Redundancy and the implication of mobility clauses

The relationship between redundancy and the utilisation of mobility clauses has been the focal point of many recent contentious legal debates. Whether or not an employer can rely on an express mobility clause in an employee’s contract of employment as an alternative to redundancy is a question that has received apparently more than one correct answer.

So what is the current legal position on this much debated issue? Daniela Cohen, an associate in the employment group at Sheridans explains…

The problem

The issue arises in situations where there is a potential redundancy situation and an employer seeks to rely on an express mobility clause in a contract of employment in a bid to avoid implementing and following a redundancy procedure.

When an employer moves premises or closes a site, many would prefer to retain their talent rather than make them redundant. Aside from the costs associated with redundancy payments, especially for those organisations with generous enhanced redundancy schemes, many employers are keen to retain experienced and valued members of staff, rather than lose them to a competitor. Accordingly, the ability to exercise mobility clauses becomes very important and valuable to an employer.

The current position

The EAT’s decision in Kellog Brown & Root UK ltd v Fitton serves as a useful reminder as to the complications that can arise when an employer seeks to exercise a contractual mobility clause against the backdrop of a redundancy situation.

The claimants in this case were dismissed after their employer took the decision to close down the workplace in which they were both employed and invoke a contractual mobility clause.  The claimants refused to relocate and so they were dismissed for misconduct, namely their refusal to follow a reasonable instruction to relocate.

Whether or not an employer can rely on an express mobility clause in an employee’s contract of employment as an alternative to redundancy is a question that has received apparently more than one correct answer.
Daniela Cohen is an associate in the employment group at Sheridans.

In this case, the employer had sought to alleviate the difficulties which the travel would have on their employees by operating a compensation scheme to cover additional travel costs and by reducing core hours with an earlier finish time to assist those with longer to travel.

A number of employees who had childcare or carer responsibilities were exited under ‘exceptional circumstances’ and received a redundancy payment. The claimants (both of whom had long service with the company) cited their objections but were not permitted to exit with a redundancy payment. They issued claims of unfair dismissal and for redundancy pay.

The EAT in part agreed with the employer and found that the reason for the dismissal was the refusal on the claimants part to obey a reasonable instruction, rather than a redundancy.  However, it still found that the dismissal was unfair and agreed with the Tribunal’s finding that on the facts, the employer acted outside the range of reasonable responses.  Specifically because it had not considered offers of suitable employment or trial periods and so in the context of long-serving employees, the dismissals were unfair.

Practical tips for employers

Although the area is far from straightforward, the various judicial decisions on this issue, including the recent EAT decision in Kellog, have provided useful guidance. In particular employers should:

ensure that any mobility clause is clearly and unambiguously drafted;

make it clear how they intend to deal with the closure of a business, be it by following a redundancy procedure or by invoking a mobility clause;

act consistently throughout – a mobility clause cannot be relied upon as a defence if it has not been exercised prior to the hearing;

ensure that a redundancy procedure is not inadvertently invoked, e.g; by making a staff announcement which may activate the company’s redundancy procedure;

understand that they are entitled to consider and weigh up their options, but should avoid communicating their decision to the affected employees until a strategy has been agreed;

act reasonably when invoking a mobility clause.

Factors to consider include the length of consultation and/or notice, trial periods, alternative roles, any possible amends to core working hours and any related expenses to be offered in a bid to mitigate the impact of relocation.

Employment Solicitor


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