So, you’ve decided to close one of your offices in which a number of employees work. You were careful to include mobility clauses in your employment contracts – so the affected employees will have to work in a different office about 20 miles away. You can do that, can’t you?
Well, actually it may not be so simple. If they refuse to move, you may have to acknowledge they’re redundant and pay redundancy accordingly. Otherwise, you may find yourself at the wrong end of an unfair dismissal claim.
This is what happened in the recent case of Kellogg Brown & Root (UK) Ltd v Fitton. The business is an engineering, construction and services company with about 1,300 employees. They used to have two UK sites: Leatherhead, which is south London, and Greenford, which is north London. They decided to close the Greenford site. They agreed to make redundancy payments under ‘exceptional circumstances’ to some staff who were elderly or had childcare responsibilities – but this judgment relates to two employees who were told to move under their mobility clauses. These two employees refused to relocate, so were dismissed.
The Employment Appeal Tribunal (EAT) held that although there was a redundancy situation, the actual reason for dismissal was misconduct. The relevant question is, what did the employer have in mind when dismissing? The company thought that it could rely on their mobility clauses to avoid redundancy, therefore the actual reason for the dismissals is that the employees refused to relocate.
However, the EAT held the instruction that they relocate to offices on the other side of London to be unreasonable, even with the mobility clauses, therefore the decision to dismiss was unfair; the reasoning on this is copied below, which is from the EAT’s judgment. You should bear in mind that it will always depend on the circumstances – the mobility was vague and very wide, and these employees had worked solely in the Greenford office for many years.
And what if the employer had accepted that it couldn’t lawfully demand that its employees relocate in that manner? Well then their positions would have been redundant and they could probably have been made redundant fairly. That would have resulted in redundancy payments. The EAT’s judgment does not say what award was made against the company, but presumably it was a lot greater than the redundancy payment would have been.
If you require further advice on these issues, you may wish to join our community; on elXtr we have guides and documents to help you navigate most employment situations. Our redundancy guides and documents can be found here.
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The ET then ... considered whether the instruction had been legitimate - in the sense that it was a valid contractual requirement - and concluded it was not ... It then turned to the question whether the instruction was reasonable; again concluding it was not ... It finally asked whether Mr Ewer's refusal was reasonable, concluding that it was.