If you are considering moving your business – whether you are reducing costs, need more space or are merging with another business – you will need to understand the legal implications of staff relocations. This means following a fair process to ensure you are not breaching your employees’ rights.
You will 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 loss of key personnel and potential tribunal or breach of contract claims.
Mobility clause in the employment contract
The employee’s contract of employment (or written statement of particulars) should state the employee’s ‘normal place of work’. A mobility clause is a provision within a contract of employment that seeks to permit the employer to move the employee’s normal place of work, either permanently or temporarily.
Mobility clauses are generally included within employment contracts as standard, with the employee agreeing to move within certain limits, such as a specific time or distance away from their normal place of work. This means that employers can normally require their employees to move to places that fall within the scope of the clause although the relocation must be considered reasonable for the clause to apply.
When an employer is planning to relocate staff, and the employee has an express mobility clause in their contract of employment, the employee would be legally required to accept the move (‘forced relocation’), 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 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.
If the employment contract does not have a mobility clause within their contract of employment, the employer would need to get agreement from the employee to relocate. There will be no obligation on the employee to accept the relocation.
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.
What is ‘reasonable’?
The existence of an express term in itself is by no means conclusive as to whether you can make an employee move. Relocations must be considered ‘reasonable’. What is reasonable will depend on a number of factors such as travel time to the new location, the distance from the original workplace, the cost of relocation for the employee and the impact of relocation on the employee. Consider also that what is reasonable for one employee may not be for another, for example, someone with caring responsibilities at home may not be able to travel further away to work each day, and requiring more senior personnel to relocate is likely to be more reasonable than junior staff.
The wording of the clause will also be important; the term should specify parameters for relocation, such as time and distance from the original place of work, but if the clause is drafted widely, it can become a matter of interpretation.
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, they will generally 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.
Employers cannot compel an employee to relocate if their contract does not include a mobility clause or the proposed move falls outside the scope of its provisions. This would be a breach of contract, for which the employee could bring a claim. If the employee resigns as a result of being forced to relocate despite having no mobility clause, they can claim constructive dismissal.
In circumstances where there is no contractual mobility clause, and the employee is refusing to move, you may need to consider bringing the employment to an end. In these circumstances, you have to follow a fair and reasonable process, with dismissal generally through either redundancy or some other substantial reason, or you risk tribunal claims.
For example, if the reason for the relocation is that the employee’s normal place of work is closing, redundancy would be appropriate ground for dismissal. In the event of redundancy, 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 process
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.
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.
Once contracts have been considered, the employer should notify affected employees about the proposed relocation in writing, giving as much notice as possible. Ensure you explain the reasons for the relocation and the impact on the business of proceeding with the relocation and not proceeding with the relocation. You should give employees the opportunity to feedback on the proposal.
The importance of openly 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.
There is no statutory right for employees to be compensated for relocation costs, but you should check if the employment contract makes provision for any contractual entitlement.
In practice, it often makes sense to incentivise employees with some form of relocation package or by covering certain costs such as travel expenses for an agreed period. This can be helpful to persuade employees who are reluctant to move, and to generally support positive working relations through the period of change.
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.
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.
DavidsonMorris’ employment lawyers are experienced in advising on all issues relating to relocations, including consideration of relevant mobility clauses and varying contractual provisions in line with the new employment terms, as well as providing guidance where an employee does not agree to the changes. For specialist advice, contact us.
Staff relocation FAQs
How do you relocate an employee?
Whether an employee is required to relocate depends on whether there is a mobility clause in the employment contract. If not, the employer will require the express agreement of the employee.
What is job relocation?
Job relocation is when an employer asks an employee to change their place of work.
Last updated: 19 January 2022