily.
When an employer is planning to relocate staff, and the employee has an express mobility clause in their contract of employment, they may be legally required to accept the move, unless they can prove the request is in some way unreasonable, such as for financial reasons or because it would cause severe disruption to family life.
By way of example, it would be wholly unreasonable to ask an employee to move abroad on very short notice, whereas it may not be unreasonable to expect them to move to different premises in the same city or region.
A mobility clause typically provides that employees have to move within certain limits. As such, this means that employers can normally require their employees to move to places that fall within the scope of the clause although, where drafted widely, this can be a matter of interpretation. The existence of an express term in itself is by no means conclusive as to whether you can make an employee move.
As such, for those employees who do not have an express mobility clause within their contract of employment, it is safer to assume that they will have the right to refuse to move and you should therefore proceed with extreme caution, otherwise risk having costly court or tribunal proceedings brought against you.
If the relocation forms part of a transfer and the TUPE regulations apply, the employee’s rights and entitlements under their existing contract will be preserved.
Can an employee refuse to move?
Employees may be reluctant to relocate for many reasons, such as family commitments or increased travel costs and commuting time.
If the employee has a mobility clause in their contract, however, they will be required to move with their employer, unless the request can be shown to be unreasonable. It will be for the employee to establish that the relocation should be considered unreasonable.
The employer will not be required to offer compensation for the move unless the contract specifically states this.
If the employee’s contract does not include a mobility clause, they have the right to decide whether to accept or refuse to relocate.
In such instances, the employer may attempt to incentivise employees to move by offering an attractive compensation package. This could include contributing to or covering relocation costs and providing a trial period for the relocation.
In circumstances where there is no contractual mobility clause, or the proposed move falls outside the scope of its provisions and the employee is refusing to move, you may need to consider redundancy.
If the employee has worked for you for a relevant qualifying period and they haven’t unreasonably refused an offer of suitable alternative work they may be entitled to a redundancy payment, provided they will not be receiving compensation for electing not to move.
In some circumstances, it may be appropriate to bring the employment contract to an end with a settlement agreement and mutually agreed terms.
Staff relocation: What steps can be taken?
When relocating, an employer should always plan in advance and carefully consider how to improve acceptance rates from employees in relation to the move, while remaining both legally compliant and cost efficient.
Perhaps the best way to achieve this is by ensuring from the outset that any contracts of employment contain clearly drafted mobility clauses which grant you, as the employer, the power to require the employee to change their place of work within a set radius or a city or a particular county or region within the UK, or even to specific international locations appropriate for the business.
However, even where an express mobility clause exists, you should still act reasonably when relying on its provisions, having regard to any impact the relocation could have on the employee.
The importance of consulting and communicating with staff and their representatives before making any relocation decisions cannot be underestimated. Employees should be informed of any proposed move with reasonable notice. This ensures an open process and can help to promote collaboration and discussion above conflict and misinformation and by following a fair process you can ascertain whether or not there are any objections and, if so, how these can be overcome.
What happens if the employee agrees?
In the event you are able to obtain agreement in principle to the proposed move, you will need to agree and make a formal record of the terms of relocation with the employee. A written relocation agreement should, as a minimum, cover:
- The duration of any temporary relocation with notice periods
- What rights and responsibilities the employee will have
- Where the relocation is to a different branch or subsidiary of the company, what workplace rules the employee will be bound by
- Who will be responsible for performance management and appraisals, and to whom grievances should be brought
- What benefits the employee will receive, for example, relocation or extra travel costs, as well as repatriation costs where the move is overseas
- The extent to which the employee will be responsible for repaying any relocation costs where they resign shortly after moving
- Where the relocation is overseas, in what currency the employee will be paid and what protection will be offered against exchange rates
- Where the relocation is overseas, what will be the law governing the employee’s contract of employment
- What level of commitment is to be given by the employer that at the end of the relocation there will be the offer of a suitable job to return to and, where there is no such guarantee, how the employee will be compensated
- What trial period, if any, will be in place to allow an employee to reverse their decision to relocate.
Dealing with staff relocation disputes
How you resolve a dispute relating to staff relocation will largely depend on the circumstances.
If the employee believes the organisation has acted unreasonably in requesting the relocation, they may raise a formal grievance or if they resign as a result of the dispute, they may have grounds for constructive dismissal, provided they have at least 2 years’ service, or they could be able to claim for unfair dismissal if they have been made redundant.
Taking specialist legal advice early in the relocation process can ensure you understand your options when dealing with a staff relocation and protect your interests, should a dispute arise with an employee.